Small Industries Development ... vs Shri Niranjan Ayurved Bhawan Ltd.
2002 Latest Caselaw 531 Bom

ORDER

D.Y. Chandrachud, J.

1. The petitioner, which is the Small Industries Development Bank of India, lent and advanced a sum of Rs. 15,00,000/- to the respondent in pursuance of a loan agreement dated 18th May, 1996. The loan was repayable in 12 equal monthly instalments of Rs. 1,25,000/-, each after a moratorium of three clear months from the date of the first disbursement. The loan agreement provides that the petitioner would be entitled to charge interest @ 20% p.a. on the principal amount of the loan outstanding from time to time.

2. The respondent defaulted in the payment of instalments of the principal which had fallen due on and from 1st July, 1996, and in the payment of interest from 1st June, 1996. A statutory notice under Section 434 of the Companies Act, 1956, was issued by the petitioner to the respondent on 14th May, 1999. In response to the notice, the respondent, by its letter dated 14th June, 1999 disputed the claim and contended that security in the form of shares of a face value of Rs. 40,00,000/- had been pledged with the petitioner. This aspect of the matter would also be dealt with a little later. In the circumstances, this petition for winding up, has been filed on 17th September, 1999.

3. The Respondent-company does not dispute the disbursement and receipt of the amount of loan. The attention of the Court has been drawn to the 17th Annual Report of the Company for the year 1999-2000, and, in the Notes attached to the Balance-sheet, there is a clear statement to the effect that the Company has obtained an unsecured loan from the petitioner on 27th March, 1996 of Rs. 15,00,000/- repayable in 12 instalments commencing from July 1996. There is a clear admission that the company has not started repayment of the loan and that provision for interest also not been made in the Books of Account during the year.

4. This matter, which was filed almost three years ago, came up for hearing from time to time before the learned Single Judge of this Court. On 7th July, 2000, this Court in its order recorded the contention of the company that shares worth Rs. 40,00,000/- have been pledged with the petitioner as recoverable security. According to the Company, this would be sufficient to satisfy the dues of the petitioner. On the other hand, it was urged on behalf of the petitioner that the value of the shares was only about Rs. 3 to 4 per share and that the offer, which had been made by the company was a conditional offer to the effect that the petitioner should not sell the shares below their face value. Consequently, the petitioner submitted that it was not possible to recover the dues by selling the shares. At this stage, the learned counsel appearing on behalf of the Company stated that the Company would furnish a list of persons, who are ready and willing to buy the snares above the face value of each share. On behalf of the petitioner it was urged that if the list is submitted to the petitioner, it would be accepted. The matter was thereafter adjourned and came up for further consideration on 24th November, 2000. The order of this Court passed on that day refers to the submission of the petitioner that it was difficult for the petitioner to sell the shares, since the price of the shares was low and the market was fluctuating. The respondent stated that it would negotiate with Stock brokers and try to ascertain the exact value of the shares, besides attempting to ascertain the modalities for the sale of the shares. Consequently, the Company sought time which was granted as a last chance to explore the possibilities to recover the money. On 9th February, 2001, it was stated before the Court that there was a likelihood of settlement. Eventually, on 2nd March, 2001, the Court was informed that there was no settlement.

5. The learned counsel for the respondent has urged, in defence, that shares of a face value of Rs. 40,00,000/- were pledged with the petitioner and these are adequate to meet the dues of the petitioner. There is no merit in this submission. For one thing that letter of the respondent dated 3rd April, 2000 is conditional. While authorizing the petitioner to sell the shares at the ruling market price, the respondent stated that the shares should be disposed of only to the extent of the principal amount of Rs. 15,00,000/- that the shares shall be disposed of only above par and not more than 2000 shares will be sold on one working day. There is obviously substance in the contention of the petitioner that the shares could not be sold at par and what has subsequently transpired during the pendency of the Company Petition serves to emphasise the point.

6. The petitioner has lent and advanced money to the respondent under a written agreement, which was entered into between the parties. The respondent has received the money and has defaulted in the repayment of the instalments due and payable to the petitioner. However, it has been stated before the Court that out of the post-dated cheques, which were issued to the petitioner, three cheques in the total amount of Rs. 30,000/- have been encashed. In the statutory notice, there is a total claim in the amount of Rs. 27,44,215/- which is inclusive of the principal amount, interest, further interest and liquidated damages. I am of the view that the figure of liquidated damages in the amount of Rs. 91,669/- should be excluded from consideration at this stage. The respondent is entitled to credit for the amount of Rs. 30,000/- which has been paid. Having regard to the facts and circumstances of the case, I am of the view that a conditional order of deposit should be passed in the present case. The petitioner has already filed proceedings

before the Debt Recovery Tribunal, for the recovery of its dues, and it would be appropriate to direct that the amount upon deposit will lie to the credit of the recovery proceeding which has been instituted before the D.R.T., being Original Application No. 21/2002, which is pending before the D.R.T., Nagpur. The pendency of the proceeding before the D.R.T., cannot oust the jurisdiction of the company Court to pass an appropriate order to serve the ends of justice. There is no bona fide defence to the petition for winding up. The dues of the petitioning bank have to be duly secured. In the circumstances, the following order is passed :--

1. The respondent is directed to deposit a total amount of Rs. 26,22,000/-in six equal monthly instalments; Upon deposit, the amount as aforesaid, shall lie to the credit of Original Application No. 21/2002, which is pending before the Debt Recovery Tribunal, Nagpur.

2. In the event of there being any single default in the payment of the outstanding, as aforesaid, the winding up petition shall be admitted forthwith, without further reference to the Court. In the event of the winding up petition, standing admitted, it will be advertised in one Marathi newspaper and one English daily having wide circulation and in the official gazette.