Bombay High Court
Sumeet Machines Ltd vs Varkey Overseas Trading Co. Pvt. Ltd on 23 June, 2025
Author: M. S. Sonak
Bench: M.S. Sonak
2025:BHC-OS:9207-DB
JUDGMENT-APPEAL-667-2005+(1).DOCX
Chaitanya
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally
signed by
CHAITANYA
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAITANYA ASHOK
ASHOK JADHAV
JADHAV Date:
2025.06.23
16:06:00
+0530
APPEAL NO. 667 OF 2005
IN
COMPANY PETITION NO.299 OF 1994
Sumeet Machines Ltd., a company
incorporated under the provisions of
the Companies Act, 1956 and having
its registered office at 601-C, Poonam Appellants/
...
Chambers, Worli, Mumbai 400018 Ori. Respondents.
Versus
Varkey Overseas Trading Co. Pvt. Ltd.
a company incorporated under the
provisions of the Companies Act,
1956 and having its registered office
at 606, VI Floor, Municipal Centre,
47, Dickenson Road, Bangalore-560 Respondents/
...
042. Org. Petitioners
ALONG WITH
CHAMBER SUMMONS NO.1490 OF 2010
IN
APPEAL NO.667 OF 2005
IN
COMPANY PETITION NO.299 OF 1994
M/s. Sumeet Machines Ltd. Appellant/
... Ori. Respondents.
Versus
M/s. Varkey Overseas Trading Respondent/
Company Pvt. Ltd. ... Org.Petitioners
And
Page 1 of 11
::: Uploaded on - 23/06/2025 ::: Downloaded on - 23/06/2025 22:18:40 :::
JUDGMENT-APPEAL-667-2005+(1).DOCX
Sumeet Machines Employees Union ... Applicant
ALONG WITH
NOTICE OF MOTION NO.3352 OF 2010
IN
APPEAL NO.667 OF 2005
IN
COMPANY PETITION NO.299 OF 1994
Sumeet Machines Ltd. Appellants/
... Ori. Respondents.
Versus
Varkey Overseas Trading Co. Pvt. Ltd. Respondents/
... Org.Petitioners
_____________________________________________________
Mr P. D. Prasad Rao a/w Ms Devika M. Purav, for Appellants.
Mr Harsh Moorjani for the Official Liquidator
Mr Anil Bhagure, Dy. Official Liquidator, present in Court.
______________________________________________________
CORAM: M.S. Sonak &
Jitendra Jain, JJ.
RESERVED ON: 13 June 2025
PRONOUNCED ON: 23 June 2025
JUDGMENT :
(Per M. S. Sonak, J.)
1. Heard learned counsel for the parties.
2. This Appeal is directed against the Judgment and Order
dated 17 June 2005, made by the learned Company Judge, A.
M. Khanvilkar, J. (as His Lordship then was), disposing of the
JUDGMENT-APPEAL-667-2005+(1).DOCX
Company Petition No. 299 of 1994 and ordering the winding
up of the Appellant-Company, under Section 433(e) of the
Indian Companies Act, 1956 ("said Act").
3. Mr Rao's main contention was that the security deposit
of Rs.50 lakhs accepted by the Appellant-Company from the
Respondent [creditor] was refundable but subject to certain
terms and conditions. He submitted that such terms and
conditions were never fulfilled by the Respondent-Petitioner
and therefore, there was no obligation to refund this amount.
He submitted that the debt in this regard was never
crystallized and based upon an uncrystallized debt, there was
no liability to pay. Therefore, he submitted that this was not
clearly a case of the Appellant-Company being unable to pay
its debts. He submitted that, in any event, a bonafide dispute
had been raised by the Appellant-Company and in such
circumstances, the order of winding up warrants interference.
4. Mr Rao submitted that the learned Judge has
misinterpreted the writings of dated 04 January 1992 and 03
May 1992. He submitted that none of these writings either
unconditionally acknowledged the debt or made any
unqualified promise for payment. He submitted that even
these writings record mutual obligations to be complied by
the parties. He submitted that the Respondent-Creditor had
failed to comply with the obligations cast upon it and
therefore, there was no liability to refund the security deposit
or pay any amounts to the so-called Creditor. He submitted
JUDGMENT-APPEAL-667-2005+(1).DOCX
that this crucial aspect was not considered by the learned
Company Judge and therefore, the impugned Judgment and
Order warrants interference.
5. Finally, Mr Rao, referred to series of financial
misfortunes faced by the Appellant-Company. At one stage, he
even offered to pay the claimed amounts to the Creditor or
rather, to the Creditor and S. Koder Ltd., (who is not a party
to this proceedings). However, upon taking instructions from
the Appellant's representative present in the Court, Mr Rao
stated that the Appellant-Company is presently not able to
make any payments. Mr Rao, once again, highlighted the
difficulties faced by the Appellant-Company on account of the
winding up order and submitted that should this winding up
order be set aside, the Appellant-Company, which was a
flourishing company, has chances of revival.
6. For the above reasons, Mr Rao submitted that the
impugned Judgment and Order winding up the Appellant-
Company be set aside.
7. The Official Liquidator present in the Court, made no
submissions on the merits of the matter. However, he pointed
out that since there was no interim relief in this Appeal,
Official Liquidator has already taken over the assets of
Appellant-Company and the winding up process is going on.
8. We have heard Mr Rao on merits, perused the record
and evaluated the impugned judgment and order. We now
JUDGMENT-APPEAL-667-2005+(1).DOCX
proceed to dispose of this Appeal against Judgment and Order
dated 17 June 2005 allowing Company Petition No. 299 of
1994.
9. The Appellant-Company was incorporated in the
business of manufacturing of electrical appliances, like
domestic mixing machines, kitchen machines, washing
machines etc. An agreement was arrived at between the
Appellant-Company and Ms Varkey Overseas Trading Co. Pvt.
Ltd. (Creditor) for clearing and forwarding the goods of the
Appellant-Company. This agreement came into effect on
deposit of Rs. 50 lakhs by the Creditor as an unsecured
interest free deposit.
10. Record shows that there were difficulties on the part of
the Company in effecting regular supplies. Therefore, a
decision was arrived at to resolve the difficulties and the
issues that had arisen therefrom. For this a meeting was held
on 04 January 1992 at Bangalore. The minutes of such
meeting containing the agreement reached were signed by
both the parties. In the minutes, the Appellant-Company
acknowledged the liability to return the security deposit of Rs.
50 lakhs together with interest. Despite the agreement, since
the security deposit amount was never returned to the
Creditor, the parties once again met and recorded further
modalities for refund of this amount in the minutes dated 03
May 1992.
JUDGMENT-APPEAL-667-2005+(1).DOCX
11. The minutes concerned not only the Creditor Varkey
Overseas Trading Co. Pvt. Ltd. but also the Petitioner in
Company Petition No. 300 of 1994 instituted by one M/s. S.
Koder Ltd. The Appellant-Company failed to pay any of the
amount undertaken by it to the Creditor and M/s. S. Koder
Ltd. Therefore, statutory notices were served upon the
Appellant-Company. The Creditor demanded an amount of
Rs.73 lakhs, being Rs.50 lakhs of the refundable security
deposit and Rs.23 lakhs of interest as agreed upon in the two
writings and the agreement recorded therein. M/s. S. Koder
demanded Rs. 47.70 lakhs. In response, the Appellant-
Company wrote to the Creditor and S. Koder Ltd. that a sum
of Rs.12,56,861.57/- was due and payable. No details of
such assertion were furnished. There was no clarity about the
claims made by the Creditor and M/s. S. Koder Ltd.
12. Accordingly, Company Petition Nos.299 of 1994 and 300
of 1994 were instituted seeking the winding up of the
Appellant-Company. In the Affidavit-in-Reply, the stand of the
Appellant-Company was that in terms of the understanding
arrived at in the meetings held on 04 January 1992 and 03
May 1992, the Appellant-Company was willing to supply
goods which could be traded by the creditors. However, since
the creditors were not prepared, there was no obligation to
pay. There were vague allegations that the minutes were not
in conformity with the deliberations that had taken place at
the meetings.
JUDGMENT-APPEAL-667-2005+(1).DOCX
13. The learned Company Judge has considered the
Appellant-Company's defense and found the same to be
neither tenable nor bonafide. We have independently
evaluated the defense as raised in the Affidavit-in-Reply and
in the contentions of Mr. Rao in support of this Appeal. Even
we are satisfied that the defense is neither tenable nor
bonafide. The entire attempt is to avoid payments by raising
vague and contradictory defense which is not even prima facie
made good. Even the admitted dues were never paid. All this
is considered in detail by the learned Company judge. The
grounds now pressed in this appeal are untenable and have
not been substantiated.
14. At the outset, there is no dispute whatsoever about the
refundable security deposit of Rs.50 lakhs. At some stage,
therefore, this deposit had to be returned by the Appellant-
Company particularly after its manufacturing business
declined and there were difficulties in making supplies. There
are findings which were not even attacked in this appeal
about the contract being terminated. The security deposit had
therefore, to be returned.
15. The minutes of the two meetings acknowledged not only
the receipt of the security deposit but also the liability to pay.
Initially, the security deposit was not liable to bear any
interest. However, considering the delay and the
accommodation offered, the Appellant-Company agreed to
refund this security deposit with interest at the rate of 24%
JUDGMENT-APPEAL-667-2005+(1).DOCX
per annum. Even if, for the present, the interest component is
excluded from consideration, still, the security deposit of
Rs.50 lakhs had become due and payable on the date of
service of the statutory notice. In the writings, the Appellant-
Company specifically undertook to pay this amount together
with interest, but defaulted.
16. The agreement, as recorded by the learned Company
Judge, had already been terminated. The writings mainly
referred to the modalities for refund of the security deposit
amount with interest. Even the offer to supply goods was not
quite bonafide. There is no material on record to indicate that
the Appellant-Company was indeed able to supply the goods.
The learned Company Judge has observed that it was only
"bare words in the Reply Affidavit filed by the Respondent
that attempt was made to supply goods to the Petitioner,....".
17. The argument about the minutes of 04 January 1992 or
03 May 1992 not reflecting the deliberations accurately is
again not quite a bonafide attempt to renege from the
promises made and the liabilities undertaken. Such a defense
was belatedly raised and that too, without any substantiation.
Contradictory defenses were raised about the two writings. A
defense about conformation of minutes was also belatedly
raised. A defense was raised that the January meetings were
superseded by the May meetings.
18. All the confusing, contradictory defenses, which were
far from bonafide have been considered in detail by the
JUDGMENT-APPEAL-667-2005+(1).DOCX
learned Company Judge. The learned Company Judge
concluded that these defenses lacked merit and based upon
the same, the Winding Up Petition could not be resisted. Upon
an independent evaluation, we too are satisfied that the
defenses were neither plausible nor bonafide. There is no
reason to interfere with or take any different view in the
matter.
19. The learned Company Judge has also referred to the
attempt of the Appellant-Company to produce minutes of 16
and 17 July 1992. The learned Company Judge has found that
these were never signed by the creditors and in other words,
the Appellant-Company had taken a false plea by producing
fabricated documents before the Court. Raising false defenses
by fabricating minutes, detracts from the bonafide of the
defense. Even apart from such fabrication, the defense was far
from substantiated prima facie and it lacked any bonafide.
20. The learned Company Judge has also taken cognizance
of the fact that the financial institutions had filed proceedings
against the Appellant-Company for recovery of crores of
rupees. The Receiver had also been appointed, and no
activities of production were carried out by the Appellant-
Company for the last over five years. The learned Company
Judge also took cognizance of the circumstance that the
Appellant-Company was offering to pay the amounts during
the pendency of the winding up proceedings, but no payment
was being made. These are all relevant considerations. There
JUDGMENT-APPEAL-667-2005+(1).DOCX
was nothing shown to us to contradict these findings except
for trying to list the financial misfortunes suffered by the
Appellant company.
21. Even before this Court, an offer was made to pay the
amount. However, upon further probing by the Court, Mr Rao,
on instructions, admitted that the Appellant-Company cannot
make any payments. Thus, the attempt was to buy time and
keep the pot boiling.
22. Therefore, no case is made out to interfere with the
impugned judgment and order winding up the Appellant-
Company. There is no error either in the findings recorded or
in the approach of the learned Company Judge. Even upon
independent evaluation of the contentions raised before the
Company Judge or raised in this Appeal, we are unable to
accept the Appellant's version of either there being no liability
to pay or that the dispute about payment was bonafide. The
liability to pay is very clear and backed by the documentary
evidence, admissions and acknowledgments. The defenses
raised were far from bonafide. As observed by the learned
Company Judge, the Appellant-Company went to the extent of
fabricating documents to create some semblance of a defense.
Other relevant factors were also considered by the learned
Company Judge and there is nothing on record to suggest any
variation of those factors.
23. For all the above reasons, we find no merit in this
Appeal and consequently dismiss this Appeal. No costs.
JUDGMENT-APPEAL-667-2005+(1).DOCX
24. The chamber summons and the notice of motion do not
survive and are disposed of. In fact no arguments were
advanced in support of these miscellaneous matters.
(Jitendra Jain, J) (M.S. Sonak, J)
