Ayurved Vikas Sanstahn vs Grow On Exports India
2005 Latest Caselaw 836 Del

JUDGMENT

A.K. Sikri, J.

1. The averments made in the petition would reflect that some amounts were due and payable by the respondent to the petitioner against the supplies made. However, since this payment was not made, the petitioner filed a suit for recovery of the amount, being S. No. 306/01, before the District Court, Delhi. This suit was decreed by learned Additional District Judge, Delhi by judgment and decree dated 28th February, 2003 passing a decree of Rs. 2,11,318/- in favor of the petitioner and against the respondent company Along with interest @ 9% p.a. from 2.9.1997 till realisation as well as costs. The respondent preferred an appeal against the said judgment to this Court which was registered as RFA 551/03. In the said appeal, this Court passed interim order dated 9.9.2003 directing the respondent to deposit decretal amount with interest with the Registrar General of this Court within four weeks. Petitioner filed Special Leave Petition 1845/04 before the Supreme Court against the aforesaid order which was also dismissed on 6.2.2004. As compliance of interim order was not made even thereafter by the respondent, the RFA was dismissed on 5.3.2004.

2. Thereafter, the petitioner served statutory notice under Section 434 of the Companies Act calling upon the respondent to make the payment of the decretal amount with costs and interest to the petitioner. Even after this notice, as this amount was not paid, present petition has been filed.

3. In the reply filed by the respondent company, aforesaid facts are not disputed. However, it is submitted that as the respondent did not deposit the amount as directed by this Court in RFA, RFA was ultimately dismissed on 5.3.2004 and against that order, Special Leave Petition has been filed which may come up for preliminary hearing in July, 2005. On the basis of this averment, it is stated that present petition filed by the petitioner is pre- mature. It is also argued that without seeking execution of decree, petitioner has filed this petition and such a petition is not maintainable in view of the provision of clause (b) of Section 434 of the Companies Act which reads as under:-

"Company when deemed unable to pay its debts.-(1) A company shall be deemed to be unable to pay its debts:-

a) x x x

b) if execution or other process issued on a decree or order of [any Court or Tribunal] in favor of a creditor of the company is returned unsatisfied in whole or in part;

x x x"

4. It is further submitted at this juncture it can not be presumed that the respondent is unable to pay the alleged debt in as much as the respondent is pursuing the remedy of appeal which is a bona fide move and alleged debt is disputed.

5. Admittedly, a decree has been passed against the respondent and in favor of the petitioner. Appeal there against has also been dismissed by this Court. No doubt, SLP under Article 136 of the Constitution of India is preferred. However, it is not a statutory remedy available to the respondent as a matter of right but an extraordinary remedy provided under the Constitution.

6. Eek execution of such a decree before filing the winding up petition and even without moving execution petition, alternative course for serving notice under Section 434 of the Companies Act and thus , filing winding up petition is open to the petitioner. Therefore, contention of the respondent about non-maintainability of this petition is without merit. It may be interesting to note that when in the RFA filed by the respondent against the decree passed by the District Court, this Court imposed the condition of deposit, the respondent filed CM 2036/03 in the said RFA seeking clarification/modification of the order and in para 3 of the application, the respondent made the following averments:-

"that the conditions so imposed by this Hon'ble Court in the facts and circumstances of the case, are not only harsh and stringent but also the appellant is unable to comply those conditions, as his business has incurring continuous heavy losses for the last more than three years, as such the conditions imposed by this Hon'ble Court needs kind reconsideration, hence this application."

7. In the aforesaid para, the respondent has itself accepted that it is undergoing financial crunch as there are continuous heavy losses suffered by the respondent for the last more than three years.

8. If there is a debt due and it is not paid within twenty one days after the service of Section 434 of the Companies Act, that section deeming provision is attracted that the addressee company is unable to pay the debt. Therefore, I am prima facie of the opinion that not only the respondent is indebted to the petitioner but is unable to pay the debt also. This petition is accordingly admitted. Citations be published in Statesman (English) and Jansatta (Hindi), returnable on 6th September, 2005.

9. Question of appointment of the provisional liquidator is deferred till the next date.