Delhi High Court
Dalmia Consumer Care Pvt. Ltd. vs Paharpur 3P on 2 September, 2015
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision : 2nd September, 2015
+ CO.APP. 11/2014 and C.M.No.3358/2014
DALMIA CONSUMER CARE PVT. LTD. ..... Appellant
Through : Ms. Maneesha Dhir, Mr. Hemant
Sharma, Advocates.
versus
PAHARPUR 3P ..... Respondent
Through : Mr. Sanjoy Ghose, Advocate for R1.
Mr. Rajiv Bahl, Standing Counsel for
Official Liquidator.
CORAM:
HON'BLE MS. JUSTICE GITA MITTAL
HON'BLE MR. JUSTICE I.S.MEHTA
GITA MITTAL, J (ORAL)
1. The petitioner assails the order dated 6th February, 2014 in CA No.
2225/2013 in company petition No. 382/2008. The company application No.
2225/2013 was filed by the appellant seeking
amendment/modification/recall of the orders dated 3rd May, 2013 and 10th
September, 2013.
2. It appears that by an order dated 2nd July, 2008, the appellant had been
directed to be wound up in a petition filed by respondent No. 1/creditor. It is
submitted that on 26th August, 2008, audit of the Balance Sheet of the
company was conducted for the period ended 21st March, 2008, wherein the
Auditor had categorically mentioned in Clause 11 of Notes that the Share
application money pending allotment was converted into interest free
unsecured loan as per the request of the companies. On 31st March, 2007,
the authorized Share Capital of the company was Rs.5 Crores and share
application money (pending allotment) was Rs.73,45,95,287/-. It was stated
that the same was converted into unsecured loan and therefore, the same has
been shown under the head of 'Unsecured Loan' in the balance sheet of the
year ended 31st March, 2008.
3. On the basis of the above audited balance sheet, the Board of
Directors of the company passed a resolution on 18th September, 2008
approving a scheme of arrangement with its unsecured creditors because
there were no secured creditors in the company. Pursuant thereto, a petition
under Sections 391/394 of the Companies act, 1956 was filed by the
company being CA (M) No. 162/2008 along with list of unsecured creditors
before the Company Judge. The same was allowed vide order dated 3rd
October, 2008 passed by the Company Judge.
4. Thereafter, the company filed the second motion petition being
Company Petition No. 382/2008, in which notice was issued to the official
liquidator. The official liquidator filed its no objection on 20 th January, 2009
before the learned Company Judge. Some of the creditors on 26th April,
2010 had also filed objections in Company Petition No. 382/2008 to the
scheme of arrangement suggested by the appellant. The Company Judge had
directed the appellant company as well as the official liquidator to file their
replies/objections thereto.
5. Vide an order dated 9th October, 2012, the learned Company Judge
had directed the appellant company to file the consent of all the share
applicants whose share application money had been converted into interest
free unsecured loans. The appellant company filed an affidavit dated 6th
November, 2012 along with the copies of the consent letters of the
companies stating that they had already agreed to the conversion of the share
application money (pending allotment) into interest free unsecured loans.
6. The learned counsel for the official liquidator pointed out that the
affidavit dated 6th November, 2012 (filed in Company Petition No.
382/2008) enclosed the copies of consent letters of the 101 companies,
stating that they have consented to convert the share application money,
amounting to Rs.73,45,95,287/- as is reflected in the company's balance
sheet as on 31st March, 2008 into interest free unsecured loans. Mr. Bahl
submitted that the consent letters cannot be acted upon in the absence of any
resolution passed by the shareholders at an Annual General Meeting or extra
ordinary annual general meeting of such companies.
7. By the order dated 3rd May, 2013, the learned Company Judge
directed the appellant company to file an affidavit enclosing the resolutions
passed by each of the 101 companies who had given their consent for
conversion of the share application money into interest free unsecured loans.
Pursuant thereto, the appellant company attempted to approach to the
respective companies for their resolutions but the same could not be
obtained. The appellant company sought further time stating that it was
impossible to obtain resolutions pertaining to that period ( i.e. year 2008) in
the year 2013 and by a subsequent order passed on 10th September, 2013
again, the direction was repeated.
8. Mr. Sanjoy Ghose, learned Standing Counsel appearing for the
respondent (the petitioning creditor before the company court) submits that
consent letters of the 101 companies filed by the appellant company along
with an affidavit dated 6th November, 2012 agreeing to the conversion of the
share application money (pending allotment) into interest free unsecured
loans appear to be fraudulent and malafide. He submits that the affidavit
neither discloses the genuine and sincere efforts on the part of the appellant
to obtain their consent nor the communications addressed to these alleged
companies and the responses received from there have been annexed with
the affidavit. He further submits that the direction of the learned Company
Judge to the appellant company to file the supporting resolution of the
companies to consider the scheme of arrangement suggested by the
appellant is a legal requirement and justified in the facts and circumstances
of the case as the consenting resolutions of the alleged 101 companies have
to be available. He submits that no indulgence deserves to be shown to the
appellant who is relying on these consent letters.
9. Mr. Ghose submits that the argument with regard to the lapse of time
years (i.e. from the year 2005 to 2008) is inexplicable as it is unimaginable
in ordinary commercial transactions for the parties to advance such a huge
amounts as capital to the company facing liquidation.
10. Mr. Rajiv Bahl, learned counsel appearing for the official liquidator
has also objected to the grant of the prayer of treating the share application
money as unsecured loans on the ground that the amounts are being claimed
as having been deposited as back as in the year 2003 and thereafter, the
prayer of the appellant that they be treated as interest free unsecured loans
cannot be granted.
11. Ms. Manisha Dhir, learned counsel arguing for the appellant has
submitted that the learned Single Judge has completely erred in law in
ignoring the provisions of sub-clause (g) of Clause G of Schedule VI which
has been framed under Section 211 of the Companies Act, 1956 which in
fact, provides general instructions for preparation of the balance sheet of a
company. The clause G (g) of Schedule VI of the Companies Act reads as
under:-
"G. Other current liabilities
The amounts shall be classified as:
(a) ...............................
(b) ...............................
(c) ...............................
(d) ...............................
(e) ...............................
(f) ...............................
(g) Application money received for allotment of
securities and due for refund and interest accrued
thereon. Share application money includes advances
towards allotment of share capital. The terms and
conditions including the number of shares proposed
to be issued, the amount of premium, if any, and the
period before which shares shall be allotted shall be
disclosed. It shall also be disclosed whether the
company has sufficient authorized capital to cover
the share capital amount resulting from allotment of
shares out of such share application money. Further,
the period for which the share application money
has been pending beyond the period for allotment as
mentioned in the document inviting application for
shares along with the reason for such share
application money being pending shall be disclosed.
Share application money not exceeding the issued
capital and to the extent not refundable shall be
shown under the head Equity and share application
to the extend refundable i.e., the amount in excess of
subscription or in case the requirements of minimum
subscription are not met, shall be separately shown
under „Other current liabilities.................."
12. It cannot be disputed that the order dated 10 th September, 2013 notes
that time was sought on behalf of the appellant to file resolution of the
shareholder companies whose consents had been filed. However, at the same
time, it cannot be denied that the Companies Act, 1956 itself prescribes the
manner in which the unrefunded share application money or unutilized share
application money has to be reflected in the balance sheet. The same is
required to be reflected as an unsecured loan therein.
13. We are confining our consideration to the issue pressed by the
appellant, that so far as the money received as share application money of
the company is concerned, it has to be reflected as unsecured loans in the
balance sheet in terms of the Schedule VI of Section 211 of the Companies
Act, 1956.
14. We however, find substance in the contention of Mr. Rajiv Bahl,
learned counsel for the official liquidator that the appellant would have to
satisfy the Company Judge that these amounts were actually share
application money and stood so received by the company. We are told by
Mr. Sanjoy Ghose that the respondents had filed objections to the claims
which are pending consideration.
15. It is made clear that nothing contained herein shall be treated as an
expression of opinion on the merits of the contentions either by the claimant
or the objections pressed by the official liquidator as well as by the
respondent company.
16. We make it clear that our acceptance of the submission made on
behalf of the appellant that the Clause G (g) of the Schedule VI of Section
211 of the Companies Act, 1956 enables the company to reflect the share
application money as unsecured loans, does not tantamount to an acceptance
of the company's claims that such amounts were received as share
application money from genuine applicants. We make it clear that it shall be
open to the learned Company Judge to examine the contentions on behalf of
the respondents as well as the official liquidator that the appellant company
has to first establish that these amounts were actually received from genuine
applicants towards share allotment apart from their challenge to these
amounts being treated as interest free unsecured loans without prior
authorization of the appellant company. The learned Company Judge in the
impugned order has correctly relied upon the legal principle that a resolution
of the Board of Directors of the company (or the share holders for a certain
situation) is essential in order to validate and bind the company.
17. In view of above, we accordingly direct as follows:-
(i) It is open to the appellant company to urge before
the learned Company Judge that it can reflect the
unutilized share application amounts received by it as
unsecured loans in the balance sheet. However, this
exercise shall not preclude the Company Judge from
undertaking the examination insisted upon by the
official liquidator as well as respondent herein to the
effect that the same is not permissible in law unless the
consenting resolutions of the 101 companies which are
stated to have made the deposits are filed on record.
(ii) The Company Judge shall also consider the
objection of the official liquidator that the unsecured
loans cannot be in any case be so treated without the
imposition of interest liability thereon by a resolution
passed in accordance with law unless the companies
which have made such deposits agree to accept its share
application deposit as an interest free loan without
resolution.
18. This appeal is disposed of in the above directions.
19. List before the Company Judge on 6th November, 2015.
GITA MITTAL
(JUDGE)
I.S.MEHTA
(JUDGE)
SEPTEMBER 02, 2015
j
