Radexpo Ag vs Jayna Time Indus. Ltd.
2017 Latest Caselaw 6948 Del

$~C-36
*    IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                           Date of decision: 04.12.2017


+     CO.PET. 182/1999
      RADEXPO AG                                         ..... Petitioner
                         Through   Mr.Abhishek Kumar Rao and
                         Ms.Bhavya Bharti, Advs.

                         versus

      JAYNA TIME INDUS. LTD.                     ..... Respondent
                    Through     Mr.Jawahar Raja and Mr.Chinmay
                    Kanojia, Advs. R-1, 3, 6

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (ORAL)

1. This petition is filed under section 433(1)(e) of the Companies Act, 1956 (hereinafter referred to as The Act) seeking winding up of the respondent company.

2. The brief facts as per the petition are that the respondent has from time to time placed upon the petitioner orders for purchase of raw material, watch components tools and other spares. The said material was being imported by the respondent from the petitioner. The petitioner claims that a sum of SFR 345,149.30 is undisputably due and payable to the petitioner from the respondent.

3. Notice under section 433(e) & (f) and 434 of Act was sent on

Co.Pet.182/1999 Page 1 31.12.1998 pointing out that the respondent company owes to the petitioner SFR 387,241.30. The respondent replied to the aforesaid legal notice disputing the liability on 27.1.1999.

4. I have heard learned counsel for the parties. Learned counsel for the petitioner has relied upon the order of this court dated 18.9.2000 to point out the conduct of the respondent/Directors. The said order records that Mr.Vinod Kumar Jain, Director of the respondent company had acted in a dishonest manner to frustrate the proceedings before this Court. An undertaking to pay Rs.15 lacs was given to this court on 1.8.2000 to establish his bona fide. However, to overreach the undertaking, a reference was also made under section 15 of Sick Industrial Companies Act (SICA) on 04.09.2000 which was few days prior to the last date of depositing the said amount. Hence, a prima facie finding was recorded that Mr.Vinod Kumar Jain has committed Contempt of Court. However, one opportunity was granted to the contemnor to deposit an amount of Rs.15 lacs either personally or from the accounts of the company within a week to purge his contempt. It has been further pointed out that pursuant to the said order dated 18.9.2000 the necessary Rs.15 lacs was deposited.

5. My attention has also been drawn to the affidavit on behalf of respondent in reply dated 25.5.2000 filed by the respondent whereby the respondent has stated that the amount payable as stated in Swiss Francs by the petitioner is not disputed whereas the amount payable in Indian currency on conversion is disputed.

6. Learned counsel for the respondent, however, states that the company has stopped functioning only in April, 2017. He stresses that a total of only Rs.60 lacs is payable to the petitioner out of which Rs.15 lacs already stand

Co.Pet.182/1999 Page 2 deposited. He submits that the balance Rs.45 lacs can be arranged in case permission is granted to the respondent to sell off some of their assets to enable them to repay the dues of the petitioner. He further states that all the secured and unsecured creditors have been paid off.

7. I may point out that there is a dispute pending between the various groups of the respondent company. Today before me a connected matter is also listed being Co.A.(SB) 13/2010 relating to a dispute between different groups of the respondent company. Proceedings under section 397 and 398 of the Act are pending. It has been pointed out that Group of Mr.Vinod Kumar Jain has only 12.5% shareholding in the company whereas the other groups, namely, Nirmal Jain group has 33% share, Raj Jain and Mrs. Anit Jain, jointly hold 14.5% making total approx. 48.5%. Sandeep Jain group has 20% and Pradeep Kumar Jain has 20% share.

8. Learned senior counsel appearing for Nirmal Jain Group in Co.A.(SB) 13/2010 and learned counsel appearing for Raj Jain Group strongly submitted that the Vinod Jain Group does not and cannot represent the respondent company as they have a minority holding having only 12.5% shares. Learned senior counsel appearing for Nirmal Jain Group and learned counsel appearing for Raj Jain Group have stated that it is in the interest of the company that it be wound up and the assets be sold and the proceeds be distributed after paying off the creditors.

9. I may note that none has appeared for the Sandeep Jain Group and Pradeep Jain Group who both have 20% shareholding each.

10. I may first have a look at the order of this court dated 18.9.2000. This court by the said order noted that on 22.5.2000 the respondent was directed to file a Statement of Accounts either indicating the amounts due and

Co.Pet.182/1999 Page 3 payable to the petitioner company or reconcile a statement indicating that no amounts are payable. Mr.Vinod Kumar Jain had filed an affidavit on 25.5.2000 wherein in paragraph 10 he admitted the liability of the outstanding amount which is stated in Swiss Francs. The Court further noted that on 25.5.2000 this court had directed that in order to establish the bona fide the respondent should deposit a sum of Rs.15 lacs with Vaish Associates, the attorney of the petitioner. On the next date of hearing Mr.Vinod Kumar Jain appeared and undertook to the court that necessary sum of Rs.15 lacs would be deposited on or before 16th September 2000. He also submitted that irrespective of any future development or other proceedings in future the said sum of RS.15 lacs would be deposited with Vaish Associates. On the assurance of Mr.Vinod Kumar Jain this court had deferred winding up of the respondent company and granted time to the respondent to deposit the sum of Rs.15 lacs.

11. On the next date, namely, on 18.9.2000 it transpired that a reference before BIFR under section 15 of SICA and section 22 of SICA was already filed and that further proceedings in this petition stood stayed. This court came to the conclusion that Mr.Vinod Kumar Jain acted in a dishonest manner to frustrate the proceedings before this court. Despite an undertaking given to this court on 1.8.2000 reference under section 15 of SICA was made few days prior to the last date of depositing the amount. Hence, a prima facie view was taken that Mr.Vinod Kumar Jain had committed contempt of court. However, the court held that it was inclined to give one opportunity to Mr.Vinod Kumar Jain to deposit of Rs.15 lacs either personally in court or in the account of the company. As noted above, the said 15 lacs is said to have been deposited. It is manifest from the said order

Co.Pet.182/1999 Page 4 that Mr.Vinod Kumar Jain has been acting in a manner detrimental to the respondent company.

12. As far as the present petition is concerned, I may note that in para 10 of the affidavit dated 25.5.2000 that was filed pursuant to order of the court dated 22.5.2000 the respondent has stated as follows:-

"10.That the Respondent even requested the Petitioner to settle the disputes whenever he visits India next time as the conversion rate has to be fixed/settled first so that the payment could be made accordingly. However at present the amount which has been raised as outstanding against the Respondent in the present petition is correct only to the extent that they have been mentioned in Swiss Franc but as far as the amount payable in Indian Currency it is of disputed nature because at the time of import what the invoice prices mentioned and the subsequent devaluation of Indian Currency when the goods reached in India is not settled between the parties till date hence the outstanding amount as mentioned by the Petitioner in the present winding up petition in Indian currency is not admitted due to the above said dispute."

13. It is clear that the only dispute is as to whether the amount which the petitioner company claims is to be paid in Indian Rupees or in Swiss Francs.

14. According to learned counsel for the petitioner, the petitioner is a Swiss company and payments have to be made in Swiss Francs. The conversion rate would be applicable on the date the respondent tenders payment. On the other hand the case of Mr. Vinod Jain on behalf of the respondent company is that the payments would have to be based on the conversion rates on the date of the invoice. However, there is no attempt made to show what is the material difference between the conversion rates in Swiss Francs as compared to the date of the invoice and today‟s date.

Co.Pet.182/1999 Page 5

15. Be that as it may, it is manifest that even if I take the date of conversion as on the date of the invoice, the respondent company is unable to make the payments to the petitioner. Despite service of notice and opportunity given earlier including the order dated 18.9.2000 it has not been able to clear its dues.

16. In fact, I may mention that learned counsel appearing for Raj Kumar Jain has pointed out to the order of 11.10.2011 of BIFR where BIFR has noted that despite having surplus land the management is neither willing to pay any money nor is able to generate funds for the revival of the company. It also noted that the present management of the company is not serious in taking steps for revival of the company and the adamant attitude is creating hindrances in the path of revival. However, I may only add that as submitted by learned counsel appearing for the Vinod Jain Group this order was stayed before AAIFR where an appeal is stated to be pending at the relevant time.

17. Reliance may be had to the judgment of the Supreme Court in Madhusudan Gordhandas & Co. vs. Madhu Wollen Industries Pvt. Ltd., AIR 1971 SC 2600/ (MANU/ SC/0033 /1971), where the court held as follows:

"21.Two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed.

Co.Pet.182/1999 Page 6

22. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debt precisely. The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends."

18. The debt in the present case is undisputed. Only dispute is of quantification. Keeping in view the undisputed facts that there are confirmed dues payable to the petitioner company I admit the present petition. The Official Liquidator attached to this court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers „Statesman‟ (English) and „Veer Arjun‟ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing. The cost of publication is to be borne by the petitioner who shall deposit a sum Rs75,000/- with the Official Liquidator within 2 weeks, subject to any further amounts that may be called for by the liquidator for this purpose, if required. The Official Liquidator shall also endeavour to prepare a complete inventory of all the assets of the respondent-company when the same are taken over; and the premises in which they are kept shall be sealed by him. At the same time, he may also seek the assistance of a valuer to value all assets to facilitate the process of winding up. It will also be open to the Official Liquidator to seek police help in the discharge of his

Co.Pet.182/1999 Page 7 duties, if he considers it appropriate to do so. The Official Liquidator to take all further steps that may be necessary in this regard to protect the premises and assets of the respondent-company.

19. Vinod Jain Group will also place on record the balance sheets of the respondent company and all the Directors will take steps to file Statement of Affairs within the statutory period of 21 days. Balancesheet be filed within 21 days before the OL. Vinod Jain Group will file the balance sheet. Directors will file the Statement of Affairs.

JAYANT NATH, J.

DECEMBER 04, 2017
n



Order corrected and signed on
16.01.2018




Co.Pet.182/1999                                                          Page 8