Madras High Court
M/S.Annam Steels Pvt Ltd vs Industrial Development Bank Of India ... on 2 January, 2025
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
WP No.1665 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 02.01.2025
CORAM
THE HON'BLE MR.K.R.SHRIRAM, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
WP No.1665 of 2019
M/s.Annam Steels Pvt Ltd
Rep by its Director C.Vijay Kumar
3/3 Second lane
T.H.Road, Washermenpet
Chennai-21 : Petitioner
Versus
1.Industrial Development Bank of India Limited
Rep by its chairman and Managing director
IDBI TOWER, Caffee parade
Mumbai- 400 005
2.Industrial Development Bank of India limited
Rep by General manger
No 1 15 Anna salai
Saidapet Chennai-15
3.M/s.Origin Agrostar Limited
(formerly known ss DSQ BIOTECH LTD)
No.15 Third cross street
West CIT NAGAR
Nandanam, Chennai-35
Page 1 of 8
https://www.mhc.tn.gov.in/judis
WP No.1665 of 2019
4.State Industries Promotion Corporation of
Tamil Nadu Ltd
No.19-A Marshalls Road
Egmore chennai-8
5.The Official Liquidator
O/o. the Official Liquidator,
High Court, Madras, Corporate Bhawan,
29, Rajaji Salai, Chennai-1 : Respondents
(R5 is impleaded vide order in
WMP No.11 106 of 2019 dt. 28.08.2019)
Prayer: Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Mandamus directing the first respondent to return to
the petitioner the auction amount of Rs 5.02 crores received pursuant to
the sale certificate in certificate of Immovable property (No 18/2011(
issued by the Chennai Debts Recovery Tribunal -2 Chennai-2)
For Petitioner(s):
Mr.R.N.Amarnath
For Respondent(s):
Mr.E.Balamurali, for
M/s.Shivakumar and Suresh for R1 and R2
Mr.Abhishek Murthy for R4
Mr.S.Gopalakrishnan for R5
R3-Not ready in notice
Page 2 of 8
https://www.mhc.tn.gov.in/judis
WP No.1665 of 2019
ORDER
(Order of the Court was made by the Hon'ble Chief Justice)
Considering the nature of disputes raised in the affidavit dated
09.10.2018, we find that serious disputed questions of fact arise. Therefore,
we dispose of the petition with liberty to petitioner to take such steps as
advised, in accordance with law, including filing of suit.
2. Time spent from the date the petition was received by Court i.e.
09.10.2018 until today shall be excluded while computing limitation.
3. We find support for this view in paragraphs 12, 13, 16, 17 and 18
of the judgment of a Coordinate Bench of the Bombay High Court in
Maharashtra State Farming Corporation Ltd. v. Belapur Sugar and
Allied Industries Ltd.1 , which read as under:
“12. Is the defence of the company claiming rent of their properties in
possession of the Corporation from the year 1964 legally sustainable?
It is not in dispute that the claim of rent is unconnected with the
claim of the Corporation against the Company for non-payment of the
sugarcane supplied during the seasons 1985-1986 and 1986-1987.
The legal position is well settled that a plea in the nature of equitable
set off is not available when the cross demands do not arise out of the
same transaction. The law recognises the right of equitable set off
1 (2004) 3 Bom 480
https://www.mhc.tn.gov.in/judis
provided the claim arises out of the same transaction which is the
foundation of plaintiff's claim and so long as it has not become time
barred; the underlying principle being that it would be inequitable to
drive the defendant to separate suit for the purpose. In the present
case, the condition precedent from claiming equitable set off is not
made out and cannot be said to be available as the cross demands do
not arise out of the same transaction. The learned counsel for the
company sought to urge that insofar as the proceedings for winding
up of the company is concerned, if a plea of equitable set off is raised
by the company, that would furnish the reasonable excuse for non-
payment and the company cannot be said to have neglected to pay
the debt due to the petitioner despite service of the statutory notice.
He placed reliance on C.A. Galiakotwala and Co. Pvt. Ltd., 1984 Vol.
55 Company Cases 746. The learned counsel for the Company would
also urge that section 3 of the Limitation Act only bars the remedy but
does not destroy the right and therefore, it is lawful for the company
to adjust even time barred claim of rent against the Corporation and
thus, there was valid defence in opposition to the petition for winding
up of the company. In this regard, the learned counsel placed reliance
on the judgment of the Supreme Court in Punjab National Bank v.
Surendara Prasad Sinha, AIR 1992 SC 1815.
13. When the claim of equitable set off does not arise out of the same
transaction on which the Corporation's claim is founded, the
prerequisite condition of equitable set off is not made out and such
plea cannot be considered to be the plea of valid set off; much less in
the facts and circumstances of the present case the plea of equitable
set off can be said to be a bona fide defence to constitute reasonable
excuse for non-payment by the company in opposition to the petition
for winding up. In this view of the matter the observation made by
the learned Company Judge that the company has a plausible defence
insofar as their counter-claim of rental charges for three years prior to
the filing of the company petition was not justified. However, the fact
of the matter is that the learned Company Judge has held in an
unequivocal terms that the company has no valid defence against the
Corporation in respect of the claim of Rs. 59,73,348.75 and Rs.
22,35,251.28. As regards the Corporation's claim in the sum of Rs.
1 1,32,974.97 in respect of the sugarcane supplied for the season
1985-1986, the learned Company Judge cannot be said to have erred
in observing that there was genuine dispute. The learned Company
Judge in his order observed thus—
“It is the specific case of the Company that they had paid the
https://www.mhc.tn.gov.in/judis
said amount to the petitioners under two separate cheques. It is
not disputed by the petitioners that they had received the
payment towards their bills dated December 16, 1986 and
December 30, 1986. However, the petitioners say that the said
amount was appropriated by them towards their earlier bills
and this was done with the consent of Mr. Maheshwari,
Director of the Respondent Company. On perusal of the
correspondence between the parties, it is clearly seen that by
their letter dated January 20, 1987, the Respondent Company
categorically disputed the case of adjustment sought to be made
out by the petitioners. It was specifically averred in the said
letter that Mr. Maheshwari has never agreed to such
adjustment. In my opinion, the dispute raised by the petitioners
in that behalf cannot be said to be frivolous or without any
substance.”
......
16. In Rameshwarlal, the Supreme Court held thus—
“2. It is not necessary for us to go into the question of the
legality of the order of the High Court in refusing to grant the
relief. It is axiomatic that the exercise of the power under
Article 226 being discretionary, the learned Single Judge as
well as the Division Bench have not exercised the same to direct
the respondent to pay the alleged arrears of salary alleged to be
due and payable to the petitioner. Under these circumstances,
the only remedy open to the petitioner is to avail of the action
in the suit. Since the limitation has run out to file a civil suit by
now, which was not so on the date of the filing of the writ
petition, the Civil Court is required to exclude, under section 14
of the Limitation Act, 1963, the entire time taken by the High
Court in disposing of the matter from the date of the institution
of the writ petition.
3. Normally for application of section 14, the Court dealing
with the matter in the first instance, which is the subject of the
issue in the later case, must be found to have lack of jurisdiction
or other cause of like nature to entertain the matter. However,
since the High Court expressly declined to grant relief
relegating the petitioner to a suit in the Civil Court, the
petitioner cannot be left remediless. Accordingly, the time taken
in prosecuting the proceedings before the High Court and this
Court, obviously pursued diligently and bona fide, needs to be
excluded. The petitioner is permitted to issue notice to the
Municipality within four weeks from today. After expiry
thereof, he could file suit within two months thereafter. The
https://www.mhc.tn.gov.in/judis
trial Court would consider and dispose of the matter in
accordance with law on merits.”
17. We are of the view that the Corporation having pursued winding
up petitions and appeals before this Court diligently and bona fide,
the time taken in the said proceedings needs to be excluded.
18. Resultantly we dispose of the four appeals by the following order:
The Maharashtra State Farming Corporation Ltd. is granted two
months time to file the suit for recovery of the due amount against
the Company viz. Belapur Sugar and Allied Industries Ltd. The time
taken by the Maharashtra State Farming Corporation Ltd. in
prosecuting the winding up petition and the appeals before this Court
shall be excluded under section 14 of the Limitation Act, 1963. The
company, if advised and legally available, may also pursue
appropriate remedy for its claim against the Corporation. Obviously
claim of the parties shall be considered in accordance with law. For a
period of two months, the Government guarantee furnished by the
Maharashtra State Farming Corporation Ltd. shall remain operative
and thereafter, the said Government guarantee shall stand discharged
unless ordered otherwise.”
4. Therefore, the time taken by petitioner in prosecuting this writ
petition shall be excluded under Section 14 of the Limitation Act, 1963.
5. All rights and contentions otherwise available are kept open.
6. There shall be no order as to costs.
(K.R.SHRIRAM, CJ.) (SENTHILKUMAR RAMAMOORTHY, J.)
02.01.2025
Index : Yes/No
https://www.mhc.tn.gov.in/judis
tar
To
1.Chairman and Managing director
Industrial Development Bank of India Limited
IDBI TOWER, Caffee parade
Mumbai- 400 005
2.General Manager
Industrial development Bank of India limited
No 1 15 Anna salai
Saidapet Chennai-15
3.State Industries Promotion Corporation of
Tamil Nadu Ltd
No.19-A Marshalls Road
Egmore chennai-8
4.The Official Liquidator
O/o. the Official Liquidator,
High Court, Madras, Corporate Bhawan,
29, Rajaji Salai, Chennai-1
https://www.mhc.tn.gov.in/judis
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
(tar)
02.01.2025
https://www.mhc.tn.gov.in/judis
