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2004 Supreme(AP) 140
Andhra Pradesh High Court
Judges : N.V.RAMANA
BHARAT OVERSEAS BANK LIMITED - Appellant
Versus
Saritha Synthetic and Industries Ltd.,anakapally, Srikakulam Dist. - Respondent
Decided On : 02-06-04
Headnote:
Companies Act, 1956 – Section 433 (e) 439 – Companies (Court) Rules, 1959 – Rule 95 – Indian contract Act, 1872 – Section 176 – Depository Act, 1996 – Transfer of property Act, 1882 – Section 130 – Sale of Goods act, 1930 – Debts Recovery Act – Section 19 – Winding Up Of Company – Company Petition – The petitioner has filed this Company Petition under Section 433 (e) and 439 of the companies Act, 1956 (companies Act) read with Rule 95 of the companies (Court) Rules, 1959 for winding up of the respondent, on the ground that it has become insolvent and is unable to pay its debts – Respondent contends the Company Petition is not maintainable, and is liable to be dismissed – Held, the contention of the respondent that inasmuch the petitioner had already filed an application in O. A. under section 19 of the Debts Recovery Act for recovery of the alleged debt before the debts Recovery Tribunal, the present company Petition filed under Section 433 (e) of the Companies Act, for winding up of the respondent for recovering the amount claimed in the application, is not maintainable, is devoid of merit – the Bombay High Court held that merely because the petitioning creditor had filed application before the debts Recovery Tribunal under the provisions of the Debts Recovery Act, it cannot be said that the petition for winding up would not be maintainable. The proceedings before the Debts Recovery tribunal and the Company Court being entirely different, distinct and independent of each other – The apex Court, observed that before the Company Court admits the Company petition it should first verify whether the petitioner had made out prima facie case – In the instant case, the letters placed by the petitioner in support of its case for admission of the Company Petition, reference to the contents of which had been made above, clearly go to show that the respondent has itself admitted its inability to pay its debts to the creditors, and therefore, it is required to be held that the petitioner has made out a prima facie case for admission of the Company Petition – In the above premises, the Company petition is admitted – The petitioner is directed to take out newspaper publication of the admission of the Company Petition as required under Rule 99 of the Companies (Court) Rules, 1959 in two daily newspapers – Company Petition Admitted
( 1 ) THE petitioner, namely M/s. Bharat overseas Bank Limited, represented by its manager, has filed this Company Petition under Section 433 (e) and 439 of the companies Act, 1956 (for short the companies Act ) read with Rule 95 of the companies (Court) Rules, 1959 for winding up of the respondent, namely M/s. Saritha synthetic and Industries Limited, on the ground that it has become insolvent and is unable to pay its debts.
( 2 ) THE factual matrix of the matter, lies in a very narrow compass, which runs thus:the petitioner is engaged in the business of corporate financing. On 9-3-2001, the respondent, which is engaged in the business of manufacturing and process of gray cloth fabrics and linen, has requested the petitioner to sanction a short Term Loan of Rs. 500. 00 lakhs. The petitioner sanctioned the Short Term Loan of rs. 500. 00 lakhs to the respondent, repayable within 90 days, subject to the condition of the respondent furnishing personal guarantee of its Managing Director, corporate guarantee and pledge of shares. The respondent in token of availment of the said Short Term Loan, executed Promissory note and furnished the personal guarantee of its Managing Director, corporate guarantee of M/s. Saritha Steel and industries Limited and pledged 80. 00 lakh shares of Rs. 10. 00 each of the respondent held by M/s. Sri Vasavi Holdings and investments Limited in eight share certificates in physical form. The respondent did not repay the loan amount within the stipulated period of 90 days. However, at the request of the respondent, the petitioner vide its letter dated 12-6-2001. extended the period of loan upto 21-9-2001 and requested the respondent to confirm the dues of the petitioner, which as on 23-6-2001 stood at rs. 5,16,02,740/ -. The respondent by its letter dated 3-7-2001 is said to have confirmed the dues of the petitioner. When the respondent failed and neglected to pay the dues even after the expiry of the extended period, the petitioner during April, 2002, and June, 2002, got the pledged shares transferred into its name in DEMAT form. On 11-5-2002, the petitioner got issued legal notice through their counsel to the respondent, its Managing Director, and the guarantor. Upon receipt thereof, the respondent vide its letter dated 14-6-2002 requested the petitioner to reschedule the loan, which was refused. Thereupon, the petitioner vide letter dated 27-6-2002 through their counsel, got issued notice of sale of the pledged shares, to m/s. Sri Vasavi Hidings and Investments limited, with a copy thereof marked to the respondent. In reply to the said notice, the respondent addressed a letter on 5-7-2002 to the counsel tor the petitioner, assuring 10 submit a detailed proposal for settlement of the dues, and requested the petitioner not to sell the pledged shares. As the respondent failed to repay the dues, the petitioner filed an application under Section 19 of the recovery of Debts Due to Banks and financial Institutions Act, 1993 (for short the debts Recovery Act ) in O. A. No. 385 of 2002 before the Debts Recovery Tribunal, bangalore, for recovery of the loan amount, against the respondent and its Guarantors, to which the respondent filed its written statement.
( 3 ) ON behalf of the respondent, its manager (Legal) has filed counter. The respondent admitted the availment of loan sanctioned by the petitioner and their furnishing of personal guarantee of their managing Director, corporate guarantee of m/s. Saritha Steel and Industries Limited, and pledge of 80. 00 lakh shares of Rs. 10. 00 each of the respondent held by m/s. Sri Vasavi Holdings and Investments limited in eight share certificates in physical form as per the terms of sanction, towards security of the loan amount. It is stated that towards discharge of its liability, the petitioner got transferred the 80. 00 lakh pledged shares of Rs. 10. 00 each into its name in DEMAT form during April, 2002 and june, 2002. It is contended that at the t
