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2014 Supreme(Bom) 295
High Court of Judicature at Bombay
G.S. PATEL, J.
Joshi Bullion Gems & Jewellery Pvt. Ltd. & Others
Versus
K.A. Malle Pharmaceuticals Limited
Company Petition No. 21 of 2012 & Company Application No. 535 of 2012
Decided On: 07-02-2014
For the Petitioners:Kamal Khata a/w Tushar Dahibawkar, Manish Vora, H.V. Mehta, i/b M/s. Dahibawkar & Co., Advocates.
For the Respondent:M.I. Sethna, Senior Advocate a/w A.M. Sethna, Advocate. i/b M/s. Udaipuri & Co., Advocates.
Headnote:Companies Act, 1956 - Sections 433 and 434 Petition for winding up. Since company has a bona fide defence as matter pending enquiries and investigation by C.B.I. and it is not a simple case of non-payment of huge amount hence petition dismissed with costs.
Companies Act, 1956 - Sections 433 and 434 Winding up petition. - Since summary enquiry under Sections 433 and 434 of Act is pending hence winding up petition liable to be dismissed. Mr. Khata contended that the filing of a civil suit and the pendency of arbitral proceedings are matters wholly irrelevant to this petition. Where the company has not complied with a demand made in the statutory notice, it must be deemed to be unable to pay its debts. That is a submission that is only partly, correct. Where the Company has a bona fide defence and denies its liability, it cannot be said to be indebted to the petitioner at all, and no question of its neglect to pay arises. Mr. Sethna also does not suggest the petition be dismissed merely because a civil suit has filed. His contention is that there are issues here that cannot be possibly be decided in a summary jurisdiction. They demand that evidence be taken. Much of this, Mr. Sethna claims, and, in my view rightly, is already the subject-matter of multiple parallel investigations. There is no reason why the Company Court should, in exercise of summary jurisdiction prefer an approach that completely overlooks the enquiries and investigations being carried out in parallel elsewhere. The fact that a summary enquiry does not permit a microscopic scrutiny does not mean that it requires no scrutiny at all. It requires an overall assessment of all factors. It cannot be in the kind of blinkered, isolated fashion that Mr. Khata seems to suggest. At its simplest, Mr. Sethna’s case is this : the jewellery his clients bought from the petitioner seems to have been diverted. It or, at any rate, its value seems to have found its way by means circuitous, clandestine and suspicious, though not known with certainty, into the hands of the petitioners’ director, Jayesh Desai, and possibly the petitioner itself. A very substantial amount of the Company’s funds seem also to have been diverted, and again at the instance of the petitioner, to another entity (the Pen Bank), with which the petitioner/Jayesh Desai had dealings. The amount so diverted corresponds too exactly with the petitioners’ present claim to be mere coincidence or sheer happenstance. Criminal investigations have been launched. Viewed from any perspective, it is not possible to consign this formulation of the defence to oblivion as Mr. Khata would have Court do.
G.S. Patel, J.
1. The petitioner claims that the respondent company, M/s. K A Malle Pharmaceuticals Limited. (“the Company”), is indebted to it the petitioner in the amount of Rs.52,82,59,398/-. It contends that as the Company has neglected to pay this amount without just cause and despite the service of a statutory notice under sections 433 and 434 of the Companies Act, 1956, the Company should be ordered to be wound up.
2. I have heard Mr. Khata, learned counsel for the petitioner and Mr. Sethna, learned senior counsel for the Company at some length. With their assistance I have gone through the record, the petition and the various affidavits filed. Having carefully considered the material and the rival arguments, I am not persuaded that this is a fit case for admission of this winding up petition against the Company. In my view the Company has a substantial and bona fide defence, not one that can be said to be illusory and spurious. Indeed, it is the petition itself that I find to be lacking in bona fides.
3. Mr. Khata’s submission is simplicity itself. In August 2008, the Company wanted to purchase gold jewellery from the petitioner. As the volumes being considered were large, the petitioner asked for an advance. The respondent agreed. It made advance payments of Rs.11.5 Crores on different dates. Following this, the petitioner supplied gold jewellery of the value of Rs.48,48,33,643/- to the Company. It raised three invoices dated 5th November 2008, 6th November 2008 and 11th November 2008. The petitioner claims that the Company accepted the deliveries of gold jewellery. There was no dispute about the quality, quantity, weight, rate or demurrage of these jewellery supplies. The invoices required the Company to make payment to the petitioner within 120 days from the date of delivery. The Company paid only Rs.6.20 Crores (Rs.1.50 crores on 11th November 2008, and Rs. 4.70 crores on 17th November 2008); making a total of Rs.17.70 crores inclusive of the Rs.11.5 crores paid earlier. The petitioner claims that the balance of Rs.30,78,33,643/-, though due, was not paid.
4. According to the petitioner, in its letter of 1st April 2009, Exhibit “C” to the petition, the Company admitted its liability. This admission was repeated exactly one year later on 31st March 2010 (Exhibit “E” to the petition) and again on 1st April 2010 (Exhibit-D to the petition).
5. As the Company did not pay the amount, the petitioner issued a statutory notice to the Company by its advocates’ letter dated 24th September 2011. The Company received the notice. On 31st October 2011, the Company’s advocates replied to the petitioners’ advocates. In this letter, the Company denied its liability. The petitioner describes the contents of the Company’s reply as frivolous and frivolous. The petitioner’s advocates responded, but the Company failed to pay the petitioner’s demand. The Company has, the petitioners claim, without just cause, failed and neglected to pay that demand, and the Company is therefore indebted to the petitioner. Having failed to comply with the demand made in the statutory notice without just cause, the Company must be deemed to be unable to pay its debts. It should be ordered to be wound up.
6. Mr. Sethna’s response presents a much more complex, and perhaps even sinister, picture of the petitioner’s dealing. The response is based on three affidavits. The first is an affidavit in reply dated 4th July 2012. Then there is a voluminous sur-rejoinder dated 3rd December 2012 and, finally, is a further affidavit dated 29th July 2013. The Company claims that it is the victim of systematic fraud perpetrated by a director of the petitioner, one Jayesh Desai, in collusion with some officers of the Maharashtra State Trading Corporation (“MSTC”), and of the Pen Co-operative Urban Bank Limited (“Pen Bank”). The Company’s version is this: It claims that in September 2008 it started a business relationship with MSTC. The business model or procedure was tha
