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2016 Supreme(Bom) 769
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
B. P. COLABAWALLA, J.
SICOM Ltd - Petitioner
Vs.
Entertainment World Developers Pvt Ltd - Respondent
COMPANY PETITION NO.625 OF 2013
Decided on : 23-6-2016.
Advocate Appeared:
For the Petitioner: Mr. Rohan Rajadhyaksha a/w Mr. Dhirajkumar Totala, Mr. Kunal Katariya i/b AZB and Partners
For the Respondent: Mr. Rohan Cama a/w Mr. Mihir Mody, Mr. Ashraj Patel i/b M/s K. Ashar and Co
1. A creditor is not adequately secured by a mortgage of an immovable property if the valuation of the property is much lower than the claim of the creditor and the highest bid received for the sale of the property is significantly lower than the reserve price fixed by the Court. 2. Omissions in a Company Petition do not amount to suppression of facts if they were not made to gain an advantage over the Respondent Company and were rectified in a further affidavit filed by the Petitioner. 3. A defense raised by a Respondent Company in a Company Petition is not substantial if it is neither in good faith nor bonafide. 4. The Company Court has jurisdiction to adjudicate a claim for winding up a Company, even if the claim is also being adjudicated by the DRT, as the RDDB Act only excludes the jurisdiction of other Courts and authorities to the extent of the jurisdiction specifically vested in the DRT, which does not include the jurisdiction to wind up a Company.
Headnote:
COMPANY PETITION - WINDING UP - INABILITY TO PAY DEBTS - DEEMING FICTION - SECURED DEBT - SUPPRESSION OF FACTS - DISPUTE AS TO DEBT - JURISDICTION OF COMPANY COURT - PROFIT MAKING COMPANY - RATIO DECIDENDI.
Fact of the Case:
The Petitioner, a financial institution, filed a Company Petition seeking to wind up the Respondent Company, a guarantor to loans given by the Petitioner to two other companies, on the ground that it was unable to pay its debts. The Respondent Company opposed the Petition, contending that the Petitioner was adequately secured by a mortgage of an immovable property, that the Petitioner was guilty of suppression of facts, that there was a substantial dispute with reference to the debt owed by the Respondent Company to the Petitioner, and that the Company Court lacked jurisdiction to adjudicate the claim since the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act) vested exclusive jurisdiction in the Debt Recovery Tribunal (DRT).
Finding of the Court:
The Court held that the Petitioner was not adequately secured by the mortgage of the immovable property, as the valuation of the property was much lower than the claim of the Petitioner and the highest bid received for the sale of the property was significantly lower than the reserve price fixed by the Court. The Court also found that there was no suppression of facts by the Petitioner, as the omissions in the Company Petition were not made to gain an advantage over the Respondent Company and were rectified in a further affidavit filed by the Petitioner. The Court further held that there was no substantial dispute with reference to the debt owed by the Respondent Company to the Petitioner, as the Respondent Company admitted its liability for the Term Loan of Rs. 35 Crores and the defense raised by the Respondent Company was neither in good faith nor bonafide. The Court also held that the Company Court had jurisdiction to adjudicate the claim, as the RDDB Act only excluded the jurisdiction of other Courts and authorities to the extent of the jurisdiction specifically vested in the DRT, which did not include the jurisdiction to wind up a Company.
Issues: 1. Whether the Petitioner was adequately secured by the mortgage of the immovable property? 2. Whether the Petitioner was guilty of suppression of facts? 3. Whether there was a substantial dispute with reference to the debt owed by the Respondent Company to the Petitioner? 4. Whether the Company Court had jurisdiction to adjudicate the claim?
Ratio Decidendi: 1. The Court held that the Petitioner was not adequately secured by the mortgage of the immovable property, as the valuation of the property was much lower than the claim of the Petitioner and the highest bid received for the sale of the property was significantly lower than the reserve price fixed by the Court. 2. The Court held that there was no suppression of facts by the Petitioner, as the omissions in the Company Petition were not made to gain an advantage over the Respondent Company and were rectified in a further affidavit filed by the Petitioner. 3. The Court held that there was no substantial dispute with reference to the debt owed by the Respondent Company to the Petitioner, as the Respondent Company admitted its liability for the Term Loan of Rs. 35 Crores and the defense raised by the Respondent Company was neither in good faith nor bonafide. 4. The Court held that the Company Court had jurisdiction to adjudicate the claim, as the RDDB Act only excluded the jurisdiction of other Courts and authorities to the extent of the jurisdiction specifically vested in the DRT, which did not include the jurisdiction to wind up a Company.
Final Decision: The Court admitted the Company Petition and directed the Petitioner to advertise the same in two local newspapers and the Maharashtra Government Gazette. The Court also directed the Petitioner to deposit a sum of Rs. 10,000/- towards publication charges with the Prothonotary and Senior Master.
1. This Company Petition has been filed seeking to wind up the Respondent Company-Entertainment World Developers Pvt Ltd on the ground that it is unable to pay its debts. It is the case of the Petitioner that the Respondent Company is indebted to it in the sum of Rs.52.80 Crores and Rs. 23.33 Crores (aggregating to Rs.76.13 Crores) as on 12th December, 2012. After the Petition was filed, an affidavit-in-reply opposing the Petition was tendered to the Court on behalf of the Respondent Company. Thereafter, a further affidavit dated 2nd February, 2016 has been also filed on behalf of the Petitioner revising their claim. In the further affidavit it is mentioned that as on 31st July, 2015, a sum of Rs. 58.24 Crores and Rs. 36.13 Crores (aggregating to Rs.94.37 Crores) is due and payable by the Respondent Company to the Petitioner. It is the case of the Petitioner that these amounts have not been paid and/or secured to the satisfaction of the Petitioner and therefore the present Company Petition.
2. The brief facts giving rise to the present controversy are that, the Petitioner had sanctioned financial assistance to one Nanded Treasure Bazaar Private Limited (hereinafter referred to as “Borrower No.1”) and Treasure World Developers Private Limited (hereinafter referred to as “Borrower No.2”) from time to time and as per the terms and conditions of the respective loan documents. As far as this Petition is concerned, the Respondent Company is sued in its capacity as a Guarantor to the loans given by the Petitioner to the said Borrower Nos.1 and 2.
THE TERM LOAN OF RS.35 CRORES SANCTIONED AND DISBURSED TO BORROWER NO.1:-
3. On 30th July, 2009, the Petitioner sanctioned a Term Loan for Rs. 35 Crores to Borrower No.1. This loan was disbursed on 28th August, 2009. It is the case of the Petitioner that this Term Loan was availed of by Borrower No.1 for partly repaying the outstandings under another Term Loan that they had availed of from the Housing and Urban Development Corporation (HUDCO) and part to finance the capital expenditure for Borrower No.1's property at Nanded, Maharashtra. This Term Loan of Rs. 35 Crores was inter alia secured by an Indenture of Mortgage dated 27th August, 2009 (Exhibit-D to the Petition) as well as two separate Deeds of Guarantee executed by one Mr. Manish Kalani as well as the Respondent Company on the same date. The relevant clauses read as under:-
“1. If at any time default shall be made by the Company in the repayment of the said Term Loan of Rs.35,00,00,000/- (Rupees Thirty Five Crores Only) lent and advanced to be lent and advanced by SICOM to the Company or any part thereof or interest thereon or any other moneys for the time being due and owing by the Company to SICOM under the said Mortgage, the Guarantor will without demur pay to SICOM on demand at Mumbai the said loan together with interest thereon and all other moneys which shall then become due to SICOM as aforesaid and all costs, charges and expenses whatsoever which SICOM may incur by reason of any default on the part of the Company its successor or successors and assigns and will indemnify and keep indemnified, saved harmless and defended SICOM at all times hereinafter against any loss or damage which SICOM may suffer by reason of any default by the Company in repayment to SICOM of the said loan or any part thereof and/or payment of interest thereon or any other moneys for the time being due and payable by the Company to SICOM under the said Mortgage and all costs, charges and expenses whatsoever which SICOM may incur by reason of any default on the part of the Company its successor or successors and assigns.
5. The Guarantee herein contained is irrevocable, absolute and independent of any rights and remedies, which SICOM may have against the Company and shall be enforceable against the Guarantor notwithstanding that the securities or any of them specified under the said Mortgage shall at the time when the proceedings are taken against th
