Back
GAUHATI HIGH COURT
H.K.Sema, P.K.Ghosh, JJ.
State of Manipur -Appellant
Versus
Ksh.Ibohal Singh : H.Angouba Sharma -Respondent
Writ Appeal No. 102 of 1995 : (Writ Appeal No. 103 of 1995) : Writ Appeal Nos. 102 and 103 of 1995
Decided On : 29-11-1996
COMPANY PETITION - WINDING UP - INABILITY TO PAY DEBTS - JUST AND EQUITABLE - COMPANY PETITIONERS ARE FIRMS REGISTERED UNDER INDIAN PARTNERSHIP ACT - RESPONDENT COMPANY IS A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT - RESPONDENT COMPANY OWNS AND POSSESSES A TEA GARDEN WITHIN THE SUB DIVISION OF GOLAGHAT, IN THE DISTRICT OF JORHAT, ASSAM - PETITIONERS FIRMS PLACED ORDERS WITH THE RESPONDENT COMPANY FOR SELLING, SUPPLYING GOODS IN RESPECT OF COMPANY PETITION NO.7 OF 1987 AND 10 OF 1987 AND FOR REPAIRING CERTAIN MACHINERIES OF GARDEN, IN RESPECT OF COMPANY PETITION NO.8 OF 1987 FROM TIME TO TIME IN BETWEEN 1983 TO 1986 - RESPONDENT COMPANY FAILED TO PAY THE AMOUNT FOR MORE THAN EIGHT MONTHS - PETITIONERS ISSUED FURTHER NOTICES THROUGH THEIR ADVOCATES DEMANDING THE PAYMENT OF OUTSTANDING AMOUNT - RESPONDENT COMPANY FAILED TO CLEAR THE DUES - RESPONDENT COMPANY ENTERED INTO AN AGREEMENT WITH SRI LALIT CHANDRA BORAH AND SHRI PUSPENDRA NATH BORAH FOR SELLING THE AFORESAID TEA GARDEN - PETITIONERS FIRMS APPROACHED THE MANAGING DIRECTOR OF THE RESPONDENT COMPANY TO CLEAR THE AMOUNT DUE BEFORE SELLING THE GARDEN - THE MANAGING DIRECTOR OF THE RESPONDENT COMPANY WROTE A LETTER TO THE PROPOSED PURCHASER TO PAY THE AFORESAID DUES TO THE PETITIONERS' FIRMS WITH COPY TO THE PETITIONERS' FIRM - AS PER THE AFORESAID LETTER, THE PROPOSED PURCHASER DID NOT CLEAR THE OUTSTANDING DUES - PETITIONERS FIRMS AGAIN WROTE LETTERS AND SENT THROUGH THEIR REPRESENTATIVES DEMANDING THE AFORESAID AMOUNTS FROM THE RESPONDENT COMPANY - RESPONDENT COMPANY AGAIN WROTE LETTERS TO THE PETITIONERS FIRMS INFORMING THE FIRMS THAT THE OUTSTANDING AMOUNTS COULD NOT BE SETTLED FOR THE REASON THAT THE SALE OF THE GARDEN WAS DELAYED DUE TO SOME TECHNICAL AND LEGAL DIFFICULTIES - RESPONDENT COMPANY FAILED TO PAY THE AMOUNT FOR MORE THAN EIGHT MONTHS - PETITIONERS ISSUED FURTHER NOTICES THROUGH THEIR ADVOCATES DEMANDING THE PAYMENT OF OUTSTANDING AMOUNT - IN SPITE OF DEMANDS THE RESPONDENT COMPANY FAILED TO CLEAR THE DUES - RESPONDENT COMPANY EVEN COULD NOT PAY THE WAGES OF THE LABOURERS OF THE TEA GARDEN ON SOME OCCASIONS AND FAILED TO PAY DUES OF OTHER FIRMS AND PERSONS - RESPONDENT COMPANY IS UNABLE TO PAY ITS DEBTS - RESPONDENT COMPANY IS IN FINANCIAL DIFFICULTIES AND UNABLE TO PAY DEBT - INTENTION TO SELL TEA GARDEN IS AN INDICATION TO THAT EFFECT - ONE CREDITOR ALONE SHOULD NOT GET THE BENEFIT TO THE EXCLUSION OF THE OTHER CREDITORS - IN THE INTEREST OF ALL CREDITORS, COMPANY SHOULD BE WOUND UP - COMPANY SHOULD BE WOUND UP UNDER THE PROVISIONS OF THE COMPANIES ACT (1 OF 1956) AND THE COMPANIES COURT RATE 1959.
Fact of the Case:
Petitioners are firms registered under Indian Partnership Act having their principal place of business at Golaghat in the district of Golaghat. The respondent, viz, Nimodia Plantations and Industries Private Limited, for short 'the company', is a private limited company incorporated under the Act having its Head Office at AT Road, Bokakhat in the district of Jorhat, Assam. The company owns and possesses a tea garden, namely, Hautley Tea Estate within the Sub Division of Golaghat, in the district of Jorhat, Assam. According to the petitioners, the Manager of the said tea garden as well as the company placed orders with the petitioners firm for selling, supplying goods in respect of Company Petition No.7 of 1987 and 10 of 1987 and for repairing certain machineries of garden, in respect of Company Petition Nol8 of 1987 from time to time in between 1983 to 1986. The goods were duly received by the authorised agents of the tea garden of the company. Besides the petitioner in Company Petition No.8 of 1987 made repairs of machineries of the garden, after supplying the goods and making repairs of machineries, the petitioner firms submitted bills. The amount due from the company in Company Petition No.7 of 1987 is Rs. 1,55,183.67, in Company Petition No. 10 of 1987 is Rs.56,974.36 for selling the goods and in Company Petition No.8 of 1987 is Rs.l,08,760.10 for repairing several machineries of garden. The company paid the company petitioner in Company Petition No.8 of 1987 a sum of Rs. 15,000 saving a balance of Rs.94,760.10. According to the petitioner firms the company is not in a position to meet liabilities and the comapny is running at a loss and there is no chance to make profit. Petitioners further state that the company having failed to manage the aforesaid tea garden had entered into an agreement with Sri Lalit Chandra Borah and Shri Puspendra Nath Borah for selling the aforesaid tea garden and on coming to know about the aforesaid agreement, petitioner firms approached the Managing Director of the company to clear the amount due before selling the garden. The Managing Director of the company wrote a letter to the proposed purchaser to pay the aforesaid dues to the petitioners' firms with copy to the petitioners' firm. As per the aforesaid letter, the proposed purchaser did not clear the outstanding dues. Thereafter, again the petitioner firms wrote letters and sent through their representatives demanding the aforesaid amounts from the company. The respondent company again wrote letters to the petitioner firms on 115.12.86 informing the firms that the outstanding amounts could not be settled for the reason that the sale of the garden was delayed due to some technical and legal difficulties. As the respondent company failed to pay the amount for more than eight months the petitioner firms issued further notices through their advocates demanding the payment of outstanding amount. In spite of demands the respondent company failed to clear the dues. It is also stated by the petitioner firms that the respondent company even could not pay the wages of the labourers of the tea garden on some occasions and failed to pay dues of other firms and persons. Hence the present petition.
Finding of the Court:
The company is unable to pay its debts. The company is in financial difficulties and unable to pay debt. Intention to sell tea garden is an indication to that effect. One creditor alone should not get the benefit to the exclusion of the other creditors. In the interest of all creditors, company should be wound up.
Issues: None
Ratio Decidendi: The expression 'unable to pay its debts' is to be taken in the commercial sense of being unable to meet current demands though the company may be otherwise solvent. The test is whether the company's existing liabilities are such as to make the Court feel satisfied that the existing and probable assets would be insufficient to meet the existing liabilities. In such circumstances the Court may incline to pass order of winding up but the mere fact that certain liabilities will accrue due in future which are more than present assets does not necessarily lead to the conclusion that the company will be unable to meet its liabilities when they accrue due. But in case of the debt is disputed then the provisions of winding up is not attracted, therefore, the company Court before considering as to whether the company should be wound up or not on the ground of inability to pay its debts, is required to see whether such liability of the company is an admitted fact or a disputed one. If such debts is disputed then in that case the question of winding up by the Court would not arise. It is also necessary that before passing an order of winding up by a Court it is to be seen whether it is just and equitable for passing such order. The expression 'just and equitable' indicates that a limited company is more than mere juridical entity with a personality in law of its own. The company law recognises the fact that behind it, or amongs it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. Such structure is defined by the Companies Act and the Articles of Association by Which shareholders agree to be abide by. This is applicable in most of the companies and this definition is sufficient and exhaustive, applicable to all types of companies large or small. The just and equitable provision does not entitle one party to disregard the obligation he assumes by entering a company, for the Court is to dispense him from it.
Final Decision: Company should be wound up under the provisions of the Companies Act (1 of 1956) and the Companies Court Rate 1959.
These two writ appeals are directed against the judgment and order dated 21.2.95 passed by the learned Single Judge in Civil Rule No.434 of 1990 and Civil Rule No.418 of 1990, In these two writ appeals, common question %of law and facts has been raised and as such, they are being disposed by this common order.
2. We have heard Mr, T. Nandakumar, learned counsel for the appellants as well as Mr. S. Jayanta, learned counsel for the respondent at length.
3. The facts given rise to the filing of the present appeal may be summarily recited. The writ petitioner in Civil Rule No.434 of 1990 was appointed as Casual Artiste Grade II in the Department of Drama Unit of the Publicity Department by an order dated 30th November, 1967. Thereafter, by an order dated 30th August, 1969 he was appointed Artiste Grade I. From the order dated 1.12.75 at Annexure 3, it clearly appeared that on the recommendation of the DPC held on 27.11.75, Gradation List Grade I Artiste has been prepared in order of merit. In the said list, name of the petitioner appeared in serial No.1. By another order dated 22.11.78 Annexure 4, it appears that on the recommendation of the Screening Committee and on the terms and conditions laid down in the contract and on his acceptance of the terms and conditions of the contract, the writ petitioner was again appointed as Artiste Grade I with usual allowances as permissible under the rules.
4. Petitioner in Civil Rule No.418 of 1990 was appointed as Casual Artiste Grade II in the Departmental Drama Unit of Publicity, Government of Manipur at a consolidated fee of Rs.120/- by an order dated 21.9.65. By another order dated 26.10.66, he was appointed as Artiste Grade I. Thereafter, by another b order dated 1st December, 1975, on the recommendation of DPC meeting held on 27.11.75 the Gradation List of Artiste Grade I has been prepared in order of merit and the name of the petitioner appeared in serial No.4 of the Gradation List of Grade I Artiste.
5. The aforesaid two writ petitioners continued hi the post from 30.11.67 and 21.9.65 respectively till their services were terminated on attaining the age of superannuation wef 28.2.95 and 28.2.94 by an order dated 31.7.95. By the time their services were terminated on attaining the age of superannuation, petitioner in Civil Rule No.434 of 1990 had put in about 28 years of service and petitioner in Civil Rule No.418 of 1990 had put in about 29 years of service as Grade I Artiste.
6. Petitioners filed the aforesaid Civil Rules with a prayer inter alia to regularise their services as Artiste Grade I in the Directorate of Information and Public Relation Manipur. While issuing a Rule, this Court on 20.8.90 directed the respondnets not to oust the petitioners from the post they are holding. The learned Single Judge after hearing the parties disposed of two writ petitions by an order dated 21.2.95 with a direction to regularise the services of the two petitioners within a period of two months from the date' of this order. The learned Single Judge further directed that their services shall be regularised so as to enable them to receive pension and other retiral benefits. Being aggrieved, the present two appeals have been preferred by the State.
7. Three contentions have been urged before us by Mr T. Nandakumar.
(a) Petitioner/respondents has not approached the Court with a clean hand inasmuch as that they were serving on contract agreement has not been disclosed in the writ petition, and as such, the petition is liable to be dismissed for suppression of facts.
(b) The petitioners are bind by their own agreement and having knowingly accepted the contract appointment on the terms and conditions laid down thereunder they are estopped from claiming the regularisation of their services.
(c) The petitioners' services were appointed on contract on the basis of Cabinet decision in its meeting held on 12.9.77.
8. In this connection, Mr. T. Nandakumar has referred to Annexure B/2 agreement dated 8.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
