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High Court of Judicature at Madras
R. BANUMATHI & B. RAJENDRAN
M/s. Sheela Rani Textiles Limited
Versus
Anjaneya Cotton Mills Private Limited rep.by its Director & Another
O.S.A.No.357 of 2010 & M.P.Nos.1 of 2010 & 1 to 3 of 2011
Decided On : 19-09-2011
Companies Act - Winding up petition - Sections 433(1)(e), 434, 439(1)(b) - Summary
Fact of the Case:
The appellant, a textile company, was ordered to wind up by the 1st respondent under Sections 433(1)(e) and 434 of the Companies Act, 1956. The appellant contested the maintainability of the petition, citing non-compliance with statutory notice requirements and disputes between the parties.
Finding of the Court:
The court found that the statutory notice was not served at the appellant's registered office, but the appellant had replied through their counsel. The court admitted the petition, citing the appellant's acknowledged liability and directed publication of the petition in two dailies and the Government Gazette.
Issues: The issues included the non-compliance of statutory notice requirements, disputes between the parties, and the maintainability of the winding up petition.
Ratio Decidendi: The court held that non-service of notice at the registered office did not warrant throwing out the petition, as the appellant had replied through their counsel. The court also found that the objection raised by the appellant regarding the amount was not sustainable, admitting the petition and directing its publication.
Final Decision: The court set aside the order for advertisement and publication of the winding up petition, recalling the publications, and remitted the matter back to the single Judge for reconsideration.
R. BANUMATHI, J. –
1. Being aggrieved by the order passed by the learned single Judge dated 25.10.2010 admitting C.P.No.132 of 2008 and ordering notice of publication of the Company Petition in two dailies, viz., Business Line (English edition) and Daily Thanthi (Tamil edition) and also in the Government Gazette in accordance with the Companies (Court) Rules, 1959 and appointment of the Official Liquidator as the Provsional Liquidator of the appellant Company with a direction to take over all assets and records of the appellant company, the present appeal is filed.
2. Factual background of the appeal is as follows:-
The 1st respondent herein filed company petition under Sections 433(1)(e) and 434 read with section 439 (1)(b) of the Companies Act,1956 seeking for a direction to wind up the appellant company and to appoint the Official Liquidator as the Liquidator. Case of the 1st respondent is that the appellant is a limited company with authorized share capital of Rs.5 crores divided into 50 lakhs shares of Rs.10/- each and its main object is to carry on the business of manufacturing, bleaching, dyeing, printing and selling yarn, cotton and/or staple fibre, cloth and other fabrics made from raw cotton, jute, wool and other suitable materials and generally to carry on the business of cotton spinning and as weaving mill proprietors in all branches. One M/s.Sivakami Textiles Ltd. borrowed loans from various banks including the Industrial Development Bank of India - 2nd respondent Bank to the tune of Rs.4,49,63,000/- and it was unable to repay the loan because of recession and the matter was referred to BIFR and by the Order dated 26.5.2000, Sivakami Mills Limited was declared as a sick mill. Aggrieved by the order of BIFR, an appeal was preferred by Sivakami Mills before AAIFR. Appellant - Sheela Rani Textiles Limited negotiated with M/s.Sivakami Textiles and submitted a rehabilitation proposal. AAIFR approved the rehabilitation proposal. Under the Rehabilitation scheme, the appellant has to pay a sum of Rs.677 lakhs to IDBI on or before November 15, 2006 as against the total due of Rs.744 lakhs to be paid by the appellant for the revival scheme of OTS (One time settlement) to IDBI. By its order dated 24.9.2001, AAIFR sanctioned the rehabilitation proposal and set aside the order of winding up passed by BIFR. The appellant took over the management and ownership of Sivakami Mills on 24.09.2001.
3. Case of 1st respondent that the 1st respondent is a company incorporated under the Companies Act, carrying on the business in running textile mills and the appellant requested the 1st respondent to run the textile mill by providing the required raw materials for conversion and stated that it would convert the raw cotton into yarn and deliver the same to the 1st respondent for consideration and the appellant also requested to give an advance of Rs.75 lakhs for the said purpose and the agreement was entered into on 19.1.2006 based on which the 1st respondent paid an amount of Rs.30 lakhs towards interest free conversion deposit and Rs.45 lakhs towards deposit repayable in 10 instalments together with interest at the rate of 12% p.a. On 19.1.2006 the appellant executed a deed of hypothecation hypothecating four generator sets in favour of the 1st respondent as security for the sum of Rs.45 lakhs and therefore, the 1st respondent has a charge over the said properties. Against the appellant company, one M/s.Dipalee Traders, Mumbai filed C.P.No.295 of 2003 for winding up and the same is pending in this Court.
4. It is the further case of the 1st respondent that after doing conversion work for some time, the appellant failed to continue the same due to electricity disconnection and requested the 1st respondent to advance further amount of Rs.32.32 lakhs towards electricity bills and the same was also paid by the 1st respondent under a supplementary agreement dated 17.4.2007 under which the appellant agreed to repay the said amount at
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