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2012 Supreme(Mad) 1103
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE A. ARUMUGHASWAMY
Kotak Mahindra Bank Ltd., rep. by its Authorised Signatory V. Bhaskaran
Versus
M/s. Subhiksha Trading Services Limited
C.P.No.68 of 2009 and Company Application Nos. 388, 389, 443, 444, 1037 of 2009
Decided On : 29-02-2012
For the Petitioner:H. Karthik Seshadri, Advocate.
For the Respondent:Prakash Goklaney, Advocate.
The court's decision emphasized the importance of repayment of debt, control over assets, and compliance with legal obligations under the Companies Act, 1956.
Headnote:
Winding Up - Companies Act, 1956 - 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26
Fact of the Case:
The petitioner sought to wind up the respondent company, Subhiksha Trading Services Limited, under the Companies Act, 1956, due to non-repayment of a substantial loan and failure to meet financial obligations. The respondent company faced financial crisis, defaulted on loan repayments, and diverted funds to other entities.
Finding of the Court:
The court found that the respondent company failed to repay the debt, lacked control over its assets, and faced multiple legal proceedings. The court appointed the Official Liquidator as provisional liquidator and ordered publication of the winding-up petition. The court dismissed the respondent's applications and ultimately ordered the winding up of the respondent company, appointing the Official Liquidator as the Liquidator.
Issues: Non-repayment of debt, diversion of funds, financial crisis, lack of control over assets, multiple legal proceedings, and dismissal of respondent's applications.
Ratio Decidendi: The court established the respondent's failure to repay the debt, lack of control over assets, and involvement in multiple legal proceedings as grounds for winding up the company. The court also dismissed the respondent's applications and appointed the Official Liquidator as the Liquidator.
Final Decision: The court ordered the winding up of the respondent company, appointed the Official Liquidator as the Liquidator, and suspended the order for a period of three weeks.
This Company Petition has been filed seeking to wind up the Respondent Company namely M/s Subhiksha Trading Services Limited under the provisions of the Companies Act, 1956.
2. The respondent company was incorporated as a private limited company on 10.4.1997 with authorized share capital of Rs. 33 crores consisting of 33 crore equity shares of Re. 1/- each and its main objects are as follows:
(a) To trade in any articles, goods, rights possessions of any nature and of any use being industrial, commercial, household, technical and in such process to buy, sell acquire, lease any merchandise, goods or property of any form whatsoever as authorised dealers, stockists, agents, brokers, factors and render all such services in the ordinary course of business to market the goods in a consumable state.
(b) To carry on the business of importers, exporters, buyers, sellers, dealers, stockists, suppliers, wholesalers, retailers, jobbers, contractors, storers, lessors, hirer of goods of every description and goods, components, sub-components, consumables, peripherals or products or articles involved in the goods and to act as agents for any products or articles involved in the goods and to act as agents for any such articles, goods or any services for Indian or overseas principals.
(c) To carry on, in any mode, the business of storekeepers in all its branches and in particular to buy, sell and deal in goods, stores, consumable articles, chattels and effects of all kinds, both wholesale or retail and to transact every kind of agency business.
3. On the request of the respondent company, the petitioner bank granted a working capital demand loan of Rs. 15 crores on 13.12.2006 with a special limit of cash credit of Rs. 5 crores. In addition to that, a revolving short term loan of Rs. 15 crores was also sanctioned and the said short term loan should be used for suppliers of food grains and pulses to the Company. The said working capital demand loan and cash credit facility were granted on the basis of pari passu first charge on assets of the respondent company and pari passu second charge on the movable assets of the company.
4. The Managing Director of the respondent company Mr.R.Subramanian, executed various documents including promissory note and deed of hypothecation regarding movable assets and current assets of the Company in favour of the petitioner bank. A deed of guarantee dated 13.12.2006 was also executed by him. The other lender banks have also given no objection for pari passu charges. Thereafter, the facility was enhanced to Rs.30 crores against working capital demand loan and a supplement deed of hypothecation was entered into apart from the deed of guarantee by Mr.R.Subramanian. Again, the said facility was enhanced to Rs.50 crores on 31.7.2007. An additional limit of Rs.25 crores was sanctioned on 20.8.2007. The company has repaid an amount of Rs.15 crores and the company has failed to repay the balance of Rs.35 crores with interest. As per the terms of sanction, the respondent company has to route a minimum amount of Rs.20 crores per month through cash credit account maintained with the bank and the company has never acted as per the terms. There was negligible cash flow with the petitioner bank. The Managing Director of the company, on discussion, agreed to pay the entire amount by 31.3.2008, which was not honoured.
5. The petitioner sent various letters to the respondent including the letters dated 2.7.2008, 9.8.2008 and 19.8.2008. In fact, in the letter dated 19.8.2008, the petitioner bank stated that there was a mutual agreement between the parties to waive all additional interest and charges and accordingly, the respondent company was to pay Rs.3597.27 lakhs to the petitioner on or before 30.9.2008, which the respondent failed to pay and even after the time was extended, the Company did not pay the amount. The Company, by letter dated 30.9.2008, requested the petitioner to renew the limit till 31.12.2008 sta
