A company cannot be wound up for non-payment of disputed debts; readiness to settle admitted liabilities negates grounds for winding up.

JUDGMENT :

Pankaj Bhatia, J.

1. Heard Mrs. Shraddha Agarwal, learned counsel assisted by Shri Shobhit Mohan Shukla and Ms. Gursimran Kaur, learned counsel for the petitioner; Shri. N.K. Seth, learned Senior Advocate, assisted by Shri Pritish Kumar, Shri Tushar Hirwani, Shri Amal Rastogi, learned counsel for the Respondent No.1; Shri R.K. Verma, learned counsel for the Respondent No.2 and Shri Anurag Verma, learned counsel for Official Liquidator.

2. Present petition has been filed under Section 439 (1)(b), Section 433 (e) & (f) and Section 434 (1)(a) of the Companies Act as well as under Section 20(1) of The Sick Industrial Companies (Special Provisions) Act, 1985 by the petitioner/company seeking winding up of the respondent/company mainly on the ground that it has failed to pay the admitted amounts of Rs.21,55,52,263/- (Rupees Twenty One Crore Fifty Five Lakhs Fifty Two Thousand Two Hundred and Sixty Three only) excluding the interest upon the unsecured loan as detailed in Para 19(iii) of the notice.

3. It is also stated that the Board for Industrial and Financial Reconstruction (for short ‘BIFR’) had recommended the winding up of the company on 26.07.1996 and the said order was affirmed by Appellate Authority for Industrial and Financial Reconstruction (for short ‘AAIFR’) and the Hon’ble Delhi High Court. It is, thus, proposed to be argued that the respondent/company is unable to pay the debts. It is also stated that the respondent/company and its Directors and Officials are trying to dispose the machinery etc., with a view to defraud its creditors including the petitioner. Allegations with regard to lack of probity in the functioning of the respondent/company are also stated.

4. It is also stated that authorized share capital of the respondent/ company was at Rs.4,00,00,000/- (Rupees Four Crore only) divided into 40,00,000/- equity shares of Rs.10/- each and the issued, paid up and subscribed capital as per balance sheet was Rs.3,46,49,530/- (Rupees Three Crore Forty Six Lakh Forty Nine Thousand Five Hundred Thirty Only).

5. It is pleaded that the respondent/company was established mainly for the manufacture and to deal with all kind of fertilizers of organic and inorganic chemicals in terms of the Memorandum and Article of Association of the respondent/company, which are contained in Annexures – 1 & 2. It is being pleaded in Para 8 of the writ petition that the respondent/company has not been functional and is lying close for the last ten years.

6. It is stated and pleaded that the respondent/company had availed financial facilities from financial institutions namely IDBI Bank, ICICI Bank & IFCI Ltd., and took a loan to the tune of Rs.486 Lakh in which the Directors of the Company had given their unconditional and irrevocable personal guarantees. It is further stated that the said financial institutions sanctioned an additional loan of Rs.63.30 Lakh— the proportions are disclosed in Paras 9 & 10 of the petition.

7. It is stated that to secure the outstanding loan from the financial institutions, loan agreement was executed on 10.09.1987 and 15.11.1989 and security documents were also executed in favour of the financial institutions and an equitable mortgaged was also created in respect of the immovable properties of the respondent/company situate at District Faizabad, U.P.

8. It is pleaded that the respondent/company had filed a reference under the The Sick Industrial