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Co. Appeal No. 8 of 2014, Co. Appeal No. 9 of 2014 in Co. Pet. 40/2011 and Co. Appeal No. 10 of 2014 in Co. Pet. 55/2011

Decided On: 16.10.2020

Appellants: Transworld Hire Purchase India Ltd. Vs. Respondent: Joy C. and Ors.

Hon'ble Judges/Coram:
C.T. Ravikumar and K. Haripal


K. Haripal, J.

1. These are appeals preferred under Section 483 of the Companies Act, 1956, hereinafter referred to as 'the Act', read with Section 5 of the High Court Act, challenging the correctness of the judgment passed by the learned Single Judge in Company Petition Nos. 2/2012, 40/2011 and 55/2011 respectively. Appellant is the respondent in all the petitions. As common questions are involved and since the company petitions were disposed of together by the impugned judgment, these matters were heard together and are being disposed of by this common judgment.

2. Respondents in these appeals moved this Court under Section 433(e) read with Sections 434(a) and 439(b) of the Act, seeking to wind up the appellant company. They claim that they are creditors of the company, that huge amounts are due to them from the company, inspite of repeated demands the amounts were not repaid, and thus it became clear that the company is unable to repay the debts due to the creditors and thus they wanted the company to be wound up.

3. Petitioners in C.P. No. 2/2012 claimed that they together were entitled to get Rs. 15 lakhs, with agreed rate of interest from the company. According to them, they had made investments in the monthly investment scheme floated by the company, details of which have been stated in the petition, even though the amounts were matured, the company was not in a position to repay the same with interest and that made them to send a notice as provided under Section 434(1) of the Act. But the notice returned with the endorsement that the office of the company stood locked. That means, it is certain that the company has defrauded them and other similarly placed persons, it has become commercially insolvent and thus the substratism of the company has been eroded, that it is unable to pay off its debts due to the creditors. They have also annexed copy of receipts proving investment of various amounts as claimed by the petitioners and also copy of the lawyer notice, postal receipt and copy of the envelope addressed to the appellant showing that it was returned to the lawyer with the endorsement that the office of the company remained locked.

4. The appellant filed a counter affidavit in the petition stating among other things that only seven creditors have joined the petition. According to him, the amount alleged to be due to them is not correct, details shown in the deposit receipts, Annexures A to M are not supported by documents, that the claim is frivolous and not based on any substance, that he did not receive any notice as Annexure N that the petition is bad for the mandatory requirement under Section 434(1)(e) (sic) of the Act. It was also stated that the company has sufficient asset such as immovable properties situated in prime locations and it is making earnest efforts to dispose of the property and raise funds, in the meantime, if winding up is ordered, that would adversely affect the interest of creditors. According to him, the petitioners did not make out a prima facie case. In the penultimate paragraph, he prayed for dismissing the company petition and in the alternative, to provide sufficient time to the company for at least one year for raising funds for clearing the liabilities, till such time winding up may not be ordered. The counter affidavit was filed on 01.01.2013.

5. The Company Petition No. 40/2011 was filed by two creditors. According to them, they have invested Rs. 2.4 lakhs each in the term deposit scheme floated by the company which was repayable after 36 months with 12% interest. Through Annexure C notice though they had demanded back the amount, the notice returned with the endorsement that the company remains closed, the notice was unclaimed and thus returned to the sender.

6. Similarly, Company Petition No. 55/2011 was filed by two creditors claiming that they had deposited sum of Rs. 4.5 lakhs in the company. Despite the deposits had become matured, the same was not repaid with interest, then, through Annexures XIII and XIV notices the Managing Director of the Company was alerted, but the notices were returned with the endorsement that the addressee had left the station.

7. In both Company Petition Nos. 40 and 55 of 2011, though the appellant had entered appearance, no counter affidavit was filed. After hearing counsel on both sides, by the impugned judgment the learned Single Judge found that the petitioners have made out a case for winding up the company. The Court also observed that though the company had been nursing the hope of revival of the business, considering the financial position, such a hope is without any bonafides, that the company had miserably failed to substantiate even a remote possibility of revival, that it is not in a position to pay the debt and that the company is commercially insolvent. On that premise, it was ordered to be wound up and the Official Liquidator was appointed for taking over the assets. The appeals were filed against the said judgment dated 21.05.2014. The appeals were filed with applications for condoning the delay. The delay was condoned on 13.02.2019.

8. We heard counsel on both sides.

9. The learned counsel for the appellant submitted that in the counter affidavit filed in Company Petition No. 2/2012 he had denied the allegation in the petition that so much amount was due to the petitioners. Still the Court did not take the denial seriously and was proceeding to dispose of the matter without affording him opportunity to substantiate his case. The Court was not justified in presuming the correctness of the claims made by the petitioners in all the petitions. In the light of the contentions in the counter affidavit, the Court ought to have looked into the correctness of the claims made by the petitioners. The learned counsel also urged that though the company had suffered some set back during a period of time, it is not correct to say that it has become insolvent or unable to repay the debts. It has solid assets to its credit, the Directors have not misutilised the income of the company, the company has large number of fixed assets like landed properties, only thing is that they should be given breathing time to dispose of the properties and to repay the amount, if any, due to the creditors. But without affording opportunity to hear the case, the learned Single Judge was proceeding to wind up the company which is an extreme step, which has caused considerable hardship to the appellant.

10. After hearing counsel on both sides and also rushing through the materials made available with the company petitions, we are unable to subscribe to the contentions raised by the learned counsel for the appellant.

11. Firstly, the argument of the learned counsel that he had specifically denied the factum of deposits made by the petitioners in Company Petition No. 2/2012 does not stand to reason. It is the specific case of the petitioners that they had made deposit of Rs. 15 lakhs, details of which are averred in paragraph 2 of the petition. Copies of the receipts issued by the company, signed by the Managing Director were annexed to the petition. It is their precise case that on the expiry of the term of the deposits, the appellant was called upon to repay the amount and since they failed, they caused to issue a lawyer notice which was returned with the endorsement that the addressee had left without instructions. Copy of 13 documents were also annexed to the petition. To these specific allegations, as mentioned earlier, the appellant filed a counter affidavit in an evasive and hedging manner that the amount alleged to be due is not correct, that the details shown in deposit receipts marked as Annexures A to M are not supported by documents, that the claim is frivolous and not based on any substance etc. In other words, he has not categorically denied the receipt of so much money, Rs. 15 lakhs, referred in the claim. It is not known as to what he had meant by averring that 'Annexures A to M were not supported with any document'. Those are copy of fixed deposit receipts shown issued by the appellant proving receipt of money from the depositors. Similarly, the appellant did not file any counter affidavit in the other two company petitions, though the counsel had entered appearance for him.

12. Against the specific assertions of the petitioners in Company Petition No. 2/2012, that they had deposited Rs. 15 lakhs on various occasions, in our reading, there is no specific denial at all, instead in a very casual and evasive manner, it is stated that the amount claimed is not correct, that the receipts are not supported by any document etc. Here this Court has to take into consideration numerous aspects. Firstly, against the specific allegation of deposits having made, the company has not given any specific denial, instead evasive averments are made in the counter affidavit. It is trite that when there is no specific denial against the assertions made by the creditors, it implies admission. (See: Lohia Properties (P) Ltd. Tinsukia, Dibrugarh Assam v. Atmaram Kumar [MANU/SC/0549/1993 : JT 1993 (5) S.C. 223] and M. Venkataramana Hebbar (D) By L.Rs. v. M. Rajagopal Hebbar & others [MANU/SC/8271/2007 : JT 2007(6) SC 164]). Secondly, all these company petitions were filed after sending registered notices under Section 434(1) of the Act, addressed to the registered office of the Company. But all the notices were returned unserved with the endorsement that the addressee had left the station.

13. Thirdly, in the said counter affidavit, the appellant had stated that he has sufficient assets to pay off the debts, at least within one year time, by raising funds he will be able to clear the liabilities. Such a statement was given on 01.01.2013. The impugned judgment was passed on 21.05.2014, more than 16 months after making such an averment. By the time, if the offer was made in right earnest, he would have settled at least some of the liabilities. But there was no material to infer that any positive step was taken in that direction. That was how the learned Single Judge made the observation that the hope nursed by the appellant on the revival of the business was without any bonafides.

14. Worsening the case of the appellant, even after lapse of more than six years, when these appeals were taken up, there is no suggestion that the situation has improved. That means, the company has become commercially insolvent. Again, the contention of the appellant that the Company is hopeful of reviving the business, the averment remains on the papers. To our pointed question as to whether any application was filed for reviving the business, the learned counsel has answered in the negative. This is an aspect which cuts the root of the arguments raised by the appellant.

15. Materials produced with the company petitions show that large number of creditors are awaiting in the queue, after making deposits in the schemes floated by the company. In our view, lack of bonafides writ large in the conduct of the appellant which dis-entitle it to get any relief. It is obvious that the company is unable to discharge the liabilities created in the name of the company. We do not find any reason to interfere with the finding of the learned Single Judge and the appeals are only to be dismissed.

Dismissed. No costs.

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