ORAL JUDGMENT 1. This Company Petition is filed under Section 433 and 434 of the Companies Act, 1956, by the petitioner M/s Tata Capital Limited, a non-banking financial company to wind up the Respondent No.1 company M/s Pooja Iron and Steel Private Limited, having its Registered Office at 11 & 12, First Floor, Chinmay Crystal, Opp. Vastrapur Lake, Vastrapur, Ahmedabad, under the provisions of the Companies Act and to appoint the Official Liquidator. 2. It is the facts of the case pleaded on behalf of the petitioner that the petitioner is a non-banking financial Company incorporated under the provisions of the Companies Act, 1956 and duly registered with the Reserve Bank of India, having its registered office at One Forbes, Dr. V.B. Gandhi MarFort, Mumbai 400 001 and also having another office at DGP House, 4th Floor, Old Prabhadevi Road, Mumbai 400 025. It is the case of the petitioner company that the Respondent no.1 who carry on the business as manufacturers, processors, converters, finishers, importers, exporters, buyers, sellers and dealers in steels including alloy steel, stainless and all other special steels, iron, brass, copper, aluminum and other ferrous and non-ferrous metals alloys and products and other articles; had approached the petitioner company for availing term loan facility for purchase of various equipments and machineries and term loan of Rs.80,00,000/-(Rupees Eighty Lakhs only) was sanctioned vide sanction letter dated 11/8/2009 repayable in the manner set out in the sanction letter. Thereafter Loan Cum Hypothecation Cum Guarantee Agreement, i.e. Loan Agreement was entered into between the petitioner and respondent no.1 company and its director Mr. Jitendra Kumar Agrawal, authorized signatory of the respondent no.1 company, who also stood as guarantor to the agreement. Pursuant to the loan agreement, respondent no.1 had hypothecated the assets purchased out of the loan facility granted by the petitioner company described in schedule to the loan agreement. 3. The respondent no.1 company also executed power of attorney dated 26/8/2009 in favour of the petitioner company inter alia authorizing the petitioner to deal with and exercise all rights in respect of the assets hypothecated along with demand promissory note dated 26/8/2009 for Rs.80,00,000/- towards repayment of said loan facility availed by respondent no.1 company. 4. 3. The respondent no.1 company also executed power of attorney dated 26/8/2009 in favour of the petitioner company inter alia authorizing the petitioner to deal with and exercise all rights in respect of the assets hypothecated along with demand promissory note dated 26/8/2009 for Rs.80,00,000/- towards repayment of said loan facility availed by respondent no.1 company. 4. It is the case of the petitioner company that the respondent no.1 fully availed and utilized the loan facility granted, however committed repeated defaults in repayment of the amounts due and payable to the petitioner under the said loan facility together with interest, delayed payment charges and other lawful charges, costs, expenses etc. That, after paying initial installments for the month of December, 2009, respondent no.1 grossly failed to company with the repayment schedule. Thus on account of repeated failures, the respondent no.1 company evidenced its inability to meet up with the liabilities and/or to pay its debts due to the petitioner. Subsequently respondent no.1 by letter dated 4/2/2010 offered to surrender the assets hypothecated in favour of the petitioner under the loan agreement and acknowledged an undisputed debt of Rs.78,42,945/-(Rupees Seventy eight lacs fourty two thousand nine hundred and fourty five only) due and payable to the petitioner company as on 4/2/2010. 5. The petitioner thereafter proceeded to sell the assets on account of continued default on the part of respondent no.1 and issued public advertisement for sale of assets, however maximum bid received was only a nominal amount of Rs.10,35,000/- against the then pending dues of Rs.84,23,955/-. Petitioner therefore addressed letter dated 15/4/2010 to respondent no.1 apprising respondent company about pending dues and calling upon respondent no.1 company to pay the dues to the petitioner. Mr. Jitendra Kumar Agrawal vide his e mail communication proposed a buyer called M/s R.S. Steel Industries which offered Rs.25,00,000/-, to which petitioner requested said R.S. Steel to deposit half of the offer amount within specific duration, however said bidder never reverted or intimated its acceptance or refusal to purchase the assets. The petitioner thereafter precoded to sell the said assets through a private treaty to the person giving highest offer for an amount of Rs.13,25,000/-. 6. The petitioner thereafter precoded to sell the said assets through a private treaty to the person giving highest offer for an amount of Rs.13,25,000/-. 6. It is further case of the petitioner that in the meantime it has come to the knowledge of the petitioner that winding up proceedings were initiated against respondent no.1 company by another company called M/s Unify Agro (India) Private Limited being Company Petition No. 108 of 2010 which came to be admitted by this Court vide order dated 14/12/2010. Thereafter respondent no.1 was declared to be wound up on 19/4/2011 by order of this Court dated 19/4/2011. In consequent thereof O.J. Appeal no. 38 of 2011 was filed by respondent no.1 company before this Court challenging the winding up order dated 19/4/2011, which was dismissed as the creditor had withdrew main Company Petition No. 108 of 2010. 7. During pendency of above O.J. Appeal, petitioner company through their advocate sent letter dated 22/7/2011 to Mr. Jitendra Kumar Agrawal calling upon to pay outstanding sum of Rs.87,70,446/- as on 27th June 2011 together with further interest @ 12.75% on Rs.77,57,600/- and additional interest @ 16.75% on Rs.44,78,544/- from the date of reference till payment or realization thereof within seven days therefrom. Mr. Jitendra Kumar Agrawal respondent to the said notice/letter, sent through their advocate dated 28/7/2011 denying any liability towards the petitioner. 8. It is the case of the petitioner that respondent no.1 company despite having been called upon to pay the monies due to the petitioner company, persistently failed to comply with the demands raised by the petitioner. It is stated by the petitioner that an application under Section 9 of the Arbitration And Conciliation Act, 1996, is also filed before Bombay High Court against the respondent no.1 company and the guarantor Mr. Jitendra Kumar Agrawal, wherein also petitioner sought protection by way of security for the outstanding amount of Rs.87,70,446/- with further interest and additional interest thereupon. 9. It is submitted that the respondent no.1 company has not been able to create any bonafide defence for non-payment of monies except blatant denials. That, after utilizing the monies of the loan facility granted, respondent no.1 has willfully defaulted payment of monies. The liability of the respondent no.1 to make payment to the petitioner is absolute and unconditional under Section 434 of the Companies Act. That, after utilizing the monies of the loan facility granted, respondent no.1 has willfully defaulted payment of monies. The liability of the respondent no.1 to make payment to the petitioner is absolute and unconditional under Section 434 of the Companies Act. However the respondent no.1 failed to pay off the dues to the petitioner amounting to Rs.87,70,446/-(Rs. Eighty seven lacs seventy thousand, four hundred and fourty six only) with further amount of interest @ 12.75 % on 77,57,600/-(Rs. Seventy seven lacs fifty seven thousand and six hundred only) and additional interest @ 16.75 on the sum of Rs.44,78,544/-(Rs. Forty four lacs seventy eight thousand five hundred and fourty four only), and therefore respondent no.1 company is required to be wound up by this Court. It is submitted that the respondent no.1 company has lost its financial substratum and therefore required to pass appropriate order of winding up of the respondent no.1 company. 10. This Court issued notice to the respondent no.1 company vide order dated 18/10/2011 making it returnable on 7th December, 2011. This petition is resisted by the respondent no.1 company by filing affidavit by its director Mr. Jitendra Agarwal denying all the charges levelled in the petition. During hearing of admission of the petition Mr. Sudhir Mehta, learned advocate appeared on behalf of respondent no.1 company. After hearing both the sides this Court (Coram: Mr. Justice G.B. Shah) vide detailed order dated 28/02/2013 admitted the petition and placed it for final hearing. The observations made by this Court while admitting the petition deserve to be noted thus: “11. I have considered the rival submissions made by the learned Advocates for the parties. It is not in dispute that the petitioner had granted loan to the respondent to the tune of Rs.80 lakhs (Rupees Eighty Lakhs). The main submission of the learned Advocate for the respondent is that the amount/debt is disputed and there is bonafide dispute with respect to the claim put up by the petitioner and the alleged claim cannot be said to be definite, ascertained and admitted. As the arbitration clause has been invoked by the petitioner by way of alternative forum, thereafter it cannot file the present petition. As the arbitration clause has been invoked by the petitioner by way of alternative forum, thereafter it cannot file the present petition. There appears no substance in the above referred submissions made by the learned Advocate for the respondent because the respondent-company itself has written a letter dated 4.2.2010, copy whereof is at page No. 107 as sell as at 233, addressed to the present petitioner which clearly establishes that the respondent has categorically admitted that terms and conditions of the loan agreement have been violated by the respondent company and also mentioned the amount paid by the company as well as the outstanding amount to be paid by the respondent. Contents of the said letter itself is enough which clearly show that there is no merit in the above referred submissions made by the learned Advocate for the respondent. The relevant portion of the said letter dated 4.2.2010 reads as under: ... ... ... “We hereby voluntarily surrender the above asset at the authorized godown of Tata Capital Ltd. To Mr Sunit Dipakkumar Gor who is the authorized officer for M/s. Tata Capital Limited, in accordance with the rights vested with M/s. Tata Capital Ltd., vide the above mentioned loan agreement whose terms and conditions have been violated by me, by defaulting on the scheduled repayment of the said Loan agreement for an Out of Rs.3,27,745/-(sic) There is a total outstanding of Rs.78,42,945/-+ other charges which will be paid by us within due course together with all the charges as per the loan agreement. In the event of our continuous default we request you to sell the above mentioned assets at the available market price. After the sale of the assets, still if there is any outstanding to be paid we shall be paying the entire outstanding within due course of your demand.” 11.1 far as the submission of the learned Advocate for the respondent hat the petitioner could not have initiated winding up proceedings and was obliged to initiate arbitration proceeding as in the case on hand the petitioner has taken the recourse of an arbitral proceedings, the petition for winding up would not lie. On this point the Hon’ble Supreme Court in Haryana Telecom Ltd. V/s. Sterlite Industries (India) Ltd. (supra), held that a claim in a petition for winding up is not for money. On this point the Hon’ble Supreme Court in Haryana Telecom Ltd. V/s. Sterlite Industries (India) Ltd. (supra), held that a claim in a petition for winding up is not for money. The petition filed under the Companies Act would be to the effect that the company has become commercially insolvent and the power to order winding up is contained in the Companies Act and is conferred upon the Company Court. It is pertinent to note that during the course of the above referred arbitration proceedings, the respondent has never appeared except on two occasions and accordingly the award dated 11.11.201 passed in the said arbitration proceedings has attained its finality. Under the circumstances, there appears no substance in the above referred submissions made by the learned Advocate for the respondent. 12. Referring to the pages No. 189, 191 and 237, it appears that the petitioner had also called upon the respondent to recommend the buyer for the machinery/assets voluntarily surrendered by him to sell the same at the available market price. The respondent has also proposed the buyer namely M/s. R.S. Steel Industries which had agreed to pay an amount of Rs.25 lakhs for the machinery. It is the fact that the said buyer had called upon to pay the earnest money for purchase consideration but the said buyer i.e. M/s. R.S. Steel Industries had failed to deposit the amount of earnest money as mentioned in letter at page No.237 and hence as a last resort the petitioner had issued public advertisement inviting bids for sale of machineries. The petitioner had received a bid of Rs.10,35,000/-and ultimately it was sold at the said price. Under the circumstances, in my view, the respondent now cannot submit his submission that at a throw away price the machinery had been sold by the petitioner. 13. It has also been argued that the petitioner has not produced a specific resolution inter alia authorizing the signatory of the present petition to file the present winding up proceedings. Perusing Annexure-1 at page 224 and the Power of Attorney dated 6.2.2008 at page 225 and the Power of Attorney dated 26.8.2009 and on a conjoint reading of the same it is clear that Kamlesh Parikh has appointed Mr. Perusing Annexure-1 at page 224 and the Power of Attorney dated 6.2.2008 at page 225 and the Power of Attorney dated 26.8.2009 and on a conjoint reading of the same it is clear that Kamlesh Parikh has appointed Mr. Arun Khanna who has initiated the present proceedings and thus there appears no substance in the submissions made by the learned advocate for the respondent that for lack of authority in institution of the winding up proceedings the same is not maintainable. 14. Having regard to the facts of the case discussed above, in my view, the respondent-company has not come with bonafide defence and the dispute which has been raised by the respondent-company appears to be an afterthought and lame defence. The court has also considered the decision in the case of DLF Industries v. Essar Steel (supra). In my view, the above decision will not be helpful to the present respondent because as discussed above, the respondent has miserably failed to show that the debt is disputed and also failed to show that the debt is disputed and also failed to show that there is a bona fide dispute with respect to the claim put up by the petitioner. Hence the following order is passed: ADMIT. 15. The Official Liquidator attached to this Court is appointed as provisional Liquidator. The Provisional Liquidator shall take charge and custody of the assets, properties, the books of accounts and the record of the Company after drawing inventory and a Panchnama. 16. By way of an interim relief the respondent Company is restrained from alienating and/or disposing and/or transferring and/or encumbering and/or creating any third party rights on its properties or assets, in any manner whatsoever. 17. The hearing of the petition shall take place on 26th April, 2013. The petitioner is directed and permitted to publish the advertisement about admission of the present petition in two Gujarati Daily viz. Gujarat Samachar and Divyabhaskar and one English Daily viz. Indian Express. Publication in the Government Gazette is dispensed with.” 11. In light of the aforesaid facts, the respondent no.1 Company is unable to pay its debt and the facts reveal that the company has lost its substratum and accordingly the respondent no.1 company is liable to be wound up. 12. Accordingly this petition is allowed. Indian Express. Publication in the Government Gazette is dispensed with.” 11. In light of the aforesaid facts, the respondent no.1 Company is unable to pay its debt and the facts reveal that the company has lost its substratum and accordingly the respondent no.1 company is liable to be wound up. 12. Accordingly this petition is allowed. The Respondent no.1 Company M/s Pooja Iron And Steel Private Limited is hereby ordered to be wound up under the provisions of Sections 433 and 434 of the Companies Act, 1956. The Official Liquidator attached to this Court who was appointed as Provisional Liquidator as per the aforesaid order is hereby appointed as the Official Liquidator. The Official Liquidator is further directed to take possession of all the assets, both movable and immovable, belonging to the Respondent No.1 Company in liquidation including its accounts, books and other relevant records and file an appropriate report before this Court, after preparing the inventories and panchnama. The Official Liquidator shall submit his report within a period of three months. If required, he shall take service of the Official Valuer for the purpose of preparation of inventory report, possession note etc. 13. This petition is allowed in the above terms. No costs.