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2015 DIGILAW 297 (AP)

Gita Malik v. Nandan Cleantec Ltd.

2015-04-27

C.V.NAGARJUNA REDDY

body2015
ORDER : C.V. Nagarjuna Reddy, J. 1. This company petition is filed for an order to wind up the respondent for non-payment of the debt, allegedly, due to the petitioners. The petitioners averred that they have approached the respondent for the purpose of planting 'Safed Musli' - planting material. That a Memorandum of Understanding (MoU) was executed between the parties on 27.1.2003 and that as per the said MoU, the petitioners paid various amounts to Nandan Agro Firms Pvt., Ltd., renamed as Nandan Biamatrix Limited and again renamed as Nandan Cleantec Limited. The petitioners further pleaded that the respondent failed to provide technical know how during the cultivation period, as a result of which, the petitioners suffered huge loss, such as loss of yield, loss due to non-payment for the crop purchased, loss due to non-lifting of the plant, loss of the amount spent towards supervision and restoration of land to its original position. That the petitioners raised a dispute by way of arbitration and accordingly, an Arbitral Tribunal was constituted with three arbitrators who have passed an award, dated 1.11.2010, holding that the respondent committed breach of MoU and accordingly, it awarded a sum of Rs. 35,00,000/- with interest at 12% per annum from 27.1.2004 till the date of payment. That the respondent challenged the aforesaid award before the Additional District Court, Panchkula, and the said Court by judgment and decree, dated 23.12.2011, rejected the respondent's objections and dismissed the petition filed by the respondent. That the petitioners filed EP No. 2 of 2011 in the same Court-Additional District Court, Panchkula, and subsequently the same has been transferred at the request of the petitioners to the District Court, Medak, where the properties of both the parties are situate. The petitioners caused statutory notice, dated 6.3.2013, issued under Sections 443 and 434 of the Companies Act, 1956 (for short 'the Act'), whereunder the respondent was called upon to pay Rs. 78,42,329/- comprising the principal amount of Rs. 35,00,000/- alongwith interest at the rate of 12% per annum upto 6.3.2013. That till the date of filing the company petition, the respondent failed to pay the amounts awarded by the Arbitral Tribunal and that therefore, the petitioner has prayed for winding up of the respondent. 2. 78,42,329/- comprising the principal amount of Rs. 35,00,000/- alongwith interest at the rate of 12% per annum upto 6.3.2013. That till the date of filing the company petition, the respondent failed to pay the amounts awarded by the Arbitral Tribunal and that therefore, the petitioner has prayed for winding up of the respondent. 2. The respondent filed a counter-affidavit, wherein the only objection raised by it is to the maintainability of the company petition as the statutory notice, dated 6.3.2013, was allegedly sent to the wrong address, which is not its registered office address. No attempt has been made in the counter-affidavit to refer to any of the averments made by the petitioners on merits. 3. At the hearing, detailed submissions are made by the learned Counsel on either side on the maintainability of the company petition on the objections taken by the respondent regarding non-service of notice on it at its registered office address. However, this Court finds it unnecessary to deal with this aspect for the reasons that are mentioned infra. 4. Under Section 433 of the Act, a company may be wound up by the Court on various grounds mentioned in clauses (a) to (f). Clause (e) thereof envisages the inability of the company to pay its debts as one of the grounds for ordering winding up of the company. 5. Section 434(1) of the Act enumerates three different situations under which the company shall be deemed to be unable to pay its debts. Under clause (a) thereof, if the company receives a statutory notice sent to its registered office and fails to pay the debt in a sum exceeding Rs. 500/- within three weeks of the notice or to secure or compound for it to the reasonable satisfaction of the creditor; (b) if execution or other process issued on a decree or order of any Court in favour of a creditor of the company is returned unsatisfied in, whole or in part; or (c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts. 6. From the aforementioned provisions, it is evident that service of statutory notice through registered post is relevant only for the purpose of clause (a) of sub-section (1) of Section 434 of the Act. 6. From the aforementioned provisions, it is evident that service of statutory notice through registered post is relevant only for the purpose of clause (a) of sub-section (1) of Section 434 of the Act. If for any reason, the creditor fails to comply with the requirement under the said clause, the company petition will be considered under clauses (b) and (c) thereof. In the instant case, it is not disputed that the respondent suffered arbitral award for a principal sum of Rs. 35,00,000/- along with interest and the petition filed by it for setting aside the award was dismissed by the Additional District Court at Panchkula, vide its judgment, dated 23.12.2011 in Arbitration Case No. 01 of 2011. It is not the pleaded case of the respondent that this judgment was challenged by the respondent by availing further remedy. From this fact, it is abundantly clear that the respondent is indebted to the petitioner and it is reasonable to presume that it is unable to pay the debt. The respondent neither pleaded that it is disputing the debt nor that it is commercially solvent to pay the debt if proved. Therefore, from the conduct of the respondent, this Court has no hesitation to hold that because of its inability to pay the debt, the respondent is evading payment of the proven debt. 7. For the aforementioned reasons, the company petition is admitted. However, to give a final opportunity to the respondent to pay the debt, publication of advertisement is deferred by two months from today. Post on 29.6.2015.