Research › Search › Judgment

Gujarat High Court · body

2016 DIGILAW 364 (GUJ)

Hajee A. P Bava v. Sparta Cements and Infra Ltd.

2016-02-16

ABHILASHA KUMARI

body2016
JUDGMENT ABHILASHA KUMARI, J.:— The present petition under Sections 433 and 434 of the Companies Act, 1956 (“the Companies Act”) has been preferred by the petitioner with a prayer to issue an order of winding-up of “M/s. Sparta Cements and Infra Limited”, the respondent-Company, and to appoint the Official Liquidator attached to this Court as the Liquidator of the entire assets, properties, affairs and records of the respondent-Company, with all/available powers under the Companies Act. 2. It is the case of the petitioner that the respondent-Company has been incorporated under the provisions of the Companies Act and its registered office is situated at 400, Platinum Plaza, Judges Bungalow Road, Ahmedabad, Gujarat-380054. The respondent-Company is a Public Limited Company engaged in the business of manufacturing cement and allied products. It has changed its name to “Star Cements and Infra Limited” vide Fresh Certificate of Incorporation dated 16.01.2008, issued by the Registrar of Companies, Gujarat, Dadra and Nagar Haveli. On 2 7.03.2008, the Company again changed its name to “Deepak Cements and Chemicals Limited”. Thereafter, the respondent-Company changed its name to “Sparta Cements and Infra Limited” on 25.10.2008 The fresh Certificate of Incorporation dated 25.10.2008, issued by the Registrar of Companies, Gujarat, Dadra and Nagar Haveli, is annexed as Annexure-D to the petition. According to the petitioner, the respondent-Company has failed to discharge its undisputed liability, hence, it is urged, an order of winding-up may be passed by this Court. 3. The petitioner is engaged in the business of undertaking engineering and mechanical contracts for fabrication, erection, installation and commissioning in the areas of cement, steel and power projects. The respondent-Company placed a Work Order dated 09.11.2006, with the petitioner, for the fabrication, erection, installation and commissioning of a cement factory, at Kutchh, Gujarat. The petitioner completed the project successfully, as per the terms and conditions of the Work Order. Bills were issued periodically to the respondent-Company for the payment of the works done by it the petitioner. 4. It is the case of the petitioner that several bills issued by the petitioner to the respondent-Company, have not been honoured and have remained unpaid. The total outstanding amount, as per the Books of Accounts of the petitioner, as on 30.04.2010, amounts to Rs. 3,48,55,560=57. On 06.02.2010, the officials of the petitioner had a meeting with Mr. Hemant Pandey, the CMD of the respondent-Company, at its registered office at Ahmedabad. The total outstanding amount, as per the Books of Accounts of the petitioner, as on 30.04.2010, amounts to Rs. 3,48,55,560=57. On 06.02.2010, the officials of the petitioner had a meeting with Mr. Hemant Pandey, the CMD of the respondent-Company, at its registered office at Ahmedabad. During this meeting, it was decided that the claim of the petitioner would be settled on, or before, 28.02.2010 A copy of the Minutes of the Meeting held on 06.02.2010 is annexed at Annexure-G to the petition. However, the respondent-Company did not make any payment pursuant to the decision arrived at the said meeting. Thereafter, the petitioner frequently demanded the settlement of the total outstanding dues, by various written communications, telephone calls and e-mails. However, the respondent-Company has failed to make any payment. 5. It is further the case of the petitioner that in part-payment of the dues, the respondent-Company has issued ten Cheques of rupees ten lakh each, drawn on Union Bank, Ashram Road, Ahmedabad Branch. However, all the above Cheques were dishonoured due to “insufficient funds” in the account of the respondent-Company. The petitioner has filed complaints under Section 138 of the Negotiable Instruments Act, 1881, against the respondent-Company and its Managing Directors, which are pending. As the respondent-Company has consistently failed to make payment of the amount due to the petitioner, Notice under Section 434 of the Companies Act, was issued to it on 20.01.2011 The respondent-Company replied to the statutory notice on 10.02.2010, admitting the outstanding amounts and stating that it has approached Banks to restructure the loans for the sanction of fresh working capital limits and is in the process of looking out for new investors. The petitioner asserts that respondent-Company has, therefore, acknowledged its liability, and the prayers made in the petition deserve to be granted. 6. This Court has heard Mr. R.D Kinariwala, learned advocate for Mr. P.T Chacko, learned advocate for the petitioner and Mr. D.K Trivedi, learned advocate for the respondent-Company, at length, and perused the material on record. 7. Mr. R.D Kinariwala, learned advocate for the petitioner, has taken the Court through the contents of the reply dated 10.02.2010, to the Statutory Notice issued by the respondent-Company, the communications issued by the petitioner to the respondent-Company and vice-versa. D.K Trivedi, learned advocate for the respondent-Company, at length, and perused the material on record. 7. Mr. R.D Kinariwala, learned advocate for the petitioner, has taken the Court through the contents of the reply dated 10.02.2010, to the Statutory Notice issued by the respondent-Company, the communications issued by the petitioner to the respondent-Company and vice-versa. In the reply to the Statutory Notice, the respondent-Company has not denied its liability but, on the contrary has stated that within a short span of two to three months, it would restart its operation and clear the dues of the contractors and suppliers, after confirming their final balances. The respondent-Company has requested the petitioner to submit the final bill, along with complete material reconciliation under the work order, to complete the accounting work. In the Minutes of the Meeting held between the petitioner and the respondent-Company on 06.02.2010, it has been specifically recorded that it has been decided that the outstanding dues of the sundry debtors would be settled by the respondent-Company on, or before, 20.02.2010 8. Learned counsel for the petitioner has relied upon a judgment of the Supreme Court in Vijay Industries v. NATL Technologies Ltd.- AIR 2009 SC 1695 , to submit that interest would come under the purview of the word ‘debt’ in Sections 433 and 434 of the Companies Act. 9. Learned counsel for the petitioner has taken the Court through the various orders passed by this Court and the Undertaking given by the respondent-Company before this Court, to which the Court would advert later. 10. Mr. D.K Trivedi, learned advocate for the respondent, has submitted that the respondent-Company is trying to reconstruct its business and would start functioning soon, with the help of the Bank of Sharjah, as talks of settlement, or term loan, are going on, which is likely to be sanctioned within a short spell of time. 11. Apart from the above stand, no dispute has been raised by the respondent-Company to the dues payable by it to the petitioner. Hence, there remains no doubt regarding the fact that the dues of the petitioner have been admitted by the respondent-Company. 12. On 07.08.2014, this Court has passed an order admitting the petition. However, the order of publication had been deferred, at the behest of learned counsel for the respondent, with a view to enabling the respondent-Company to overcome its financial crisis. 13. 12. On 07.08.2014, this Court has passed an order admitting the petition. However, the order of publication had been deferred, at the behest of learned counsel for the respondent, with a view to enabling the respondent-Company to overcome its financial crisis. 13. The respondent-Company filed an Undertaking before this Court on 18.11.2014, whereby eight Cheques, drawn on IDBI Bank, were handed over to the petitioner, as below: Sr. No. Cheque No. Cheque Date Amount 1. 866159 10/04/15 25,00,000/- 2. 866160 16/04/15 50,00,000/- 3. 866161 22/04/15 50,00,000/- 4. 866162 30/04/15 50,00,000/- 5. 866163 10/05/15 50,00,000/- 6. 866164 16/05/15 50,00,000/- 7. 866165 23/05/15 50,00,000/- 8. 866166 31/05/15 23,55,560=57 Total: 3,48,55,560=57 14. It is specifically stated by the respondent in the Undertaking that “the Respondent further undertakes that the aforesaid cheques would be cleared on being presented with the bank” (emphasis supplied). 15. It is an admitted fact that all the above Cheques have been dishonoured by the Bank. The respondent-Company has, therefore, failed to honour the Undertaking given by it to this Court. Even thereafter, sufficient time has been granted to the respondent-Company in order to make the necessary payment to the petitioner, which it has failed to do, up to date. 16. In the order dated 02.07.2015, this Court (Coram: Hon'ble Mr. Justice V.M Pancholi) has stated as below: “9. From the record, it emerges that the respondent-company has, though admitted its liability, not made payment to the petitioner-company though sufficient opportunity is given. The petition is filed in the year 2012. On the request of the respondent-company, this Court adjourned the matter from time to time with a view to give chance to the respondent-company to come out from the financial crisis. However, from the evidence on record, it is clear that the respondent is not in a position to pay its debts and, therefore, as per Section 433 read with Section 434 of the Companies Act, prima facie it is revealed that the respondent-company is unable to pay its debts. In view of this position, the following order is passed. 10. The Official Liquidator attached to this Court is appointed as provisional liquidator. The provisional liquidator shall take charge and custody of the assets, the properties, the books of account and the record of the respondent company after drawing inventory and a panchanama. 11. In view of this position, the following order is passed. 10. The Official Liquidator attached to this Court is appointed as provisional liquidator. The provisional liquidator shall take charge and custody of the assets, the properties, the books of account and the record of the respondent company after drawing inventory and a panchanama. 11. By way of interim relief, the respondent company is restrained from alienating and/or disposing of any of its properties or assets in any manner whatsoever. 12. At this stage, learned advocate for the respondent-company Mr. Trivedi once again requested that this Court may give last chance to the respondent-company to settle the matter with the petitioner and, therefore, at this stage, order of advertisement may not be passed and the same may be deferred for a period of eight weeks. The request is accepted. The publication of advertisement is deferred for a period of eight weeks. S.O to 4.9.2015” 17. As is clear form the above order, once again, the order of publication of the advertisement was deferred by this Court, at the behest of the respondent. The opportunity granted to the respondent-Company by the Court was not availed of and the respondent-Company still did not make the payment of the outstanding dues to the petitioner. Therefore, by an order dated 06.10.2015 this Court (Coram: Hon'ble Mr. Justice V.M Pancholi) permitted the petitioner to publish an advertisement in the Gujarati daily newspaper “Sandesh” and the English daily newspaper “Indian Express”, Ahmedabad editions. The publication of the advertisements has been carried out as per the directions of this Court. 18. When the petition came up for final hearing on 2 7.01.2016, Mr. D.K Trivedi, learned advocate for the respondent-Company made a statement, upon instructions, that the respondent-Company is desirous of settling the dues of the petitioner, therefore, time, as prayed for, was granted. As the respondent-Company failed to arrive at any settlement with the petitioner or make the payment of its outstanding dues, this Court has no option but to pass the final order after hearing the learned counsel for the respective parties. 19. The only submission advanced on behalf of the respondent-Company is that it is in the process of having talks with a new investor and expects to get sufficient funds after about twenty days. 20. 19. The only submission advanced on behalf of the respondent-Company is that it is in the process of having talks with a new investor and expects to get sufficient funds after about twenty days. 20. This Court has granted more than sufficient time to the respondent-Company in order to make the payment of the outstanding dues of the petitioner, not disputed by the respondent-Company. The Undertaking given by the respondent-Company before this Court has not been honoured by it and all the Cheques handed over to the petitioner pursuant to the said Undertaking have been dishonoured despite a specific statement that all the Cheques would be honoured. The entire sequence of events, as disclosed hereinabove, does not inspire sufficient confidence in the Court so as to show more leniency to the respondent-Company by granting time. 21. From the material on record, including the affidavit-in-reply filed by the respondent-Company and the consistent failure of the respondent-Company to make good the admitted dues of the petitioner, it is amply evident that the respondent-Company has lost its financial substratum and is unable to pay its debts. 22. Insofar as the judgment of the Supreme Court in Vijay Industries v. NATL Technologies Ltd. (supra), is concerned, there can be no dispute to the above proposition of law and no objection has been raised on behalf of the respondent-Company. 23. Considering the totality of the facts and circumstances of the case, this Court considers it just and proper to pass the following order: “M/s. Sparta Cements and Infra Limited”, the respondent-Company, is hereby ordered to be wound-up. The Official Liquidator attached to this Court is appointed as the Official Liquidator of the respondent-Company and is directed to take over the possession of the entire assets of the respondent-Company, that is, movables, immovables as well as Bank Accounts etc. The Official Liquidator is further directed to take all measures for the winding-up of the respondent-Company as provided under the Companies Act. 24. The petition is allowed, in the above terms.