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Rajasthan High Court · body

2018 DIGILAW 257 (RAJ)

In Re : Vikas Sethia v. .

2018-01-18

SANJEEV PRAKASH SHARMA

body2018
JUDGMENT Sanjeev Prakash Sharma, J —By way of the Company Petition No.23/2014, the petitioner has submitted that he was working as an Associate Vice-President in a multinational company in Mumbai and quit his well paying job for the purpose of forming a technology solution company. The petitioner and one Mr. Nikhil Gupta started the Company namely; Delivery Cloud Private Limited, having its registered office at B-70, Bais Godaam Industrial Area, Road No.4, Jaipur, together as equal shareholders and the Directors of the Company. The petitioner made a capital contribution of Rs.50, 000/- in the Company. 2. The petitioner has further submitted that following amounts were advanced by him as unsecured loans to the Company to meet its financial requirements:- (1) Rs.11, 50, 000/- By direct account transfer to the account of the Company held in IndusLnd Bank (2) Rs.11, 000/- By depositing in SBBJ Account of the Company in Sept., 2013 (3) Rs. 37, 000/- By purchasing five mobile phones/tablets for the Company. (4) Rs.1, 30, 500/- By paying from his own account the salaries to the employees of the Company namely; Manoj Jangid, Naval Jangid, Suneel, Ravi Yogendra Pal as also the Payment to the IT freelancing team engaged as consultants namely; Anirudh Batwara and Darpan Pathak for the Month of April, 2014. (5) Rs.19, 200/- By paying amount from his own account due to the third party vendors of the Company for upkeep & installation of Vending Machines in the office of the Company. (6) Rs.50, 000/- Original Capital Contribution. 3. Thus, the petitioner submitted that a total amount of Rs.13, 48, 200/- is required to be paid by the Company for which he raised a demand and also sent a winding up notice on 11/08/2014 at the registered office of the Company demanding repayment of debt alongwith interest within a period of 21 days. On 06/09/2014, Mr. Nikhil Gupta, Director of the Company sent reply to the notice denying to pay the dues. 4. Accordingly, the petitioner prays that the Company be wound up in terms of the provisions of Section 433, 434 and 439 of the Companies Act, 1956 and Official Liquidator be appointed to take charge of the assets, properties, business affairs and bank accounts of the Company. 5. 4. Accordingly, the petitioner prays that the Company be wound up in terms of the provisions of Section 433, 434 and 439 of the Companies Act, 1956 and Official Liquidator be appointed to take charge of the assets, properties, business affairs and bank accounts of the Company. 5. Learned counsel for the petitioner pointed out that the amount, which the petitioner is claiming, is an acknowledged and are unambiguous debts and there is no bonafide dispute relating to the debt which the Company is owed to pay to the petitioner. As it has failed to pay its debts, the Court should order winding up of the Company. 6. Learned counsel for the petitioner relied upon the the law laid down by the Supreme Court in the case of M/s. Vijay Industries Vs. NALT Technoloties Ltd , (2009) AIR(Supreme Court) 1695 and Madhusudan Gordhandas and Co. Vs. Madhu Woolen Industries Pvt. Ltd , (1971) 3 SCC 632 . He also relied on the law laid down by this Court in the case of Panchsheel Colonizers Pvt. Ltd. Vs. Ranva Real Estate Pvt. Ltd. (SB Company Petition No.1/2013) , decided on 01/10/2015 and Cisco Systems Capital India Pvt. Ltd. Vs. M/s Aksh Optifibre Limited (SB Company Petition No.10/2013) , decided on 14/10/2015. He also relied upon the law laid down by the Delhi High Court in the case of Karam Chand Thapar and Bros (Coal) Sales ltd. Vs. Acme Paper Ltd , (1994) AIR(Delhi) 1. 7. It is further submitted that the bank statement clearly suggests that the loans were advanced directly to the Company and were put to use by the Company in its day to day operations. 8. Per-Contra, learned counsel appearing for the Company submits that the petitioner has preferred this winding up petition which is a part of the modus-operandi of the petitioner to snatch the business property of the Company and to cause irreparable loss to the other shareholder. It is submitted that a criminal case was registered against the petitioner by the Company with the allegation of theft and forgery of the Company's assets/contracts and as per Police investigation, prima-facie the petitioner has been found guilty of stealing softwares of the Company which were the sole earning asset of the Company and were most valuable. It is submitted that a criminal case was registered against the petitioner by the Company with the allegation of theft and forgery of the Company's assets/contracts and as per Police investigation, prima-facie the petitioner has been found guilty of stealing softwares of the Company which were the sole earning asset of the Company and were most valuable. The petitioner, by misusing his position as Director of the Company, has fraudulently transferred contracts of the Company by providing delivery solution to the client using software stolen by him in favour of his private firm. For the said offence, he was arrested and sent to judicial custody. The present petition is an afterthought and is a hostile attempt to wind up the Company with the purpose to influence the criminal proceedings because on the event of winding up of the Company, the petitioner and his private firm would become the sole owner of the stolen asset and contracts of the Company. 9. It is submitted that the Company is a two Directors' Company and the petitioner being one of the Directors, no Board meeting is possible without his presence and no decision can be taken without his knowledge and presence in the Board. The petitioner, being signatory to the check books of the Company, no money can be withdrawn or paid by the Company and the petitioner, being a Chartered Accountant, is well aware of the affairs of the Company including validation of any transaction or repayment of any dues which cannot be made without his express consent and presence. 10. In view thereof, the Company has not been able to continue its operation. The allegations levelled by him of the Company not being able to pay his dues, are merely an eye-wash as he himself would be answerable as Director of the Company regarding repayment of the loan. It is submitted that there is no document to prove that the suo-motu transfer of money made by him into the Company's Bank Account is loan to the Company. Simple entry in the Bank Statement cannot be considered as loan. Consequently, an argument has been taken by the Director of the Company that the provisions of Section 180 of the Companies Act, 2013 would apply. It is submitted that the transactions claimed to be debt/loan, pertain to the period prior to 05/06/2005. Simple entry in the Bank Statement cannot be considered as loan. Consequently, an argument has been taken by the Director of the Company that the provisions of Section 180 of the Companies Act, 2013 would apply. It is submitted that the transactions claimed to be debt/loan, pertain to the period prior to 05/06/2005. Such debts/loans are not valid and effectual as per Clause (5) of Section 180 of the Companies Act, 2013. 11. The counsel for the Company further submitted that while originally under Section 180 of the Companies Act, 2013, the Private Companies were granted exemption from its applicability Section 180 vide exemption notification No.464(E) dated 05/06/2015, in view of the amended notification dated 13/06/2017, the exemptions, modifications and adaptations provided under Column (3) shall be applicable to a Private Company which has not committed any default in filing its financial statements. As the present Company has not filed its annual return or financial statements with the Registrar till date, therefore, the said exemption shall not be applicable to the Company. Thus, the Company is covered under the provisions of Section 180 of the Companies Act, 2013. 12. Learned counsel for the Company relies on the law laid down by this Court in the case of Shakti Agencies Vs. Manshuk Bhai Industries Ltd , (2007) 5 WLC(Raj) 436 to submit that the bonafide dispute about the debt is not a negligence on the part of the Company to pay its debt and the same cannot be a ground to seek winding up. 13. Learned counsel for the petitioner additionally submits that the Company needs to be wound up also in terms of Section 433 (c) and (f) of the Companies Act, 1956 as it has failed to commence its business from the date of its incorporation and has also failed to comply with the provisions of the Companies Act. The criminal proceedings registered against the petitioner have been challenged by the petitioner by filing a criminal misc. petition under Section 482 Cr.P.C. and the entire criminal proceedings have been stayed. It is submitted that the provisions of Section 180 of the Companies Act, 2013 would not apply and the restrictions contained therein would not apply to the present Company at all it being a Private Company and the exemptions which the Company has submitted in terms of the notification dated 03/07/2017 would have no bearing to the present case. It is submitted that the provisions of Section 180 of the Companies Act, 2013 would not apply and the restrictions contained therein would not apply to the present Company at all it being a Private Company and the exemptions which the Company has submitted in terms of the notification dated 03/07/2017 would have no bearing to the present case. 14. Having heard counsel for both the parties and after going through the entire record, this Court finds that the winding up order can be passed under Section 433 of the Companies Act, 1956 on the circumstances which read as under:- "433.Circumstances in which company may be wound up by Tribunal.- A company may be wound up by the Tribunal.- (a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal ; (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting ; (c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year ; (d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two; (e) if the company is unable to pay its debts ; (f) if the Tribunal is of opinion that it is just and equitable that the company should be wound up ; (g) if the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years ; (h) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality ; (i) if the Tribunal is of the opinion that the company should be wound up under the circumstances specified in section 424G : Provided that the Tribunal shall make an order for winding up of a company under clause (h) on application made by the Central Government or a State Government." 15. Thus, on any of the circumstances, which are brought to the notice of the Court, a Company can be ordered to be wound up. Thus, on any of the circumstances, which are brought to the notice of the Court, a Company can be ordered to be wound up. From the facts, as noted above, it is an admitted position that the Company in the instant case is a two Directors' Company with both the Directors before this Court at loggerheads and criminal proceedings have been initiated by one against the other and there remains no faith between both the Directors which has resulted in seriously affecting the interests of the Company. 16. Admittedly, as per reply, the Company has committed default in payment of its dues. The question whether the amount advanced by the petitioner-Director, would fall within the definition of loans to the Company would not be material for passing the order for winding up of the Company. Thus, this Court finds that the Company has not commenced its business within one year of its incorporation and its business has remained suspended for a whole year. 17. Thus, following aspects are noticed:- Firstly, no decision has been taken nor any Annual General Meeting has been called; secondly, in view of the dispute between both the Directors, the Company would be unable to pay its debts and thirdly, it would be just and equitable in the circumstances to wind up the Company. 18. The Company Petition is accordingly admitted. In view of the facts of the case as noted above, the Official Liquidator attached to this Court, is appointed as a Provisional Liquidator of the Company under Section 450 of the Companies Act, 1956 who shall immediately take steps to take possession of all movable and immovable assets of the Company. The Official Liquidator is also directed to represent the Company in any criminal proceedings registered against against any of its Directors or any other person and take all steps for protection of the properties of the Company. 19. The Citation of admission of winding up petition being admitted be published by the Official Liquidator in two daily newspapers i.e. Rajasthan Patrika (Jaipur Edition in Hindi) and Daily News & Analysis (DNA) (Jaipur Edition in English) . 20. As the Company has been directed to be wound up under Section 433 (c) , (e) & (f) of the Companies Act, 1956, both the Directors i.e. petitioner as well as Mr. Nikhil Gupta are directed to deposit jointly the necessary expenditures for the above publication. 20. As the Company has been directed to be wound up under Section 433 (c) , (e) & (f) of the Companies Act, 1956, both the Directors i.e. petitioner as well as Mr. Nikhil Gupta are directed to deposit jointly the necessary expenditures for the above publication. 21. At the same time, the Official Liquidator shall also see that the properties of the Company shall not be alienated and if during the pendency of the petition any property has been alienated or agreement has been entered into with any of the third party, steps for retrieval of the property shall be taken by the Official Liquidator.