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In Re: Chhayabani P. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Petition No. 32 of 1979
Judge
Reported in[1981]51CompCas369(Cal)
ActsCity Civil Court Act, 1953 - Section 5(4); ;Companies Act, 1956 - Section 434; ;Indian Succession Act, 1925 - Section 214
AppellantIn Re: Chhayabani P. Ltd. and ors.
Advocates:Nirmalendu Roy, Adv.
Cases ReferredJagdish Chandra Gupta v. Kajaria Traders
Excerpt:
- .....1839 of 1978 (chhayabani private limited v. aruendra kishore roy chowdhury) before the 8th bench, city civil court, on the 19th of september, 1978, and obtained an ex parte order of ad interim injunction, restraining the said aruendra kishore roy chowdhury, since deceased, from filing any winding-up petition before this court under section 434 of the companies act, 1956. it appears that the said city civil court had no jurisdiction under the companies act and, therefore, if any order has been passed that must be deemed to be without jurisdiction and a nullity. it is further alleged by the petitioner that the suit before the city civil court has abated and as no substitution has been effected after the death of the said aruendra kishore roy chowdhury, the sole defendant in the suit,.....
Judgment:

Salil K. Roy Chowdhury, J.

1. This is an application for winding up which was presented on the 29th of January, 1979, and on the returnable date notice was directed to be served on the company along with a copy of the petition. The company appeared and took direction for filing affidavit to show cause why the petition should not be admitted. The petitioning creditors also obtained leave to file an affidavit in reply. Thereafter, the matter was mentioned several times before me for the court order but ultimately nothing happened and the matter was heard.

2. The winding-up petition is presented by the heirs and legal representatives of a deceased creditor of the company. After serving a statutory notice of demand under Section 434 of the Companies Act, 1956, dated the 28th of August, 1978, the creditor, Shri Aruendra Kishore Roy Chowdhury, died intestate on the 29th November, 1978, leaving behind the petitioners, Mrs. Sukriti Devi Chowdhurani, the widow, petitioner No. 2, Shri Arup Roy Chowdhury, the son, and the petitioner No. 3, Miss Ajapa Roy Chowdhury, and petitioner No. 4, Miss Ajoya Roy Chowdhury, two daughters. The claim arises out of the loans advanced by the said deceased creditor, Aruendra Kishore Roy Chowdhury, on the 8th of January, 1977, 10th of January, 1977, and 15th of January, 1977, Rs. 1,25,000, Rs. 75,000 and Rs. 25,000, respectively, to the company for the company's business particularly for the print and publicity of a picture known as ' Sabyasachi ' and the company duly executed three promissory notes on the respective dates payable on demand with interest @ 8% on the sum of Rs. 2,00,000 covered by the promissory notes dated the 8th and 10th of January, 1977, and @ 12% on the promissory note for Rs. 25,000 dated the 15th January, 1977. It appears that in order to prevent the said creditor, Aruendra Kishore Roy Chowdhury, since deceased, to present any winding-up petition, the company filed a suit, being Title Suit No. 1839 of 1978 (Chhayabani Private Limited v. Aruendra Kishore Roy Chowdhury) before the 8th Bench, City Civil Court, on the 19th of September, 1978, and obtained an ex parte order of ad interim injunction, restraining the said Aruendra Kishore Roy Chowdhury, since deceased, from filing any winding-up petition before this court under Section 434 of the Companies Act, 1956. It appears that the said City Civil Court had no jurisdiction under the Companies Act and, therefore, if any order has been passed that must be deemed to be without jurisdiction and a nullity. It is further alleged by the petitioner that the suit before the City Civil Court has abated and as no substitution has been effected after the death of the said Aruendra Kishore Roy Chowdhury, the sole defendant in the suit, whereas the respondent company alleged that they were taking steps for substitution in the said City Civil Court suit.

3. Mr. Nirmalendu Roy who appeared for the petitioning creditors submitted, drawing my attention to the promissory notes and also the statutory notice and replies thereto, that there is no bona fide dispute whatsoever raised by the company to the claim of the petitioning creditors. He submitted that the company's contention sought to be raised in reply to the said statutory notice, and also the said false, frivolous and vexatious suit filed before the City Civil Court, are not bona fide, but have been raised for the purpose of weaving a cobweb and amusing itself. Mr. Roy submitted that the said City Civil Court has no jurisdiction to entertain the said suit, as the said suit, in substance, is for forestalling the said Aruendra Kishore Roy Chowdhury from presenting a winding-up petition in respect of his said claim for which the statutory notice was served under Section 434 of the Companies Act on the company. It cannot be disputed that the said City Civil Court has no jurisdiction to deal with any matter relating to or arising out of the Companies Act and the Company cannot by some subterfuge and camouflage invoke the jurisdiction of the City Civil Court in respect of the company, preventing any petitioning creditor from presenting a winding-up petition against it under the Companies Act. The company admits the loan but is trying to dispute that the said loan was advanced for acquiring the world distribution right of a Bengali film, ' Job Charnaker Bibi ', and it is alleged that the said creditor agreed and it is further alleged that the said creditor agreed to be paid out of the box office collection of the said film. The company has specifically admitted the execution of the two promissory notes, one for Rs. 2,00,000 and another for Rs. 25,000 but alleged that those were collateral securities and were not to be enforced. Reading the plaint filed before the City Civil Court as a whole, which is the principle for the construction of a plaint, it is quite clear that the claim in the plaint was in substance for obtaining injunction restraining the said deceased creditor, Shri Aruendra Kishore Roy Chowdhury, the only defendant in the said City Civil Court suit, for obtaining an injunction restraining him from giving effect to the notice under Section 434 of the Companies Act, 1956, and, therefore, the said suit and order made therein are without jurisdiction and are nullities. Therefore, I am of the view that there is no substance or merit in the defence sought to be raised by the company and there is no bona fide dispute raised to the claim of the petitioning creditors.

4. A question has also been raised as to whether the petitioners can maintain a winding-up petition without obtaining a succession certificate against the company as they are the heirs of the deceased creditor. It is also alleged by the company that on or about 28th of July, 1978, it received a notice under Section 226(2) and (3) of the I.T. Act whereby a sum of Rs. 42,307 due and payable by the said creditor, Aruendra Kishore Roy Chowdhury, deceased, was directed to be paid to the I.T. Dept. and the said amount was attached out of the money payable by the company to the said deceased creditor. It is admitted that the company has not paid any amount to the I.T. Dept. The petitioner submitted that the said notice has nothing to do with the petitioning creditor and in any event the income-tax notice is liable to be cancelled and not relevant for the purpose of this application. But the fact is admitted that the amount was not paid by the company.

5. After carefully considering the matter, I am of the view that the present application cannot be said to be an abuse of the process of the court ; further, the attitude of the company appears to be highly dishonest and against commercial morality. They are trying to take advantage of the unfortunate position of the petitioning creditors, which they have been put to, due to the sudden death of the original creditor, Aruendra Kishore Roy Chowdhury, after the service of the statutory notice under Section 434 of the Companies Act. The company has not disclosed any document to show any agreement with the deceased creditor regarding payment out of the box office collection of the Bengali film, ' Job Charnaker Bibi ', but on the other hand the company has admitted the loan and execution of the promissory notes and, therefore, there is no defence to the liability to pay the said amount to the heirs of Aruendra Kishore Roy Chowdhury, who are now the petitioning creditors in this application. Presentation of a winding-up petition is a statutory right for preventing an insolvent company from carrying on business as that would really amount to a public danger; therefore, the company having no defence whatsoever against the claim of the petitioning creditor, it cannot be said to be an abuse of the process of the court and in my view there is no question of any succession certificate for presenting the winding-up petition at this stage as the petitioners are not asking for any decree nor executing any order in favour of the deceased creditor. The attitude of the company appears to be highly dishonest and at this stage I cannot but hold that the company has no defence to the claim and the company must be held to be unable to pay its debts.

6. The only question, which is to be decided, is as to whether the petitioning creditor can maintain this winding-up petition after the death of the creditor, Aruendra Kishore Roy Chowdhury, who served the statutory notice of demand on the company and the company failed to pay the amount as I have already stated. The liability is admitted but the dispute sought to be raised by the company is not only highly improbable but without any scrap of document supporting the said contention. Only because the said deceased creditor was a technical adviser of the company, it cannot support the contention that the loan advanced by the deceased creditor was to be paid out of the box office collection of a particular picture as alleged by the company. This contention is not only dishonest but an after thought and cannot at all be bona fide, there being a clear admission on the part of the company about the said loan and the execution of the promissory notes evidencing the said loan, where the rate of interest is clearly stated in both the said two promissory notes, which are annexed to the petition. There appears to be no defence either in fact or in law to the debt due to the deceased for which the statutory notice was served on behalf of the deceased creditor, Aruendra Kishore Roy Chowdhury, and the company failed to pay the said amount and anticipating the winding-up proceedings, instituted a suit in the City Civil Court which, I have held, is not maintainable, as the City Civil Court has no jurisdiction to stay winding-up proceedings or issue injunction for presenting a winding-up petition, as the same arises out of the Indian Companies Act, or relating thereto and it is clearly excluded from the jurisdiction of the City Civil Court. Further, it is not clear whether the company has taken any step for the substitution of the petitioning creditors in the said suit and whether the alleged injunction is still continuing. Be that as it may, the said order of the City Civil Court must be held to be a nullity as it is without jurisdiction and cannot have legal effect. It will be clear from the First Schedule under Section 5(4), item 10(i), of the City Civil Court Act, 1953, which provides as follows :

' 10. Suits and proceedings-

(i) Under the Indian Companies Act, 1956, or the Banking Companies Act, 1949, or

(ii) relating to or arising out of the constitution, incorporation, management or winding up of corporations.'

' 5. (4) The City Civil Court shall not have jurisdiction to try suits and proceedings specified in the First Schedule. '

7. This provision is quite clear and the suit and proceeding which the company has instituted before the City Civil Court is in substance under the Companies Act, for obtaining injunction or stay of the winding-up proceedings under the Companies Act, which may be filed pursuant to a notice under Section 434 of the Companies Act, 1956.

8. The presentation of a winding-up petition is a statutory right which no one can be prevented from exercising. Further, I have already held that the suit which the company has filed in the City Civil Court is, in substance, for the stay of a prospective winding-up proceeding under the Companies Act, 1956, or in other words preventing the petitioning creditor from presenting a winding-up petition anticipating that the same would be presented after the expiry of the period of the statutory notice under Section 434 of the Companies Act, by the deceased petitioning creditor. It can now be said to be well settled that the right of a petitioning creditor to present a winding-up petition or of a creditor presenting an insolvency petition is a statutory right and not arising out of any particular contract or of a loan transaction between the petitioning creditor and the debtor. See Sreemannarayanamurthy v. C. Arjanadu, AIR 1939 Mad 145. The said decision has been approved in the Supreme Court decision in Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., : [1964]8SCR50 . Therefore, the present petitioning creditor's right to present a winding-up petition against the company cannot be said to be affected by any question of getting a succession certificate under Section 214 of the Indian Succession Act. The question would have arisen only for the realisation of the said debt from the company had the debt been admitted and the company offered to pay to the estate of the deceased, but this is not a case where the company has admitted the claim but is trying to raise a dispute and which I have already held as not bona fide and, therefore, the company is unable to pay its debts. In the facts and circumstances of this case the company is liable to be wound up under the Companies Act, being a dishonest company and which is a public danger, la short, for enforcing a statutory right there is no question of any succession certificate at this stage. Therefore, the present winding-up petition is maintainable and the same is not an abuse of the process of the court, on the other hand disputes sought to be raised by the company are not bona fide and there is no substance or merit in the defence raised by the company either in fact or in law at this stage.

9. I deferred delivering the judgment and order in this application as the parties repeatedly represented before me that there is a possibility of settlement between them, that is, the company would satisfy the claim of the petitioning creditors or make provision for the same, but, ultimately, I was told that there was no such possibility and, therefore, I have to dispose of the matter.

10. Therefore, I am making the following order :

The winding-up petition is admitted. It is to be advertised once in Statesman, once in Jugantar and the advertisement in Calcutta Gazette is not necessary to be published as it has suspended publication since June, 1979. The matter to appear in the list on the 17th of December, 1979.


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