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Pandam Tea Co. Ltd. Vs. Darjeeling Commercial Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberAppeal No. 160 of 1971
Judge
Reported in[1977]47CompCas15(Cal),80CWN172
ActsCompanies Act, 1956 - Sections 431, 434, 439(1) and 439(2)
AppellantPandam Tea Co. Ltd.
RespondentDarjeeling Commercial Co. Ltd.
Appellant AdvocateA.C. Bhabra and ;B.K. Chatterjee, Advs.
Respondent AdvocateS.C. Sen and ;Jayanta Mitra, Advs.
DispositionAppeal dismissed
Excerpt:
- .....of ghose j. dated may 3 and may 13, 1971, rejecting the appellant-company's petition for permanent stay of winding-up proceedings against it.2. the respondent, on service of a notice under section 434 of the companies act, filed a petition stating that a sum of rs. 3,00,000 was lent and advanced by it to the appellant on a second charge of the assets of the company and the amount was a running loan from year to year shown in the balance-sheets of the company. the loan was acknowledged in the last balance-sheet of the company as on december 31, 1967, and was also otherwise acknowledged in writing by the appellant from time to time. no part of the loan was paid in spite of the notice under section 434 of the act and, accordingly, the company should be wound up. this petition, being company.....
Judgment:

Salil Kumar Datta, J.

1. This is an appeal against an order of Ghose J. dated May 3 and May 13, 1971, rejecting the appellant-company's petition for permanent stay of winding-up proceedings against it.

2. The respondent, on service of a notice under Section 434 of the Companies Act, filed a petition stating that a sum of Rs. 3,00,000 was lent and advanced by it to the appellant on a second charge of the assets of the company and the amount was a running loan from year to year shown in the balance-sheets of the company. The loan was acknowledged in the last balance-sheet of the company as on December 31, 1967, and was also otherwise acknowledged in writing by the appellant from time to time. No part of the loan was paid in spite of the notice under Section 434 of the Act and, accordingly, the company should be wound up. This petition, being Company Petition No. 225 of 1970, was admitted by K.L. Roy J. on January 19, 1971, and necessary directions for advertisements were issued.

3. The appellant took out judge's summons for permanent stay of the proceedings disputing the claim. It was stated that the fictitious loans were shown as advanced by the respondent to the appellant when both the appellant and the respondent-companies were under common management and, further, a false mortgage on assets of the appellant was created on the basis of the aforesaid loans. The appellant instituted Suit No. 50 of 1970 at Darjeeling for a declaration that the respondent had no legal right to enforce the mortgage. In that suit an injunction was issued on November 26, 1970, restraining the respondent from 'proceeding in any action onbasis of demands ' in the notice under Section 434 of the Act. In any event the claim was barred by limitation as the loan was advanced even according to the respondent some time in 1951.

Ghose J. held that the respondent had a prima facie case. An admission of indebtedness in balance-sheets was sufficient acknowledgment under the Limitation Act. Further, the injunction of the Darjeeling court did not prevent the respondent from proving the appellant's inability to pay debt by evidence aliunde apart from the presumption under Section 434. The petition for stay, as already stated, was accordingly dismissed.

4. Mr. Bhabra and later on Mr. Chatterjee contended, firstly, that the application for winding up was lacking in material particulars and the obligation to furnish the particulars is mandatory as provided in the Companies (Court) Rules, 1959, Rule 95 and Forms 45 and 46. Further, there was an inconsistent case about the claim. The loan was once stated to be a sum of Rs. 3,00,000, while at another place it was stated to be a running loan. There can be no dispute and it is an essential requirement of law that the requisite particulars of the indebtedness of the company on which the insolvency proceeding is initiated against such company should find place in the notice of demand under Section 434 as also in the petition for winding up. Such particulars are necessary to enable the company to meet the claim of the petitioning-creditor. Absence of material and requisite particulars thereof will invalidate the petition for winding up of the company as in such proceedings there should be no bona fide dispute about the indebtedness of such company to the petitioning-creditor. In the context of the circumstances of this case, however, we do not think that absence of the particulars as alleged, of accurate statement about the claim, should affect the maintainability of the petition filed by the respondent. There is clear and unequivocal admission of debts in the last balance-sheet of the appellant for the year 1967. There is, accordingly, no question of any prejudice to the appellant-company by the alleged absence of the particulars as the loan was admitted and acknowledged in the balance-sheets from year to year as alleged and these allegations have not been disputed.

5. The appellant has further urged that the loans were fictitious and had been manufactured when the parties were under common management. It would again appear that even when the common management ceased, the loans had been acknowledged by the appellant in its balance-sheets in succession. The balance-sheet for the year 1967 was signed by S.N. Sarawgee, director, who is the deponent on behalf of the appellant in the stay of winding-up proceedings initiated by it. Further, there is no evidence of any steps being taken by the appellant for declaration that the loans in question were fictitious in the context of the admissions made in the balance-sheet.

6. It was next contended that the claim was barred by limitation. Admission of indebtedness in balance-sheets has been held to be acknowledgment as contemplated in Section 18 of the Limitation Act, 1963. The respondent alleged that the indebtedness was acknowledged in successive balance-sheets, lastly in the balance-sheet for the year 1967. There is no denial that there was any such acknowledgment in the balance-sheets and the plea of the bar of limitation accordingly cannot be sustained.

7. It was further contended that at the material time there was an injunction by the Darjeeling court restraining the respondent from proceeding in any action on the basis of the demands made in the notice of the solicitor of the respondent to the appellant. The application for winding-up was admitted on June 16, 1970, and came up for hearing on January 19, 1971, when the injunction order was produced before the court. Order for advertisement was passed on that date but the court stayed advertisement for three weeks to enable the appellant to move for permanent stay of winding-up proceeding. The appellant then took out judge's summons on February 9, 1971, for dismissal of the winding-up petition, or, in the alternative, for permanent stay of the winding-up proceeding. The order for advertisement was thus an order of the court which the court on its own stayed for some time to enable the appellant to take steps for stay and such steps were in fact taken by the appellant.

8. The proceeding for stay of winding up was initiated by the appellant and the injunction could not accordingly be operative on the respondent for opposing the application for stay in respect whereof there was no injunction. Further, in any event, the respondent in the connected proceeding was restrained from proceeding in any action on the basis of demands made in the solicitor's notice under Section 434. The demand in such notice is for winding up the company on the basis that the company is to be deemed to be unable to pay its debts when such debts are not secured or compounded to the satisfaction of the creditor within the statutory period. The creditor, apart from notice under Section 434, which even if it is treated as non-existent is entitled to prove by other evidence that the company is unable to pay its debts. It was observed in In the matter of Darjeeling Bank Ltd., [1949] 19 Comp Cas 1, 9 (Cal) by S.R. Das J. (as his Lordship then was), that the invalidity of notice under Section 434,

'......will only prevent the petitioner from getting the benefit ofpresumption as to the company's inability to pay its debts but the petitioner may prove such inability as a fact aliunde '.

9. The respondent before us, from the materials produced, has prima facie established the appellant's indebtedness to it as claimed and there is no averment or case by the appellant in the affidavits in support of the judge's summons or otherwise that the appellant at the material time was in a position to pay off or compound its debts. Further, it appears that the Darjeeling suit was dismissed for default on July 21, 1973. It was said that the suit has been restored but no paper in support was produced. For all these reasons we are unable to accept the contention raised on behalf of the appellant.

10. The last point urged on behalf of the appellant is that in view of the secured debt as alleged by the respondent, the petition for winding up was not maintainable unless the security was given up. This contention is untenable by the express provisions of Section 439(1)(b) which states that a petition for winding up of a company can be made by any creditor. Under Sub-section (2) a secured creditor is to be deemed to be a creditor within the meaning of clause (b) of Sub-section (1).

11. For all these reasons and as all the contentions raised by the appellant fail, this appeal is dismissed with costs.

Sankar Prasad Mitra, C.J.

12. I agree.


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