K.A. Puj, J.@mdashThe present Company Petition is filed by the petitioner for winding up of the respondent-company on account of its failure to make payment of debt to the extent of Rs. 4,20,667/- together with interest at the rate of 24% p.a. to the petitioner.
2. The brief facts, giving rise to the present petition, as stated in the petition, are that the petitioner was appointed as a Sales Manager on a salary of Rs. 6500/- per month exclusive of bonus and commission with effect from 15.4.1994. That it was agreed between the petitioner and the respondent-company by virtue of the letter dated 12th March 1996 that the petitioner was entitled to get commission at the rate of 5% of the total sales of the company with effect from 15.4.1994 and over and above this commission the petitioner was also entitled to get 3% additional commission on all the orders placed to SMEC Inc., USA from India.
3. The petitioner has further stated in the petition that he has resigned from the company with effect from 28.1.1997 and the said resignation was accepted by the respondent-company on 7.2.1997. It is the say of the petitioner that as per the said letter dated 7.2.1997 accepting the resignation of the petitioner, the respondent-company has specifically stated that the company has received all the papers, files, and documents from the petitioner and that nothing was pending with the petitioner. It was also stated in the said letter that the company would send full and final settlement amount to the petitioner at the earliest.
4. The petitioner has further stated that despite having accepted the resignation of the petitioner the respondent-company had not made the payment to the petitioner and hence the petitioner had issued the notice through the Advocate on 11.2.1997 requiring the respondent-company to make the payment within a period of 7 days. In response to the said notice,the respondent-company vide its reply dated 24.2.97 has stated that as the papers and documents of the company were lying with the petitioner, the demand for payment of the money could not be considered. The petitioner thereafter issued a statutory notice dated 5.4.1997 under the provisions of Section 434(1)(a) of the Companies Act, 1956 requiring the respondent-company to make the payment of the debt to the extent of Rs. 4,20,667/= together with interest at the rate of 24% p.a.
5. The petitioner has further submitted that despite the receipt of the aforesaid notice the respondent-company has neither made any payment nor any reply was sent to the said notice. The petitioner, therefore, came to the conclusion that the company has neglected to pay the dues as demanded by the petitioner and that the petitioner was therefore commercially insolvent and liable to be wound up. The petitioner has, therefore, filed the present petition before this Court on or about 29th July 1997 making the prayer for winding up of the respondent-company under the provisions of the Act. This Court has issued the notice on the respondent-company on 29th September 1997 making it returnable on 8th October 1997. Despite the service of the notice, no one appeared on behalf of the respondent-company. The matter was adjourned from time to time thereafter and ultimately it was admitted by this Court on 20th January 1998 and this Court has passed the order with regard to the publication of advertisement in Local Daily Gujarati newspaper, namely ''Sandesh'' and English newspaper,namely ''Indian Express''. The publication of advertisement in the official gazette was dispensed with by the Court vide order dated 28.2.2001. The advertisement of the notice of petition was published in the English daily newspaper namely ''Indian Express'', Ahmedabad Edition on 3-2-1998, and Gujarati daily ''Sandesh'', Ahmedabad Edition on 2-2-1998. The affidavit to this effect was also filed before the Court on 5th February 1998. Despite the publication of advertisement in the newspapers, nobody appeared on behalf of the respondent-company and hence on the request having been made by the ld. advocate appearing for the petitioner, the matter was placed before the Court for Final Hearing of the petition and on 12-7-2001, this Court (Coram: C.K. Buch, J.) has passed an order recording the submissions of the petitioner''s advocate that the respondent-company is functioning and has deliberately not responded to the process served. The conduct of the respondent-company was to pressurise the petitioner by adopting delaying tactics by not appearing in the matter at appropriate time and stage. This Court has therefore without going into the merits of the case issued the directions to the respondent-company that the company should arrange for personal appearance of its Company Secretary or any Senior Director on 2-8-2001. On this date, one of the directors had remained present and one Jaish Krupakar has filed his appearance on behalf of the respondent-company and prayed for time to file affidavit-in-reply. The said affidavit-in-reply was tendered before this Court on 27.9.2001.
6. The respondent-company in its affidavit-in-reply has disputed the claim of the petitioner. It was stated in the said affidavit-in-reply that the petitioner was appointed by one Shri Baldev Chaudhry on the letterhead of SMEC INC on 31-3-1994 offering the petitioner monthly salary of Rs. 5500/- and Rs. 1000/- as petrol and maintenance allowance. The respondent-company has also challenged the genuineness of the letter dated 12.3.1996 produced by the petitioner at Annexure ''A'' to the petition. It was stated by the respondent-company that the said letter was forged as the respondent-company has given some blank letterheads with signatures of Mr. Pithubhai L. Chaudhari for attending to urgent work relating to custom, for taking delivery, for giving urgent reply, and for urgent bank correspondence and such blank letterheads duly signed were misused by the petitioner for making false and wrong claims against the respondent-company. The respondent-company has given number of reasons for establishing that the letter dated 12th March 1996 was a fabricated letter. The respondent has also disputed the letter dated 7th February 1997 produced by the petitioner at Annexure ''B'' to the petition. It is the say of the respondent that the petitioner should not have issued the legal notice immediately after 4 days, i.e. 11.2.1997 if the respondent-company would have issued the letter dated 7.2.97 agreeing to settle the account. It is therefore submitted by the respondent that the petitioner has put up false claims on the basis of forged documents. The respondent has further submitted in the affidavit-in-reply that the petitioner has also made the similar attempt by forwarding similarly fabricated letter dated 10-7-1996 to the Deputy Director of Enforcement to harass the respondent-company. However the Assistant Director of FERA dropped the proceedings against the company as well as Mr. Pithubhai L. Chaudhari by order dated 24.10.2000 as the petitioner failed to produce the original-letter dated 10.7.96 proving the signature of the said Pithubhai L. Chaudhari. The respondent has further submitted that the company is a growing concern and enjoying good reputation in the market and having a bright future. The respondent has given the details of sales and profit for the years 1994-95 to 1996-97 in the affidavit-in-reply. Lastly, it was submitted that the claim of the petitioner was in dispute and there existed a bonafide dispute between the petitioner and the respondent-company. It is further submitted that the disputed question of facts cannot be looked into in winding up proceedings as it requires a full-fledged trial and evidences were to be led before the competent Civil Court. The respondent therefore submitted that the winding up petition filed is not maintainable and deserves to be dismissed.
7. The petitioner has filed affidavit-in-rejoinder on 16th January 2002 denying the stand taken by the respondent-company in the affidavit-in-reply. The petitioner, inter alia, had stated in the rejoinder-affidavit that Mr. PL Chaudhary had resigned somewhere around the end of year 1997 on account of possibility of prosecution by the Custom Authorities and therefore his affidavit should not be relied upon for the purpose of present proceedings. It was further stated by the petitioner that the original-letter dated 10.7.1996 was produced before the Custom Authorities and the respondent company was involved into under valuation of various transactions of import and thereby it evaded huge amounts of custom duty. It was further stated that the Custom authorities have issued notice upon the company for payment of huge amount by way of Custom duty and by way of penalty. It was also stated that the Company and its directors were guilty of illegal evasion of custom duty and therefore the Custom department had passed the orders against the company and its directors. The petitioner has also raised the grievance that the respondent-company had deliberately not submitted the details of the sales and profit for the year 2000-2001 as the company did not have any business and it is suffering huge loss.
8. The respondent-company has filed affidavit-in-sur-rejoinder on 28th March 2002 denying and disputing the contents raised by the petitioner in his affidavit-in-rejoinder. The respondent has made it very clear that the respondent company was not penalised by any of the Government department and entire reporting in the newspaper seemed to be at the instance of some mischievous business rivalry persons connected with the journalists to spoil the name of the company. It was also clarified by the respondent company that the reference to the payment of custom duty of Rs. 5,15,033/= made by the petitioner in his affidavit-in-reply was misconceived as the said payment was in fact made as per the scheme of the Government known as Kar Vivadh Samadhan Scheme, 1998 and not a penalty at all. The respondent-company has also made it clear that the company is a running concern and sales for the year 1999-2000 and 2000-2001 are to the tune of Rs. 68 lacs and Rs. 65 lacs respectively. It was also made very clear that the company is mainly importing from USA and making sales in India right from the incorporation of the company; that there was no substantial contribution by the petitioner except that he was appointed as Sales Manager with monthly salary of Rs. 5500/- and Rs. 1000/=payable for vehicle expenses; and that there was no reason for the company to offer any commission for making sales. The respondent-company has also submitted that the audited accounts for the year 1999-2000 and 2000-2001 are ready and would be handed over to the court for perusal and the same were not filed along with the affidavit-in-sur-rejoinder only because the petitioner may misuse the same by demanding the copy thereof.
9. Heard Mr. Navin K. Pahwa, ld. advocate appearing for the petitioner and Mrs. Swati Soparkar, ld. advocate appearing for the respondent-company. Mr. Pahwa has reiterated all the submissions which are made in the petition as well as in the affidavit-in-rejoinder. He has also taken me through the various documentary evidence which are produced along with the petition as well as affidavit-in-reply. He has strongly contended that all these documents which are produced are the genuine documents and there is no question of these documents being false or fabricated. The respondent company is disputing the said document only because it wanted to avoid its liability towards the petitioner. The company''s accounts produced before the court are nothing but merely a window-dressing and company is not doing any activity. The company is unable to discharge its liabilities and as per the provisions contained in the Act, the respondent-company is required to be wound up.
10. Mrs. Swati Soparkar, on the other hand, appearing for the respondent-company has reiterated the submissions which are made in the affidavit-in-reply as well as the affidavit-in-sur-rejoinder. She has further submitted that the respondent-company has given clear, cogent and unequivocal reasons as to why the document produced should not be considered as the genuine documents. Even otherwise a particular document whether it is genuine or not cannot be decided in the present proceedings as it requires full-fledged trial and leading of necessary evidence in the matter. The respondent-company has raised the serious disputes with regard to the claim of the petitioner and when the petition is seriously disputed this Court should not entertain such petition. Even otherwise, the company is working and it progresses year after year. She has produced the audited accounts of the respondent-company for the year ended on 31st March 2000, 31st March 2001 and 31st March 2002. These accounts show net profit for the year ended on 31st March 2000, 2001 and 2002 at Rs. 8,52,718/=, Rs. 8,64,668/= and Rs. 2,23,813/= respectively. The sales figures for the said period are also Rs. 68,44,988/=, Rs. 64,95,550/= and Rs. 48,91,629/= respectively. The company has also given note in its report that the turnover for the year ended on 31st March 2002 has decreased marginally by about 25%, however the same was due to the general recessionary trend in the economy and the effect of the same was also seen in the profit of the company, but on this basis it cannot be said that the company is incurring heavy losses. Mrs. Soparkar has further submitted that there is a settled legal position that when the claim of the petitioner is disputed and the respondent-company is a running unit and making profits the winding up of the company is not the proper recourse which is to be taken and disputed questions of facts cannot be gone into in winding up proceedings. She has relied on the decision of this Court in the case of
11. This Court has earlier dealt with the issue in the case of American Express Bank Ltd. vs. Core Health Care Ltd (1999) 96 Comp Cas 841 (SC), wherein it is, inter alia, held that "Neglecting to pay in terms of section 434(1)(a), the specified demand of a creditor raises a presumption as to inability to pay its debts. Thus, mere inability to pay a particular debt by itself cannot be held to be sufficient to an order of winding up ex debito justitiae. With the aid of presumption the court may be satisfied that the company is unable to meet the current liabilities in the commercial sense which include the debt due to the petitioning creditor as well as other debts. But the presumption is a rebuttable one. The presumption may be rebutted on existing material. What evidence is sufficient, depends on the facts and circumstances of the case.
12. Even the Rajasthan High Court, in the case of Asusingh Rajput vs. Gehlot Enterprises Ltd (1994) 1 Comp L J 449 (SC) has held that where the claim against the company was allegedly based on a forged document, the petitioner must be relegated to a civil suit where alone on the basis of evidence the matters of forgery and fabrication can be sorted out. Based on these decisions, it was submitted that the present petition filed by the petitioner for winding-up of the company is required to be dismissed.
13. Here, in the present case, admittedly earlier the respondent-company has disputed the claim of the petitioner on the ground that the documents produced are not real and genuine and they are forged by the petitioner. The respondent-company was also able to satisfy the Court to the effect that the Company is the running concern and it was making profit year by year. In such a situation, it is not desirable to pass an order of winding-up against the respondent-company.
14. After having considered the rival submissions of the parties and after having considered the authorities relied upon by the ld. advocates appearing for the respective parties, I am of the view that the respondent-company has raised a serious doubt with regard to the claim of the petitioner. The petitioner has based his claim on the documents which are seriously disputed by the respondent-company. Independent of these documents, the petitioner is not in a position to sustain his claims. Even with regard to the customs and FERA proceedings, the respondent-company has explained the nature and outcome of the proceedings and on that basis it is difficult to arrive at the conclusion that the company is required to be wound-up. The respondent-company has also cleared the doubt raised by the petitioner with regard to the financial position of the company as looking at the documents produced before the Court, the Court is of the view that the respondent-company is a running unit and making profits year after year. It is not pointed out by the petitioner that there is any other liability against the respondent-company which the company is not in a position to discharge. Having regard to the totality of the facts and circumstances of the case, and having regard to the settled position and the view taken by this Court in the abovereferred decisions, I am of the view that the present petition has no merits or substance and hence it is accordingly dismissed. However, looking to the facts of the case, there is no order as to costs.
