SIDDHARTHA APPARELS P LTD Vs. STATE
LAWS(CAL)-1983-5-5
HIGH COURT OF CALCUTTA
Decided on May 02,1983

SIDDHARTHA APPARELS P.LTD Appellant
VERSUS
STATE Respondents

JUDGEMENT

Padma Khastgir, J. - (1.) This application is for winding up of the company, Siddhartha Apparels Pvt. Ltd. The claim of the petitioning creditor arises in respect of the arrears of rent payable by the company. By an -agreement in writing dated April 29, 1979, executed by and between the petitioning creditor and the said company, the petitioner let out and delivered vacant possession of about 88,000 sq. ft. space in the third floor of premises No. 24/1/1, Alipore Road, Calcutta, to the company. The company entered into possession, and agreed to pay the rent on and from May 1, 1979, at the rate of Rs. 8,000 per month, according to English calendar year, payable in advance on or before seventh of every month, occupier's shares of taxes and/or other taxes payable by the occupier and pay the proportionate charges or shares for the maintenance of the pumps, meters, electricity consumed and for water supply. On May 2, 1979, the company paid a sum of Rs. 7,000 by cheque being the rent for the month of May, 1979, but the company defaulted from the month of February, 1981, in payment of rent and as a result, a total sum of Rs. 1,36,000 representing rent payable for the period February, 1981, to June, 1982, exclusive of interest and a further sum of Rs. 48,000 representing occupier's shares of taxes, Rs. 2,000 representing charges for water supply and electricity consumed, charges aggregating to a sum of Rs. 1,86,000 became due and payable. As a result, the petitioner filed an ejectment suit against the company being Title Suit No. 85 of 1981 before the Alipore Court and prayed for a decree for ejectment, damages, perpetual injunction, costs, etc. The company filed an application in the said suit under the provisions of Section 17(2)(a) and (b) of the West Bengal Premises Tenancy Act wherein the company admitted that it was not in a position to pay all the arrears of rent at a time inasmuch as the company was running at a loss and passing through financial stringency and wished to pay only a sum of Rs. 1,000 per month, that is, the company desired to pay the dues of the petitioning creditor in 187 months, nearly, in 15 years' time. The petitioner contended that it being a charitable trust and in the event the company paid the arrears of dues to the tune of Rs. 1,000 per month, it would suffer irreparable loss and prejudice. The petitioner contended that the company is commercially insolvent and is unable to pay its debts and has categorically admitted before a court of law its inability to pay and its financial stringency. Moreover, the company failed to submit its annual report and the balance-sheet since 1976.
(2.) According to the company, this winding-up petition was a pressure tactics inasmuch as the petitioning creditor had already instituted a suit for eviction on the ground of non-payment of rent before the Alipore court. Under the circumstances, the company contended that this proceeding was in the nature of parallel proceedings in respect of the same cause of action and as a result, such course should be deprecated by this court more so to avoid conflict of jurisdiction of findings by two parallel courts of competent jurisdiction. The petitioner had not served the statutory notice for its claim on account of non-payment of rent. Under the circumstances, there could be no presumption for constructive admission of liability to pay the petitioner's dues. The presumption of inability to pay the debts of the petitioner is not available in the instant case within the meaning of Section 434 of the Companies Act. It had been further contended that the petitioning creditor before the Alipore court moved an application on an untrue allegation that the company was trying to part with possession of the premises and/or sub-let the same without the prior consent of the landlord but when it was brought to the notice of the learned judge that under the agreement the company was entitled to sub-let the said premises, the said interim order was vacated. According to the company, because of the acrimonious litigation initiated by the petitioner, the State Bank of India in whose favour the company was attempting to grant a sub-lease of the demised premises has resiled from such agreement and as a result the company suffered loss and damages. According to the company, the company had a total turnover of Rs. 80 lakhs and under the circumstances, the company could not be treated as insolvent or financially unsound. The petitioner creditor also belatedly filed the petition for winding up which was affirmed in July, 1982, but not filed till January, 1983. Under the circumstances, the company asserted that the petitioning creditor was guilty of inordinate delay. As a result no order should be passed on this application.
(3.) From the facts and circumstances of this case, it appeared that the company was unable to pay the lawful dues of the landlord and in fact admitted in a legal proceeding before a court of law its inability to pay the arrears of rent at a time and prayed for payment by monthly instalments of a paltry sum of Rs. 1,000. It is admitted that the company did not comply with its statutory obligation of filing the audited balance-sheet since 1976. The learned Alipore court is competent to entertain and/or try the title suit filed by the petitioning creditor for eviction on the ground of non-payment of rent as also it had been alleged that the company had been storing combustible and other inflammable articles in the demised premises and for other reasons the company was entitled to vacate possession inasmuch as on those grounds the tenancy created in favour of the company had been terminated. The present application had been taken out for winding-up under the company jurisdiction of this court on the ground that the company is unable to pay its debts as also the company being guilty of non-compliance of the statutory duties as envisaged under the Companies Act. Both the proceedings could not be considered as parallel proceedings for the same cause of action. Although no statutory notice under Section 434 of the Companies Act had been served on the company and as a result the petitioning creditor was not entitled to the benefit of the presumption of the company's inability to pay its debts. Apart from that, the petitioning creditor is entitled to and had been able to establish before this court upon the admission of the company that it was suffering from financial stringency and hardship and was unable to pay the arrears of rent.;


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