ALL INDIA GENERAL TRANSPORT CORPORATION LTD Vs. RAJ KUMAR MITTAL
LAWS(CAL)-1976-1-19
HIGH COURT OF CALCUTTA
Decided on January 16,1976

ALL INDIA GENERAL TRANSPORT CORPORATION LTD. Appellant
VERSUS
RAJ KUMAR MITTAL Respondents


Referred Judgements :-

ALUMINIUM CORPORATION OF INDIA LTD. V. LAKSHMI RATTAN COTTON MILLS COMPANY LTD. [REFERRED TO]
MADHUSUDAN GORDHANDAS AND COMPANY VS. MADHU WOOLLEN INDUSTRIES PRIVATE LIMITED [REFERRED TO]
KO KU LA LTD VS. STATE [REFERRED TO]
OM PRAKASH MOHTA VS. STEEL EQUIPMENT AND CONSTRUCTION CO P LTD [REFERRED TO]
UNIQUE CARDBOARD BOX MFG CO P LTD VS. STATE [REFERRED TO]
W T HENLEY S TELEGRAPH WORKS CO LTD VS. GORAKHPUR ELECTRIC SUPPLY CO LTD [REFERRED TO]





JUDGEMENT

Salil K. Roy Chowdhury, J. - (1.)This is a winding-up petition which was presented on 19th of November, 1975, and on the returnable date being 24th of November, 1975, direction was given to serve notice on the company and thereafter, on the 8th of December, 1975, directions were given for filing affidavits to the company to show cause, if any, as to why the winding-up petition should not be admitted and the petitioning-creditor was also given leave to file affidavit-in-reply and, thereafter, the matter was heard.
(2.)The petitioning-creditor obtained a decree dated the 18th of October, 1972, from the Second Joint Civil Judge (Junior Division) at Baroda in Suit No. 606 of 1971. The petitioning-creditor's claim arose out of the non-delivery of goods carried by the company which were alleged to be missing and damaged. Thereafter, the petitioning-creditor served a statutory notice of demand under Section 434 of the Companies Act, 1956, dated the 26th of March, 1975, on the company for payment of the said decretal amount of Rs. 6,060 with interest and costs. In reply to the said statutory notice the company raised the question of the decree being obtained by fraud and collusion by its advocate's letter dated the 24th of April, 1975, and the petitioning-creditor's advocate by his letter dated the 30th of May, 1975, denied such allegations. And, thereafter, on the 19th of November, 1975, the present winding-up petition was presented. The company filed an affidavit through one Sudarsan Kumar Arya, a director of the company, and alleged that there is a bona fide dispute as to the claim of the petitioning-creditor. The company admitted that the goods were delivered by the petitioning-creditor for carriage at the company's godown at Jorhat, Assam, to Baroda and alleged that it was to be carried entirely at the owner's risk. It is alleged that after coming to know of the said decree passed by the Baroda court in favour of the petitioning-creditor, the respondent-company instituted a suit in the City Civil Court being Title Suit No. 1431 of 1975, against the petitioning-creditor for declaration that the said ex parte decree passed by the Baroda court on the 18th of October, 1972, has been obtained by practising fraud and the same is not binding on the company, and the same is not maintainable against the company. It appears that in the said city civil court suit, the company made an application for interim injunction and on or about 13th of August, 1975, the 8th Judge, City Civil Court at Calcutta, has issued a rule upon the petitioning-creditor to show cause within seven days from the date as to why the prayer for injunction shall not be granted. The said rule was fixed for hearing on the 22nd of December, 1975. It is alleged, inter alia, that the question of validity of the decree passed by the Baroda court is now pending before the city civil court and a rule has been obtained by the company to show cause why the petitioning-creditor should not be restrained from executing the said decree. In these circum stances, it is alleged that there is a bona fide dispute and substantial defence to the petitioning-creditor's claim and the winding-up petition is an abuse of the process of the court and should not be admitted. '
(3.)Mr. B.M. Seth, appearing for the petitioning creditor, after placing the facts before me as stated in the winding-up petition, submitted that already there is a decree passed by the Baroda court which is not yet set aside in appeal or otherwise and the company has with mala fide intention instituted a frivolous and vexatious suit in the City Civil Court after the statutory notice of demand was served by the petitioning-creditor on the company only to raise some sort of dispute, if possible, in this application. The question is whether a petitioning-creditor who has obtained a decree from a court of law against the company without executing the said decree can serve a notice of demand under Section 434(1)(a) of the Companies Act, 1956, and the company can be deemed to be, unable to pay its debt, if such claim is unsatisfied in spite of the said statutory notice. Mr. Seth cited an unreported decision of mine in Company Application No. 33 of 1974 in Company Petition No. 412 of 1973 (since reported as Unique Card Board Box Mfg. Co. Ltd. [1978] 48 Comp Cas 599) delivered on the 5th of March, 1975, where the identical question arose as to whether, after obtaining a decree against a company, can the petitioning-creditor serve a notice under Section 434(1)(a) of the Companies Act, 1956, and the company can be deemed to be unable to pay its debt if the decretal amount is not paid. I have held that it is not necessary that the decree has to be executed, as the petitioning creditor had the option either to execute the decree and, thereafter, come under Section 434(1)(b) or serve a notice under Section 434(i)(a) for payment of the decretal amount. Relying on the said decision Mr. Seth submitted that in the present case also it must be held that the petitioning-creditor is entitled to present this winding-up application on the basis of the decretal amount which has not been paid in spite of the statutory notice being served.
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