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Judgment
Parekh J.
Two company petition, bearing Nos. 366 of 1983 and 142 of 1984, have come up for final hearing whilst Petition No. 388 of 1985 has come up for admission. The petitioner in each of the matters seeks a winding-up order against the respondent company, Shri Laxmi Traders Limited.
I shall first deal with tHe subject-matter of Company Petition No. 366 of 1983 and then with the subject-mater of Company petition No. 142 of 1984 and thereafter with Company Petition No.388 of 1985, in that order.
In so far as Petition No.366 of 1983 i concerned, it is the petitioners'' case that the respondent-company owed to the petitioners a sum of Rs. 2,24,797.39, that the petitioners gave the usual statuary notice, but the same was no complied with by the company and hence he petitioners filed the petition. The petition, in its usual course, came up for admission and on August 31, 1983, consent terms were arrived at. Under the said consent terms, the company agreed to pay the dues of the petitioners by installments as specified in the said consent terms. The consent terms also provided that if the respondents committed defaults as specified in the consent terms, the petition would stand admitted, and the petitioners were at liberty to insert the necessary advertisements as provided for in the aid consent terms. It appears that thereafter the respondent-company did make some payments to the petitioners, but none the less committed defaults in payment of other installments. By reason of these defaults, the petition stood admitted and the petitioners became entitled to insert the necessary advertisements. The matter again came on board at that stage, when the respondent company appeared, and it was argued on behalf of the respondent-company, that the respondent-company had taken on lease a processing unit belonging to Podar Mills Limited and all the work of the respondent-company was being carried out in the said processing house unit. That this processing house unit of Podar Mills Limited was taken over on October 18, 1983, under the Textile Undertakings (Taking Over of Management) Act had also taken charge of the assets of the respondent-company lying in the said processing house unit although wrongly and illegally. That by reason of this take over, the respondent- company could not carry on business and hence could no meet its liabilities under the consent terms. That no purpose would be served by the proceedings for the winding up of the company, more particularly because it would not be for the benefit of the company''s creditors. That, in view of all this, the petitioning creditors ought not to be allowed to insert any advertisement with regard to the petition. This application was resisted by the petitioners. By an order dated July 26, 1985, the contention of the respondent-company was negatived. The necessary advertisements have once appeared in the papers, but I am informed that these were in Petition No 142 of 1984, and in view of the same, the advertising of this petition (i.e. Petition no. 366 of 1983) was dispensed with. The said petition has now come up for final hearing.
At the hearing of this petition, i.e. No.366 of 1983, the petitioners'' counsel has urged that in so far as the debt is concerned, the same is admitted and an order of winding up must follow.
Mr. Ganesh learned counsel for the respondent-company, on the the other hand, has urged that the respondent-company had taken on lease the processing house unit of Podar Mills Ltd. That, as a matter of fact, the respondent-company had put in assets of about Rs. 3 crores in the said processing house unit. That at the time when the consent terms were arrived at on this petition on August 31,1983, the respondent-company was functioning and the respondent-company was hopeful of meeting its commitments under the said consent terms. However, the said processing unit of Podar Mills Ltd. was taken over under the Textile Under authorities also took charge of the assets of the respondent-company although wrongfully and/or illegally. The result of this was that the business of the respondent-company came to a standstill. That the respondent-company thereafter made several representations to the authorities to hand back its assets, and even held some negotiations, but neither the representations nor the negotiations fructified. That the assets of the company have hence remained in the hands of the authorities under the Textile Undertakings (Taking Over of Management) Act, 1983. That it is in these circumstances that the respondent-company could not met its commitments under the consent terms after October, 1983, and committed defaults, and the petition stood admitted. That earlier, an application was made on behalf of the respondent-company to this court that, in the facts and circumstances of the case, the petitioners should not be allowed to insert any advertisement particularly because it would not be in the interest of the creditors. By an order dated July 26, 1983, the application was rejected.
Mr.Ganesh further argued that in view of the fact that the assets of the respondent-company have been wrongly withheld by the authorities under the Textile Undertakings (Taking Over of Management) Act, 1983, the respondent-company has now fled a writ petition, interalia, seeking an order for release of their property. That this writ petition is to come up for admission. That in view of this, no order of winding-up should be made at this stage, for even if the official liquidator is appointed, all that he could possibly do is to pursue the writ petition and do no more. That since the respondent-company was already pursuing this course, no further purpose would be served by appointing a liquidator. That the creditors of the company would be in no happier position than what they were, and, in the facts and circumstances of the case, no benefit would accrue to them by the making of a winding-up order. That if the creditors did not stand to benefit, the court will refrain from making a winding up order, and more particularly, when a majority of the creditors were opposed to its winding-up.
In support of its contention that no winding-up order should be passed if it does not benefit its creditors and/or if it is not in the interest of the majority of its creditors, Mr. Ganesh relied upon the decisions in In re Chapel House Colliery Co. [1883] 24 Ch 259 and Madhusudan Gordhandas and Co. Vs. Madhu Wollen Industries Pvt. Ltd.,
I am unable to accept the contention canvassed by Mr. Ganesh. The argument proceeds on a wrong premise. The question is not what more can a liquidator do that the respondent-company has not already done, but whether he company has assets, and if the answer to this is in the affirmative, and the company does not pay, then a winding-up order must follow. It is an admitted position that the respondent-company has assets, although, according to the company, its assets are lying in the processing unit of Podar Mills Ltd., and have been wrongly taken charge of by the authorities under the Textile Undertakings (Taking Over of Management) Act, 1983. It is also an admitted position that the company owes moneys to the petitioners. In other words, there is a debt due, which the company i liable to pay. in view of this winding-up order must follow.
Turning to the contentions In re Chapel Colliery Co. [1883] 24 Ch 259 the facts in that case were that the colliery was heavily mortgaged and a debenture holder came forward and filed a petition for the winding-up of the company. The majority o the creditors were opposed to the winding-up and the court held that since the the company did not have assets from which anything could be received and since the majority of the creditors were opposed to the winding-up no winding-up order should be passed. I do not see how this citation can assist Mr. Ganesh in any manner. In the present case, it is an admitted position that the company has assets although, according to the company, they are lying in the hands of the authorities under the Textile Undertakings (Taking Over of the Management) Act, 19983. There is no data placed before this court that the majority of the creditors are opposed to the winding-up nor has any data been placed before this court to show that a winding-up would not be in the interest of its creditors r share holders.
Turning next to the decision in Madhusudan Gordhandas and Co. Vs. Madhu Wollen Industries Pvt. Ltd., the ratio in that case is that in a petition for winding up, the court will have regard to the wishes of the majority in value of the creditors, and if for any good reason they (i.e. the creditors) object to a winding-up order, the court in its discretion may refuse to pass the order. As stated earlier, in the present case, no data is placed before this court that the majority of creditors are opposed to the winding up. I do not see how the ratio of this case can be of any assistance to the respondent-company. On the other hand, in so far as the respondent-company is concerned, t is an admitted position that apart from these three company petitions referred to here in above, there are two other petitions,viz., Company Petition No. 168 of 1985 (filed by two other creditors) seeking the winding-up of this company for the very same reason, i.e. non-payment of their dues. What appears from all this, therefore, is that there are numerous creditors clamoring for their dues, but the majority of them has certainly not come forward to say that the winding-up would not be in the interest of the creditors. In the result, the contention canvassed by Mr. Ganesh must be negatived. The petitioners would well be entitled to the relief prayed for.
Turning to Petition No. 142 of 1984, the facts are that in this petition,, consent terms came to be filed on July 18, 1984, under which the respondent-company agreed to pay the dues of the petitioners by installments as specified therein. The said consent terms also provided that in the case of defaults as provided, the petition would stand admitted. Thereafter, the respondent-company paid some installments aggregating to Rs. 43,000, about none the less committed defaults and petition stood admitted. The petitioners hence proceeded to insert the necessary advertisements. The petition has now come up for final hearing. Mr. Merchant, learned counsel appearing for the respondent argued that the assets of the respondent-company have been taken charge of by the authorities under the Textile Undertaking (Taking Over of Management) Act, 1983. That the company has ten steps to retrieve these assets. That if these assets are retrieved, the company would be able to function and meet is liabilities. That a winding-up order, therefore would not be in the interest of the creditors of the company. This argument advanced by Mr. Merchant is the same as that of Mr. Ganesh, and for the very reason, must now be negatived. The petitioners hence would well be entitled to the reliefs claimed.
In so far as Petition No. 388 of 1985 is concerned,, the same is on board but the same is for admission. The contentions raise by the respondent-company in this case are the same as in Company Petition No. 366 of 1983 and Company Petition No. 142 of 1984, and in view of this, Company petition no. 388 9f 1985 is admitted.
In the result Company Petition No. 12 of 1983 is made absolute in terms of prayers (a) (b) and (e). Official liquidator attached to this court is appointed liquidator of the respondent-company. official liquidator to take possession forthwith of the assets, properties and effects of the company during the course of the winding up.
Petitioners in Company Petition no 142 of 1983 to advertise the winding-up order within fourteen days form December 21, 1985, in the same newspapers in which notice of hearing of the petition was advertised and submit the bill of cost within a week thereafter.
In so far as Company Petition Nos. 366 of 1983 and 388 of 1985 are concerned, in view of he winding-up order passed in company Petition No. 142 of 1984, there will be no order on these petitions. The petitioners will, however, be at liberty to pursue their claims with the official liquidator.