Tejinder Kaur vs Bhawani Castings Private Limited

Santanu Kumar Mohapatra, Member (T)

Smt. Tejinder Kaur claiming as the financial creditor has filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity 'the Rules') for initiation of Corporate Insolvency Resolution Process in respect of respondent Company M/s. Bhawani Castings Pvt. Ltd. referred to as the corporate debtor.

The Respondent Company M/s. Bhawani Castings Private Limited (CIN No. U27310 DL 1992 PTC 050029) against whom initiation of Corporate Insolvency Resolution Process has been prayed for, was incorporated on 20.08.1992 having its registered office at KN/F-10, Gali No. 10, Anand Parbat, Industrial Area, New Delhi - 110005. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code.

The case of the applicant as per the application is that the management of the respondent corporate debtor was taken over by the father in law and husband of the Financial Creditor in the year 1998 and the business of the respondent run by them. Owing to recession in the industry the company faced liquidity crunch and defaults in meeting payments of the suppliers and other statutory dues.

Applicant financial creditor lent money on several occasions starting from 29.06.2007 till 24.02.2010 as detailed in the application. It is submitted that the respondent company also returned the some of the funds from time to time as stated in the application. The applicant was appointed as director of the company on 1.11.2008 and resigned from the directorship on 20.03.2011 when the new management took over the affairs of the respondent company. It is alleged that the new management of the corporate debtor declined to pay the amount due to the applicant who had lent funds to save the company in the interest of all stock holders including employees and their families.

It is submitted that the applicant had approached the High Court of Delhi on 08.11.2012 for winding up the company under section 433(e) (f) read with Section 434 (1) & 439 of the Companies Act 1956, which was dismissed with leave to the petitioner to seek any other remedy that may be available to her in accordance with the law.

Subsequently, applicant filed a recovery suit on 31.07.2013 in the court of Civil Judge Amloh, District Fateh Garh Sahib which is still continuing and is stated to be at the evidence stage.

Applicant has also relied upon the Balance Sheet of the respondent company as on 31.03.2011 with the contention that the respondent corporate debtor has clearly acknowledged the financial debt which was duly audited and signed by the present Directors of the respondent company. It is further submitted, that despite repeated requests the respondent failed to pay the outstanding dues to the applicant financial creditor and therefore it is prayed to initiate insolvency resolution process against the respondent corporate debtor under the provisions of the Code.

At Part IV of the applications it is claimed that an amount of Rs. 1,51,73,198/- plus interest is due as on 30.09.2018.

The respondent corporate debtor has filed its reply on 29.01.2019 with the main contention that no amount at all is pending towards the applicant and the amount as claimed in the application is not due and payable to the applicant.

Respondent have alleged that the applicant and her husband has siphoned off the assets of the company for their personal benefit. In this connection the respondent has relied upon the show cause notice issued by the office of commissioner, Central Excise & Service Tax Commissionerate and the bail order passed by the learned Sessions Judge, Fatehgarh Sahib.

Respondent has submitted that the applicant and her family members approached them with a view to sell their shareholding of the company which was bought after paying them a full and final amount in lieu of the shares held by them.

Subsequently the share transfer certificate was executed between the parties, including the applicant, and their stake in the company was relinquished. Applicant had received full and final settlement of her dues. Subsequently the applicant and her family members resigned from the company.

Respondent has also alleged in its reply that the applicant along with her husband are illegally retaining the properties of the company for which action is being taken by the respondent company. Besides there has been many allegations in the reply which are self-explanatory and for the sake of brevity the same is not reproduced below.

We have heard the learned counsels for the parties and have perused the case records including rejoinder filed by applicant on 08.02.2018.

The precise contention of the applicant is that she had lent money to the respondent company on several occasions during the period from 29.06.2007 till 24.02.2010, but some of the dues have not been returned by the respondent company. She has relied upon the balance sheet of the respondent company as on 31.03.2011 to show that the respondent has acknowledged that the debt is due and payable to the applicant financial creditor.

Respondent company in their exhaustive reply has inter alia alleged syphoning and mismanagement by the ex-management i.e. applicant and her family members. It is the case of the respondent that the present management took over the company after paying them full and final amount in lieu of the shares held by them and that no amount at all is pending towards the applicant. Apparat from denying the liability, the respondent has made counter claim that the petitioner owes money to the respondent. Respondent has also relied upon the auditor's report dated 31.03.2012 to show that no amount is due to the applicant as per the balance sheet of the company for the year ending 31.03.2012. It is contented that as per financial statement of the company since the year 2012, no amount is due and payable to the applicant.

It is stated in the application that as the management of the corporate debtor refused to make any payment and resorted to illegal adjustments, the applicant had approached the High Court of Delhi on 08.11.2012 for winding up of the respondent company under Section 433 (e) (f) read with Section 434 (1) & 439 of the Companies Act, 1956.

The Hon'ble High Court of Delhi while dismissing the petition on 19.02.2013 passed the following order:

"1. The reply filed by the respondent to the legal notice issued by the petitioner under section 433 read with Section 434 of the Companies Act 1956 indicates that apparat from denying liability, the respondent is claiming that the petitioner owes the respondent money.

From the documents placed on record, it appears that the very question whether respondent owes any money to petitioner is a highly disputed one. Therefore, it is not possible for the Court to conclude that the respondent is unable to pay its debts. The grounds for winding up of the respondent are not made out at this stage. However, it will be open for the petitioner to seek any other remedy that may be available to the petitioner in accordance with the law.

The petition is dismissed and the applications are disposed of in the above terms."

Subsequently applicant filed a civil suit on 31.07.2013 in the court of Civil Judge Almloh, District Fateh Garh Sahib, which is pending adjudication and is stated to be at evidence stage.

In the afore stated factual scenario it is seen that the present management has taken over the affairs of the respondent company from the applicant and its relatives along with their shares long before in 2011. The financial records of the company show that no amount is due to the applicant as per their balance sheets since the year ending 31.03.2012.

Respondent has not only denied the liability, but also has claimed that rather the petitioner owes money to the respondent inter alia on the allegation of mismanagement and syphoning by the ex-management.

The present very old and long pending contested issue as to whether respondent owes any money to the petitioner after passing over the company's management in 2011, is a highly disputed question which requires investigation and trial.

Admittedly civil suit on the issue is pending for adjudication before the court of Civil Judge Almloh, District Fateh Garh Sahib.

There is also no dispute that on the self-same issue applicant had moved Hon'ble High Court of Delhi for winding up of the respondent company, which was dismissed mainly on the ground that the question whether respondent owes any money to the petitioner is a highly disputed one.

In the light of the observation of the Hon'ble High Court in the self-same matter and in view of the discussions made above, it is difficult to conclude at this stage in the present summary proceedings that there has been default in payment.

For the reasons stated above the application fails and therefore the same is rejected.

It is made clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy and the right of the applicant before any other forum shall not be prejudiced on account of dismissal of instant application.

Let the copy of the order be served to the parties.