IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.32 OF 1994 WITH COMPANY APPLICATION (LODGING) NO.327 OF 2007 ING Vysya Financial Services Ltd. ...Petitioners Versus Recondo Ltd. ...Respondents ...... Mr.Anurag Gokhale with Ms.Kavita Anchan i/b M/s.M.V.Kini & Co. for Petitioners. Mr.Arif Bookwala, Sr.Counsel with Mr.Jaideep Raut i/b Ranjit & Co. for Respondents. ...... CORAM: CORAM: CORAM: A.M.KHANWILKAR, J. A.M.KHANWILKAR, J. A.M.KHANWILKAR, J. JANUARY JANUARY JANUARY 11, 2008. 11, 2008. 11, 2008. P.C. P.C. P.C. 1. Heard Counsel for the parties. Perused the pleadings and documents on record. 2. According to the Petitioners, the liability of the Respondent Company arises under the Equipment Leasing Agreement executed on 3rd September 1988 (Exhibit B). Counsel for the Petitioners has placed emphasis on letter issued under the signature of authorised Officer of the : 2 : Respondent Company dated 17th September 1992 (Exhibit I), whereby, Respondent acknowledged the liability to pay sum of Rs.14,84,966.01 (Rupees Fourteen Lakhs Eighty-four Thousand Nine Hundred Sixty-six & Paise One Only). Reliance is also placed on another communication issued in subsequent point of time by the Respondent Company dated 22nd March 1993, which concedes the position that the Respondent Company is liable to pay sum of Rs.8,49,760/- (Rupees Eight Lakhs Forty-nine Thousand Seven Hundred Sixty). Inspite of admitting this liability, as the Respondent Company failed and neglected to pay the amount, the Petitioners issued statutory notice on 3rd March 1993. In response to the statutory notice, Respondents sent reply on 22nd March 1993 disputing the correctness of the stand of the Petitioners. The Petitioners in turn, controverted the stand taken by the Respondents in their letter dated 5th July 1993. As the amount remained unpaid inspite of statutory notice, the Petitioners eventually have filed this Petition for initiating action of winding up against the Respondent Company. : 3 : 3. This Petition came to be admitted on 30th June 1995 as other Company Petitions against the Respondent Company were already admitted and pending as noted in the said order. 4. The Respondents have filed reply controverting the stand taken by the Petitioners. Essentially, it is asserted on behalf of the Respondents that there is a bonafide dispute between the parties in relation to the outstanding amount. The Petitioner Company has already instituted Summary Suit for recovery of that amount. It is next contended that it is not a case of Respondent Company unable to pay its debt but the Respondent Company has not paid the amount as there was bonafide dispute. It is stated on affidavit that in fact the Respondent Company was willing to settle the matter which attempt was made in the past and the parties had arrived at understanding that the Respondent Company shall pay sum of Rs.9,98,082.52 (Rupees Nine Lakhs Ninety-eight Thousand Eighty-two & Paise Fifty-two) and that the Respondent Company was more than willing to pay that amount. However, the Petitioners did not come forward to accept that : 4 : amount although the Respondent Company had made part payment on earlier occasion when the negotiations for settlement were in progress. It is seen that the affairs of the original Petitioners have been taken over by the new management. Perhaps, the new management is not inclined to abide by the settlement terms which were arrived at by the Respondents with the erstwhile management. 5. Be that as it may, the question that needs to be considered in the present Petition in the first place is: whether the Respondent Company is unable to pay its debt? In this context, the Petitioner Company has placed emphasis on averments in Paragraph 20 of the Petition which refers to four different proceedings filed against the Respondent Company for recovery of substantial amounts such as Rs.2,20,64,247.54 (Rupees Two Crores Twenty Lakhs Sixty-four Thousand Two Hundred Forty-seven & Paise Fifty-four) and Rs.73,44,455.98 (Rupees Seventy-three Lakhs Forty-four Thousand Four Hundred Fifty-five & Paise Ninety-eight) payable to Bank of Tokyo Limited, Rs.85,25,648.47 (Rupees Eighty-five Lakhs Twenty-five Thousand Six : 5 : Hundred Forty-eight & Paise Forty-seven) payable to Benque National De Paris, Rs.85,52,095.17 (Rupees Eighty-five Lakhs Fifty-two Thousand Ninety-five & Paise Seventeen) to Bank of Credit and Commerce International Overseas Ltd. and Rs.3,96,29,775.28 (Rupees Three Crores Ninety-six Lakhs Twenty-nine Thousand Seven Hundred Seventy-five & Paise Twenty-eight) to Canara Bank. All these Banks have instituted Suit for recovery of the respective claims against the Respondent Company. However, in the reply affidavit, the Respondent Company has stated on oath that all these proceedings have been terminated in view of the settlement with the concerned Bankers. To support this position, Respondent Company has relied on documentary evidence. There is no reason to doubt the correctness of that position. 6. The Petitioners though served with the reply affidavit long back, have not chosen to file any rejoinder to dispute this position. Left with this position, I have no hesitation in taking the view that it will be erroneous to assume that the Respondent Company is unable to pay its debt. The amount payable by the Respondent Company to the : 6 : Petitioners, according to the Petitioners, is, at best Rs.22,55,684/- (Rupees Twenty-two Lakhs Fifty-five Thousand Six Hundred Eighty-four). If the Respondent Company has been able to settle all the claims of the concerned Banks which was running into few hundred thousands, there is no basis to take the view that the Respondent Company will be unable to pay the debts of the Petitioners, which is only in the sum of around Rs.23,00,000/- as on the date of the filing of the present Petition. Besides, the Petitioner Company has already instituted Suit for recovery of the outstanding amount. In the event, the Petitioners succeed, the Petitioners may be able to get the decree executed against the Respondents to the extent of the decretal amount. Suffice it to observe that it is not a case of Respondent unable to pay its debt as such. 7. Indeed, if the Respondents had failed and neglected to pay the amount inspite of the statutory notice, the Court would still be entitled to proceed to order winding up of the Respondent Company. In the present case, however, I am in agreement with the stand taken on behalf of the : 7 : Respondents that the Respondent Company has a bonafide dispute with regard to the amount as claimed by the Petitioners. The Respondent Company has justly relied on clauses 4.10 and 4.11 of the Leasing Agreement to contend that the amount which has been claimed by the Petitioners is not payable in terms of the said clauses, as that amount would have become payable only if the situation provided for in the said clauses were to occur. However, that is not the case established by the Petitioners. The Petitioners may be right to the extent that the Respondent Company has admitted the liability not once but at least in two communications sent from time to time. In the first place, the Respondents executed document dated 17th September 1992 acknowledging liability to the extent of Rs.14,84,966.01 (Rupees Fourteen Lakhs Eighty-four Thousand Nine Hundred Sixty-six & Paise One) on that date. The explanation offered by the Respondents that the signature of the Respondents was required to be given as condition precedent for availing of the facility cannot be the basis to discard these documents. 8. The Petitioner Company has also rightly : 8 : placed reliance on document at Exhibit L dated March 22, 1993 whereby, the Respondent Company has acknowledged its liability to the extent of Rs.8,49,760/- (Rupees Eight Lakhs Forty-nine Thousand Seven Hundred Sixty). However, now the Respondent Company has filed reply affidavit and has placed reliance on letter sent by the Respondents to the Petitioners dated 19th July 2006 for which, once again the Respondent acknowledges the fact that there was settlement between the parties whereby the Respondent Company was required to pay sum of Rs.9,98,082.52 (Rupees Nine Lakhs Ninety-eight Thousand Eighty-two & Paise Fifty-two). 9. In my opinion, at least to the extent of amount indicated in the said communication, the Respondents would be liable to pay the amount. The Respondents cannot be heard to dispute the correctness of the said amount which they have admitted in communication dated 19th July 2006. Inspite of statutory notice if the Respondent Company has not come forward to pay at least the acknowledged and admitted claim of the Petitioners, that can be ground for proceeding against the : 9 : Respondent Company with the present action. 10. However, at the hearing, Counsel for the Respondents, in all fairness, agreed that the Respondents can be excused if the Respondents were to bring the said amount of Rs.9,98,082.52 (Rupees Nine Lakhs Ninety-eight Thousand Eighty-two & Paise Fifty-two) to be deposited in this Court. Indeed, the Respondent Company has been contending that the Respondent Company was always ready and willing to pay that amount to the Petitioners which has been noted even in letter dated 19th July 2006. However, the fact remains that the Respondent Company has still not made over that amount to the Petitioners nor shown willingness to deposit the same in Court. But today, at the hearing, as the Respondents through Counsel agree to deposit the said amount, in my opinion, it would not be necessary to proceed in the matter any further. 11. The appropriate course in such a situation is to allow the Respondents to deposit the amount quantified under this order i.e. Rs.12,00,000/- (Rupees Twelve Lakhs) which would cover principal amount of Rs.9,98,082.52 (Rupees Nine Lakhs : 10 : Ninety-eight Thousand Eighty-two & Paise Fifty-two) admitted by the Respondents and interest accrued thereon after 19th July 2006. However, this is only a tentative amount to be deposited by the Respondents. This deposit will be without prejudice to the rights and contentions of the parties in the pending Suit between the parties. 12. The Respondents shall deposit amount of Rs.12,00,000/- (Rupees Twelve Lakhs) in this Court within four weeks from today. In the event of amount being deposited in time by the Respondents, the Prothonotary and Senior Master to ensure that the same is transferred to the Suit Account being Suit No.1555 of 1995 pending in this Court. The Prothonotary and Senior Master shall thereafter invest the said amount in appropriate Fixed Deposit Scheme, to derive best interest returns initially for a period of two years to be kept alive till the disposal of the Suit or till such other or further orders to be passed by the Court in the said Suit, whichever is earlier. 13. In the event, the Respondent Company fails to deposit amount of Rs.12,00,000/- (Rupees Twelve : 11 : Lakhs) in this Court within four weeks from today, it would necessarily follow that the Respondent Company is avoiding to pay the amount and has failed and neglected to pay the outstanding dues of the Petitioners. In that case, the Company Petition would succeed in terms of prayer clauses (a) and (b) of the Petition, without further reference to the Court. 14. Needless to observe that in the event, the above mentioned amount is deposited within time, the Petition to stand dismissed on the terms already indicated earlier. 15. Petition disposed of accordingly. A.M.KHANWILKAR, J.