1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi COMPANY PETITION NO.615 OF 2009 WITH COMPANY APPLICATION NO.746 OF 2009 IN COMPANY PETITION NO.615 OF 2009. In the matter of winding up of Shree Raj Travels & Tours Ltd. H.D.F.C. Bank Ltd. ..Petitioner/Applicant. .... Mr. Bergis Colabawala, a/w. Mr. Rajesh Talekar, i/b. M/s. K. Ashar & Co., for Petitioner. .... CORAM : S.J.KATHAWALLA, J. DATE : 4TH SEPTEMBER 2009. P.C. This petition has been filed by HDFC Bank Limited claiming that an amount of Rs.13,62,46,661.62 as on 19 th February 2009 is due and payable by the respondent company on account of various credit facilities granted by the petitioners to the respondent company. 2. It is the case of the petitioners that under sanction letter 2 dated 8 th November 2007, the predecessor in title of the petitioners one Centurion Bank of Punjab Limited sanctioned a cash credit facility with a limit of Rs.8 crores and a term loan facility with a limit of Rs.0.45 crores on the terms and conditions set out in the said sanctioned letter. The said terms and conditions have been duly accepted by the respondent company by signing a copy of the same. To secure the aforesaid facilities, the respondent company executed the usual security documents such as two demand promissory notes, master credit facility agreement, term loan agreement, agreement of hypothecation of goods, vehicle, plant, machinery, stocks and book debts, all dated 15 th November 2007. 3. Thereafter, at the request of the respondent company, on 12 th December 2007, the said Centurion Bank of Punjab Limited realigned the aforesaid facilities in the following manner :- Facility Limit (Crores) (i) Cash Credit (Reduced) 4.00 (ii) Short Term Line of Credit (Fresh) 4.00 (iii) Term Loan (Existing) 0.45 3 4. The said sanction letter has also been duly signed by the respondent company accepting the terms and conditions mentioned therein. To secure the said realigned facilities, the respondent company once again executed the usual security documents, such as, a Revolving Facility Agreement, a Supplemental Facility Agreement, a Supplemental Hypothecation Agreement and a Term Loan Agreement, all dated 13 th December 2007. 5. At the request of the respondent company, the Centurion Bank of Punjab Limited on 29 th December 2007 sanctioned an additional credit facility being a short term loan of Rs.5 crores on the terms and conditions mentioned in their sanction letter dated 29 th Deember 2007. The said terms and conditions have been duly accepted by the respondent company by signing a copy of the same. The said short term loan of Rs. 5 crores was to be repaid in one go after a period of 90 days. Once again, the usual security documents were executed by the respondent company, such as a demand promissory note, a clear term loan agreement and a letter of 4 undertaking, all dated 29 th December 2007. 6. It has been stated in the petition that with effect from 23 rd May 2008, Centurion Bank of Punjab Limited merged with HDFC Bank Limited (the petitioners) pursuant to a scheme of amalgamation sanctioned by the Reserve Bank of India under section 44A of the Banking Regulation Act, 1949. Pursuant to the said scheme all assets, liabilities and/or obligations as well as the vesting of the entire undertaking of the Centurion Bank of Punjab Limited vests with the petitioners abovenamed. In light of the aforesaid amalgamation, the respondent company as on date is now indebted as a principal borrower to the petitioners abovenamed. 7. Since the respondent company was unable to repay the short term loan of Rs. 5 crores within 90 days, the respondent company requested the petitioners for extension of time which was granted vide the petitioners sanctioned letter dated 28 th June 2008 on the terms and conditions more particularly set out therein. 8. It is the case of the petitioners that since the respondent’s 5 account was not regular and they failed to regularize the same, the petitioners by their recall notice dated 26 th November 2008 inter-alia called upon the respondent company as well as the guarantors to pay a sum of Rs.12,99,58,226.41 together with interest at 18% per annum from 1 st November 2008 till payment and/or realization within 7 days failing which the petitioners would be constrained to initiate legal action. The said letter was replied to by the respondent company by its letter dated 1 st December 2008. It is interesting to note that the respondent company has not disputed either of availing of the various facilities or the amounts due thereunder. In fact, in the last paragraph of the said letter the respondent company has admitted its liability by stating as follows :- “We have assured you that we will repay your every penny but we do need a breathing time and kindly do look at your own letter where it shows the approved limit is Rs.13.45 crores whereas total outstanding as per your letter is Rs.12.99 crores. And we are sure that it is quite possible to adjust the facilities within and graciously give us the time at least upto March 6 2010.” 9. The petitioners replied to the aforesaid letter by their letter dated 4 th December 2008 and inter-alia informed the respondent company that it was not possible to accede to their request of granting them time till March 2010. 10. It is stated in the petition that subsequently, the petitioners have also filed an original application in the Debt Recovery Tribunal for recovery of their dues which is pending as of date. 11. Since no payment was forthcoming, the petitioners through their Advocates issued a notice dated 12 th May 2009 to the respondent company addressed at its registered office inter-alia calling upon the respondent company to pay a sum of Rs. 13,65,41,627.67 within 21 days of the receipt of the said notice failing which the petitioners would be constrained to file a winding up petition against the respondent company. The said notice was the statutory notice as contemplated under sections 433 and 434 of the Companies Act, 1956. Despite having received the said notice, the 7 respondent company has failed to reply to the same and/or secure the amounts mentioned in the said notice to the satisfaction of the petitioners. 12. The learned Advocate appearing for the petitioners have therefore submitted that the respondent company is unable to pay its debt and therefore, the company petition deserves to be admitted. It is also submitted on behalf of the petitioners that though they are secured creditors, the security is not sufficient. Reliance is also placed on the Division Bench Judgment of this Court in Bharat Overseas Bank Limited vs. V. Shree Arcee Steels Pvt. Ltd., reported in Vol.58 Company Cases 174, wherein it is held that a company petition has to be admitted and advertised and then Court has to consider the sufficiency of security. This view is followed by a Learned Single Judge of this Court in the decision in Canfin Homes Limited v/s. Lloyds Steel Industries Limited., reported in 2001 (4) Bom.C.R. 84. 13. From the aforesaid facts, it is clear that in response to the 8 recall notice issued by the petitioner dated 25 th November 2008 calling upon the respondent company to pay a sum of Rs. 12,99,58,226.21 together with interest at the rate of 18% per annum from 1 st November 2008 till payment and/or realisation, the respondent company by its letter dated 1 st December 2008 did not deny / refute the liability of the respondent company but assured to repay every penny to the petitioners, and sought time upto March 2010. After 1 st December 2008, the respondent company has not paid any amount to the petitioners and also failed and neglected to respond to the statutory notice dated 12 th May 2009 served by the petitioners at the registered office of the respondent company. 14. Even after the company petition was served on the respondent company as can be seen from the affidavit of service dated 12 th August 2009 filed by the petitioners, the respondent company has not come forward to defend the company petition. In view thereof, the facts set out in the petition remains un-controverted and therefore accepted by this Court. 9 15. Company petition is accordingly, admitted and made returnable on 9 th November 2009 and is directed to be advertised. 16. Petition to be advertised in two local newspapers, namely “Free Press Journal”, “Maharashtra Times” and in the Maharashtra Government Gazette. The petitioner shall deposit an amount of Rs. 10,000/- with the Prothonotary and Senior Master towards the publication charges, within three weeks from the date of the respondent company failing to deposit the said amount, with intimation to the Company Registrar failing which the petition shall stand dismissed for non-prosecution. 17. No orders are passed at this stage on application no.746 of 2009 and the same stands disposed of. However, the petitioners will be at liberty to take out a fresh application after the petition is advertised and claims are received from other creditors of the respondent company. [ S.J.KATHAWALLA, J. ] 10