[2015] 9 S.C.R. 165

STANTECH PROJECTENGG. PVT. LTD.

NICCO CORPORATION LTD.

(Civil Appeal No. 7373 of2005 etc.)

AUGUST 13, 2015

[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]

Concession - Winding up petitions against respondentcompany - Concession by counsel of the respondents to c pay the due debts in 10 and 8 equal instalments respectively

- Company Judge disposed of the petition in view of the concession - Order of Company Judge challenged upto Supreme Court wherein the Court directed the respondent to move the Company Judge for modification of its order - D Company Judge refused the modification - Division Bench of High Court by impugned order held that the counsel made the concession by mistake and set aside the order of Company Judge - On appeal, held: Order of the Division Bench is unjustified legally as well as equitably - Since the E respondent-company had failed to discharge the admitted debt even after service of statutory notice, the Company Judge had no alternative but to proceed for the winding-up of the Company- The counsel of the respondent had displayed legal sagacity in getting the winding-up postponed and F avoided the publication in the petition - Had he not done so, the respondent would have had to pay the entire debt at once or face certain commercial death as a consequence of publication/citation of winding-up petition - The respondent G abused the judicial process in order to delay the discharge of an acknowledged debt for almost a quarter of a century during which period he continued his business - However, order of Company Judge modified - The respondent• is directed to pay all the amounts due, alongwith the cost H

A imposed by the Company Judge and the cost of the present proceedings within 45 days of this judgment - Appeals

allowed - Companies Act, 1956 - s. 439 -Administration of Justice -Abuse of Judicial Process.

B Administration of Justice - Proliferation and prolongation of litigation - Unwarranted lenient approach of the courts, results in proliferation and prolongation of litigation, leading to insurmountable pendency of litigation.

C CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7373 of2005

From the Judgment and Order dated 29.09.2003 of the High Court at Calcutta in T 490 of 2003 in C.P. No. 432 of

D 2000

WITH

C.A. No. 7374 of 2005

E S. D. Singh, Bharti Tyagi, Vishwajit Singh for the

Appellant.

R. C. Kohli for the Respondent.

The Judgment of the Court was delivered by

VIKRAMAJIT SEN, J. 1. Both these Appeals assail the common impugned Order passed by the Division Bench of the High Court at Calcutta on 29.9.2003, setting aside the Order passed by the Company Judge rejecting the plea of the G Respondent that the so-called concession made by the Junior

Counsel should not be given curial recognition.

2. The facts, succinctly stated, are that the Appellant had fileo Winding-up petitions against the Respondent on the H asseveration that debts admittedly payable by the Respondent

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CORPORATION LTD. [VIKRAMAJIT SEN, J.]

to the Petitioner had remained outstanding even subsequent A to the issuance of a statutory Notice issued under Section 434 of the Companies Act. 1956.

Keeping in perspective the nature of the question of law raised before us, we need not go into the genesis or the characteristics of the contract between the parties. So far as Civil Appeal No. 7373 of 2005 is B concerned, the claim was for a sum of Rs.3,54,500/- together with interest at the rate of ten per cent per annum together with Rs.1,09,958/- deducted by the Respondent on account of the tax deducted at source (TDS). These amounts have remained unpaid even after the receipt of the statutory notice. It is C palpably clear that the statement made by the learned counsel for the Respondent that these amounts would be paid in ten equal installments commencing from 16.8.2002, was so done in order to avert the ordering of an advertisemenUcitation in D the proceedings by the Company Judge. In Civil Appeal No. 7374 of 2005, the claim was for a sum of Rs.8,08,314/- together with interest at the rate of ten per cent per annum together with Rs.1,24,984/-which had been deducted by the Respondent on account of TDS. It appears that these amounts E were admitted by the Respondent in terms of its letter dated 8.2.2000 as also in the Affidavit of the Manager (Corporate) of the Respondent who, at the material time, was its Principal Officer. In the said Affidavit, it was admitted that the total amount payable was Rs.8,05,664/-which was being retained awaiting F final clearance from TISCO who had floated the subject turnkey project. As in the foregoing instance, the Company Judge recorded the statement of the counsel for the Respondent offering to pay the principal sum of Rs.8,05,664/-togetherwith Rs.1,24,984/- in four equal installments commencing from G 6.8.2002. It had been made clear by the Company Judge vide

Orders dated 24. 7 .2002 that if these payments were not made, the Winding-up petitions would stand admitted and it would be open to the Appellant to pray for advertisemenUcitation. A fortnight later, i.e. on 8.8.2002, the foregoing Orders were H

A modified by the consent of the parties to the effect that it would be open to the Respondent to pay off the dues together with the interest accrued in eight monthly installments instead of four monthly installments as was directed in the Order dated 24.7.2002.

3. In these circumstances, these orders passed on the concession of the learned counsel for the Respondent were challenged by the Respondent before the Division Bench of the High Court, which we cannot but view as extraordinary.

C The Division Bench disposed of the Appeal in terms of its Order

dated 6.1.2003 with the observation that aJ; l application should be preferred before the learned Company Judge for modification of the order, which were assailed before this Court. We had disposed of the Special Leave Petition on D 3.3.2003 thus:- "Whether such application for modification is at all maintainable is a question which is expressly left along with other questions for being decided by the learned Single Judge if and when such application for modification is filed by the Respondent".

4. Thereafter, a detailed Order came to be passed by the learned Company Judge on 22.8.2003 rejecting the prayer for re-hearing or modification of the consent Order, primarily on the premise that the so-called junior and an inexperienced F counsel had rightly made the statement that the admitted debt would be paid in installments. The learned Company Judge had recorded that the Respondent Company was fully aware that Winding-up petitions were going to be admitted, which situation is always stigmatic and therefore to be strenuously G avoided since it inexorably leads to a commercial death. The learned Company Judge found the conduct of the Respondent not to be bona fide. The second salvo of litigation, therefore, proved to be unsuccessful so far as the Respondent is H concerned as the petition/application was dismissed by the

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CORPORATION LTD. [VIKRAMAJITSEN, J.]

Company Judge with costs assessed at 600 GMs. Thereafter, A these Orders dated 24.7.2002 came to be assailed once again before the Division Bench, which then passed the Orders now impugned before us. The Division Bench was of the view that the concession was made mistakenly by the counsel appearing forthe Respondent and on this predication, the Order was set B aside and the Company Petition was remanded to be heard once again.

5. We find no justification whatsoever, in law or in equity, for the rationale adopted by the Division Bench in the impugned C Order. The Company Judge had no alternative but to proceed for Winding up of the Respondent Company since it had failed to discharge the admitted debt even after the service of the afore-noted statutory notice. The said junior Advocate of the Respondent had, in fact, displayed legal sagacity in getting D the winding-up of the Company postponed and avoided the publication in the Winding-up petition by praying for and obtaining leave to pay the debt in installments. Had he not done so, the Respondent would have had to pay the entire debit at once or face certain commercial death as a E consequence publication/citation of Winding-up petition. It is note worthy that the Respondent so is transacting business even today. The Division Bench has been inexplicably and

unjustifiably considerate towards the Respondent. It is this F kind of leniency that results in proliferation and prolongation of litigation, which approach has led to an almost insurmountable pendency of litigation. Learned counsel for the Appellant rightly relies on the decisions of this Court in Shrimati JamilabaiAbdul Kadarv. Shankarial Gulabchand (1975)2 SCC 609 and State G of Maharashtra v. Ramdas Shrinivas Nayak (1982) 2 SCC 463.

 6. We accordingly set aside the common impugned Order of the Division Bench of the High Court. The Respondent has abused the judicial process in order to delay the discharge of H

A an acknowledged debt for almost a quarter of a century, in which period it has continued in business.

7. These Appeals are allowed. We, however, modify the Orders of the learned Single Judge by directing the . B Respondent to pay the said admitted dues of Rs.3,54,500/- and Rs.8,08.314/-togetherwith interest atthe rate often per cent per annum, as also the costs imposed by the learned Company Judge at 600 GMs. If the two sums of TDS of Rs.1,09,958/- and Rs.1,24,984/- have not been deposited with C the Income Tax Department, these sums shall also be paid to the Appellant. The Respondent shall also pay to the Appellant the costs of these proceedings quantified at Rs.20,000/-. All these amounts are payable within 45 days from today. No extension for payment shall be granted since the D . accommodation and the indulgence granted by the learned

Company Judge has been abused by the Respondent. In the event of failure to make the above mentioned payments, the Appellant shall be entitled to once again move the learned

Company Judge, who will thereupon admit the Winding-up E petition, and proceed with expedition under the relevant

provisions of law.

Kalpana K. Tripathy Appeals allowed.