® IN THE HIGH COURT OF KARNATAKA AT BENGALURU Dated this the 22nd day of July, 2016 Before THE HON’BLE DR JUSTICE VINEET KOTHARI Company Petition 266 / 2013 Between Mr J R Srinivasa, 35 yrs S/o late J S Ramesh R/a ‘Sudarshan Nilaya’ # 5, Chakravarthy Layout Palace Cross Road Bangalore (By Ms Sukrutha for Mr Poonacha C M, Adv.) And Sree Gururaja Enterprises P Ltd Regd.Off:
173. 174 Subedar Chatram Road Seshadripuram, Bangalore 20 By its Managing Director (By Mr Madhukar Deshpande, Adv.) Company Petition is filed under S.433(e) of the Indian Companies Act, 1956 praying to order winding up of the respondent company; appointment of an official liquidator to take charge of the respondent company and its assets, etc. Petitioner Respondent Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 2/23 The Petition having been reserved for orders on 15.7.2016, coming on for pronouncement of orders this day, Dr Vineet Kothari J., made the following:
ORDERMs Sukrutha for Mr Poonacha C M, Adv. For Petnr. Mr Madhukar Deshpande, Adv. For Respdt. 1 This winding up petition has been filed by Mr J R Srinivasa, an ex- Director of the respondent company Sri Gururaja Enterprises Pvt Ltd seeking winding up of the respondent company on account of the alleged failure to pay interest at 24% p.a. on the admitted liability of Rs.75.50 lakhs due by the respondent company to the petitioner, against the loan advanced by the petitioner to the respondent company. 2 The case set up by the petitioner in the present petition is that the petitioner Director advanced a sum of Rs.1,41,00,000/- to the respondent company to square up the outstanding dues of Andhra Bank which had initiated action against the respondent company under the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 3/23 Act, 2002 claiming a sum of Rs.2,64,69,938/- and no written agreement for the loan advanced by the petitioner to the respondent company was executed. But against the said advance of Rs.1.41 crores, respondent company had paid only a sum of Rs.65.50 lakhs and thus, the balance sum of Rs.75.50 lakhs remained outstanding which was duly reflected in the books of account of the respondent company and despite service of legal notice under S.434 of the Act by the petitioner vide Annexure G dated 20.9.2013 calling upon the respondent company to pay the balance amount of Rs.75.50 lakhs along with interest at the rate of 24% p.a., the outstanding dues were not cleared by the company and the company therefore, deserves to be wound up under S.433 (e) read with S.439 of the Act. 3 The respondent company replied to the said statutory notice vide Annexure H dated 15.10.2013 and while denying its liability to pay the said amount of Rs.75.50 lakhs, the respondent company through its advocate, gave the following reply and the relevant extract of which is quoted below for ready reference: Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 4/23 Our Client instructs us to state that, your client has not properly instructed to you and therefore you have issued this notice without ascertaining factual matrix of the matter. Our client is a company incorporated under the provision of Companies Act, 1956. Your client was one of the Directors of our client. Your client without any reason unnecessarily used to initiate proceedings before the various courts/forum. All the proceedings initiated by your clients were baseless, misconceived and abuse of process of law. Your client filed a Company Petition No.494/2008 before the Hon’ble Company Law Board at Chennai against our client and others, seeking relief under S.111 of the Companies Act, 1956 and obtained an interim of status quo in respect of constitution of board of director of the company. As there were only two directors i.e., your client and Mr Narasimha Murthy Naik and due to non-cooperation from your client with the company, there was total deadlock in the Board of Directors of the Company. indifferent approach of your client toward the company, the Company started facing various financial problems. The banker viz., Andhra Bank initiated the proceedings under SARFAESI Act, against our client. Non co-operation from your client with the Company, indifferent approach towards our client, putting spokes in day-to-day affairs of our client by your client were the reasons for financial problems of our client and ultimately this lead to initiation of recovery proceedings by M/s Andhra Bank. Your client deliberately was not allowing to hold lawful meetings of our client to deprive our client from carrying out business. During such crucial time also your client did not co-operate with out client for opening of the North Block showing disrespect to the order passed by the Because of Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 5/23 Company Law Board and did not allow our client to generate the revenue to repay the loan to the financial institution viz., Andhra Bank. An application in CA132009 was filed before the Company Law Board seeking an order to reopen the North Block premises belonging to our company which consists of 60 lodging rooms. After hearing the parties, the Hon’ble Company Law Board passed an order dated 5.5.2009 in CA132009 directing your client to cooperate with Director of our client to reopen the North Block premises. With an intention to overcome order dated 5.5.2009 passed in CA132009 and to deprive our client from opening the North Block, your client illegally took away keys of the North Block from the custody of our client, handed over the keys of North Block to one M/s Cimec Enterprises and set up M/s Cimec Enterprises to institute a suit in OS32902009. Thereafter the Hon’ble Company law Board passed an order dated 30.7.2009 dismissing the Company Petition 494/2008 filed by your client. Being aggrieved by the said order, your client preferred an appeal in Comp.Appeal 12/2009 before the Hon’ble High Court of Karnataka, challenging order dated 30.7.2009, passed in Company Petition 494/2008. The Hon’ble High Court of Karnataka by order dated 20.10.2009 dismissed the Company Appeal 12/2009 with cots, confirming order dated 30.7.2009 passed by the Hon’ble Company Law Board Our client instructs us to state that your client is the reason for depriving our client from running the hotel business in North Block premises. Your client’s action of committing illegalities further continued. Your client with an ulterior motive created documents against the interest of the company and also misused seal of the Company against the interest of our client. To deprive our client to carry on its business in North Block premises, your client in Company Petition 494/2008. Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 6/23 fabricated an alleged work order dated 15.7.2008, TDS certificate and various other documents. Acts of your client are unbecoming of a director of a company. Under these circumstances, our client initiated action to remover your client from the position of Directorship of the Company. Accordingly, the other directors removed your client from the Directorship of the Company. Our client instructs us to state that, it has instituted a suit in OS69422011 seeking recovery of Rs.2,33,17,790/- (Rupees two crores thirty three lakh seventeen thousand seven hundred ninety only) against your client and M/s Cimec Enterprises who was set up by your client. Our client further instructs us to state that your client and your client HUF i.e., M/s Sudarshan Silks is illegally occupying a portion of the premises belonging to our client and our client has initiated appropriate proceedings against M/s Sudarshan Silks to evict the said firm from the property. Your client is responsible for illegal occupation of portion of the property by M/s Sudarshan Silks belonging to our client. Our client instructs us to state that it is your client who is liable to pay amounts to our client and our client has already initiated appropriate proceedings before the appropriate forum. When your client is liable to pay an amount of Rs.2,33,17,790/- to our client, your client’s demand for Rs.75,50,000/- is baseless, illegal and misconceived. Our client instructs us to state that, it is not liable to pay any amount to your client much less the amount demanded in your legal notice. Our client further instructs us to state that as your client acted against the interest of the Company, misused the position of director of the company, did not adhere to the orders passed by the competent forum and did not allow the company to carry on its business in the north Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 7/23 block premises, your client is not entitled for amount demanded in your legal notice under reply. Therefore, your legal notice is baseless, illegal and misconceived. 4 Learned counsel for the petitioner Ms Sukruta vehemently submitted that the debt of the respondent company to the extent of Rs.75.50 lakhs was an admitted liability of the respondent company and vide order dated 26.6.2015, a co-ordinate Bench of this Court, after hearing both the counsel, had found that this was a fit case for admission but since there was a fervent plea on behalf of the respondent that there is a possibility of settlement if there is a concession shown by the petitioner, therefore, the matter was referred to the Mediation Centre at Bangalore. However, on 27.11.2015, it was recorded that the mediation talks have failed but the respondent company expressed its readiness and willingness to pay the amount claimed in the statutory notice on installment basis and a sum of Rs.10,50,000/- was thus assured to be paid on the next date of hearing. On 4.12.2015, the said sum of Rs.10,50,000/- was paid and the balance amount of Rs.65 lakhs was assured to be paid in ten equal monthly installments and therefore, the case was adjourned. Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 8/23 Learned counsel for the petitioner submitted that thus, in installments the entire amount of principal amount due of Rs.75,50,000/- was paid by the respondent company during the pendency of this winding up petition. However, thereafter, the respondent company has stopped payment of the remaining part of the debt, viz., the interest claimed by the petitioner at the rate of 24% p.a. and on account of the failure to pay the interest part of the debt of the petitioner, the company petition deserves to be admitted now and advertised, in accordance with the rules. She has relied upon the judgment of the Delhi High Court in the case of Devendra Kumar Jain Vs Polar Forgings & Tools Ltd 1995 (84) Company Cases 766 and also the Hon’ble Supreme Court decision in the case of Vijay Industries Vs NATL Technologies Ltd (2009) 3 SCC527 5 On the other hand, Mr Madhukar Deshpande, learned counsel for the respondent company, taking this Court through the detailed statement of objections filed by the respondent company, submitted that the petitioner is a disgruntled ex-director of the respondent company and ever since he was removed from the Board of Directors by the Resolution of the Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 9/23 Board of Directors by the respondent company, he has been creating troubles for the respondent company and has instituted a large number of cases against the respondent company and has caused loss and damage to the company and has prevented it from peacefully carrying on its hotel business and he not only set up a firm to institute an eviction case against the respondent company but also filed petition under S.397 and 398 of the Companies Act for alleged oppression and mismanagement by the majority against him as a minority shareholder before the Company Law Board. He also submitted that the liability of Rs.75.50 lakhs was never admitted but under pressure and threat of the present winding up petition, after the mediation failed, the respondent company had to pay the said amount in installments as pointed out above but that does not mean that the respondent company has admitted its liability to pay the said amount which was clearly denied vide its reply to the statutory notice quoted above. He also submitted that on the contrary, the respondent company has instituted a civil suit viz., OS69422011 Sri Gururaja Enterprises Pvt Ltd Vs M/s Cimec Enterprises & Ors including the present petitioner J S Srinivasa as the 6th defendant for claiming damages for the Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 10/23 sum of Rs.2.33 crores against the defendants including the present petitioner and that suit is still pending trial in the competent civil court. 6 Learned counsel for the respondent company also submitted that in any case, in the absence of any written agreement to pay the interest on the said claim of Rs.75.50 lakhs, no such liability of interest can be stated to be an admitted liability of the respondent company and can be so fastened upon the respondent company and the demand of such interest at an abnormally high rate of interest of 24% p.a. was raised, for the first time only in the legal notice served by the petitioner’s Advocate vide Annexure G dated 20.9.2013. He also drew the attention of the Court to para 6.59 of the Company Petition 9/2012 filed by the present petitioner before the Company law Board vide Annexure R7 in which, when a cheque for Rs.2.50 lakhs dated 18.6.2011 was offered to the petitioner in part repayment of his loan, but he did not encash the same and on the contrary, raised it as a ground of oppression against the respondent company. Learned counsel for respondent company, therefore, urged that even if the liability of interest could be assumed against the Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 11/23 petitioner, while denying the same, such a liability ceased after the said date of 18.6.2011 when the payment was offered to the petitioner, it ceased to so exist. He also submitted that even the payment in installments made by the respondent company during the pendency of this winding up petition has been adjusted by the petitioner only against his claim of principal amount of Rs.75.50 lakhs and not against the interest claimed by him now and therefore, the said interest amount cannot be said to be a debt due from the respondent company, the inability to pay which can result in the winding up order. Lastly, he urged that the respondent company is a going concern and profitable company and therefore, the substratum of the company has not been lost and winding up proceedings not being a money recovery proceeding akin to a civil suit filed for such purpose, as such the liability of interest cannot be determined and directed to be paid by this Court and such payment made by the respondent company to buy peace during the pendency of this winding up petition in the face of the earlier orders passed by the co- ordinate Benches of this Court, cannot be said to be an admission of Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 12/23 liability of the respondent company and the present winding up petition deserves to be dismissed by this Court. 7 He also relied upon the judgment of this Court in the case of Jyothi Limited Vs Boving Fouress Limtied 2001 (106) Company Cases 380 which found a mention in the Supreme Court judgment relied upon by the opposite counsel in the case of Vijay Industries (supra). He also relied upon the judgment of the Hon’ble Supreme Court in the case of IBA Health (India) Private Ltd Vs Info-Drive Systems SDN. BHD (2010) 10 SCC553wherein in para 25, the Hon’ble Supreme Court laid down that an examination of the company’s solvency may be a useful aid in determining whether the refusal to pay the debt is a result of bonafide dispute as to the liability or whether it reflects the inability to pay. 8 I have heard the learned counsel at length and perused the record and judgments cited at the Bar. Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 13/23 9 In the considered opinion of this Court, the present winding up petition has no merit and deserves to be dismissed. The reasons are as follows: A winding up petition under S.433(e) of the Companies Act, 1956 is a very serious and drastic proceeding against the respondent company and it cannot be equated with a proceedings for recovery of a debt, even though an admitted debt, and much less when the debt is disputed. The moment the respondent company puts up a defense raising a bonafide dispute about the debt claimed to be due to the petitioner creditor, the court should refuse to exercise this wide jurisdiction which can result in the death of a juristic person viz., a limited company. The case laws on this proposition are umpteen in number and one need not multiply such authorities except by making a brief reference to para 25 of the recent judgment in the case of IBA Health (India) Pvt Ltd (supra) referred by the learned counsel for respondent, which would be enough to support the said proposition. The said para 25 reads as under: An examination of the company’s solvency may be a useful aid in determining whether the refusal to pay debt Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 14/23 is a result of a bonafide dispute as to the liability or whether it reflects an inability to pay. Of course, it there is no dispute as to the company’s liability, it is difficult to hold that the company should be able to pay the debt merely by proving that it is able to pay the debts. If the debt is an undisputedly owing, then it should be paid. If the company refuses to pay, without good reason, it should not be able to avoid the statutory demand by proving, at the statutory demand stage, that it is solvent. In other words, commercial solvency can be seen as relevant as to whether there was a dispute as to the debt, not as a ground in itself, that means it cannot be characterized as a stand alone ground. 10 A learned Single Judge of this Court (Hon’ble R V Raveendran, J as His Lordship then was) in the case of Jyothi Limited (Supra) lucidly expressed the following with regard to a similar dispute with regard to interest claimed in a winding up petition and denying such relief in the winding up proceedings, this Court held as under: (f) Award of interest either under S.61(2)(a) of the Sale of Goods Act or under S.3 of the Interest Act, is by way of damages, that is, making good the loss suffered by the seller/creditor, by denial of the use of the money due to him by the purchaser/debtor, by wrongfully withholding the money. These provisions are invoked only when there is no contract to pay interest. Thus a claim for interest based on S.61(2)(a) of the Sale of Goods Act or under S.3 of the Interest Act. Nor can this Court hold that Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 15/23 Interest interest. non-payment of such interest granted and computed in winding up proceedings amounts to inability to pay a ‘debt’. Let me consider whether non-payment of interest by the respondent, in this case, amounts to inability to pay its debts. The contracts in this case, (purchase orders dated July 25, 1996 and September 11, 1996) do not provide for interest. The bills dated March 30, 1997 and March 31, 1997, under which the supplies are made are not produced to show that they contained any term regarding interest. It is not even the case of the petitioner that the bills provide for interest. The letter dated July 8, 1997, demanding payment of the bill amounts does not refer to is demanded for the first time in the letter dated July 10, 1997, by saying that “I will be constrained to charge you interest for the delayed payment’, thereby making it clear that there was no earlier agreement for payment of interest. If that is so, the demand for interest is not in pursuance of any contract or agreement. There is no admission by the respondent to pay interest. On the other hand, the respondent has denied its liability to pay interest. Interest cannot be claimed or awarded under S.62(1)(a) of the Sale of goods Act and/or S.3 of the Interest Act as these proceedings are not proceedings for recovery of money. Therefore, this Court cannot hold in these proceedings that the respondent is due to the petitioner, any interest, nor quantify the same. There is also a bona fide dispute in regard to the liability to pay interest, the rate of interest and the date from which the interest is payable. While it may be open to the petitioner to establish a claim for interest in a civil suit, under S.61(2)(a) of the Sale of Goods Act and/or S.3 of the Interest Act, I am satisfied that the petitioner has not Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 16/23 made out any admitted or undisputed liability to pay interest, in these proceedings. Having regard to the fact that the respondent has paid the entire principal amount during the pendency of this petition and thereby established its financial and commercial solvency and in view of the bonafide dispute regarding interest, there is no liability to pay any debt and consequently this petition for winding up is dismissed. This Court respectfully agrees and endorses the view taken by the learned Single Judge in the case of Jyothi Limited (supra). 11 This Court finds it difficult to agree with the view expressed by the learned Single Judge of Delhi High Court in the case of Devendra Kumar Jain (supra) wherein the Delhi High Court held that, relegating the creditor petitioner to avail the remedy by way of a civil suit, without determination of the liability towards interest on the debts, would multiply the litigation and therefore, the company court sitting in a winding up proceeding can determine such interest amount and direct the payment thereof. The relevant portion of judgment of the Delhi High Court is quoted below for ready reference: Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 17/23 (6) The question to be determined is, whether in absence of specific contract for payment of interest even where the price of the goods is not paid admittedly by the due date, can the liability to pay interest and rate thereof be adjudicated by the Company Court in a petition Filed for winding up of the company and on failure of the company to make payment of interest amount as may be adjudicated, can the Company Judge direct winding up of the company or the question of interest should be left to be determined by a civil court where creditor should file a suit for recovery of the interest amount. result (7) On the aforesaid question divergent opinions have been expressed by Allahabad and Madras High Courts. Counsel for the parties have not cited any decision of this Court. In my opinion, it is the duty of the court to adopt that approach which would in avoiding multiplicity of litigation. When the Company Court is seized of the matter and liability to pay the principal amount is not only admitted by the company but that amount is in fact paid in the winding up proceedings so as to avoid an order for the winding up, the Company Court will be fully competent to determine whether the creditor is also entitled to interest and direct winding up of the company on its failure to make payment of such amount. Reference may also be made to S.61(2)(a) of the Sale of Goods Act, 1930 which inter-alia, provides that in the absence of a contract to the contrary the court may award interest at such rate as it thinks fit on the amount of the price to the seller in a suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable. The interest amount can be determined by the company court in exercise of the power under the provisions of the Sale of Goods Act or on the principles underlying the said Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 18/23 provisions. Learned counsel for the Company relies upon a decision of Allahabad High Court in Ultimate Advertising and Marketing Vs. G.B. Laboratories Ltd., 66, Company Cases Page 232 holding that the winding up court could not investigate into the question of rate and quantum of interest and unless it was established that the amount claimed was either agreed upon or admitted or decreed by a competent court, the amount did not become a debt. The learned Judge came to the conclusion on the facts of that case that the amount claimed as interest had yet to be established as a debt inspite of the fact that the principal amount was paid in the proceedings for winding up initiated by the creditor. In the present case the petitioner has specified the balance amount payable by the company and specified the rate of interest at 18% p.a. Due dates when the balance price of the goods was payable have also been specified. The rest is a matter of mathematical calculation and the petition for winding up cannot be dismissed on the ground that mathematical calculation as to the amount of interest have not been stated. The exact amount of interest payable is likely to change depending upon the time when the payment of the principal amount is made. The court in its discretion, on consideration of all the facts and circumstances of the case and the financial market conditions, in the absence of agreement as to rate of interest between the parties, can award a reasonable rate of interest. There may not be a specific contract for payment of interest but if the contract provides for payment of the price of the goods by a particular date it is clear that the creditor would ordinarily be entitled to interest if the amount is not paid by the due dates. As noticed above, the court has discretion to award interest at a reasonable rate on the amount of price from the date on which the price was Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 19/23 payable to the seller. Unlike the facts of the cited decision the petitioner has been writing to the company that in case the outstanding balance is not released the petitioner will be constrained to charge overdue interest- at 18% p.a. from the due dates of payment till realisation. With utmost respect, I am unable to concur with the opinion expressed by learned single Judge in the cited decision to the effect that winding up court cannot investigate into a question of rate and quantum of interest even where the principal mount is admitted by the company and paid in the course of the winding up proceedings. I am in respectful agreement with the opinion expressed by a Division Bench of the Punjab & Haryana High Court in Stephen Chemical Limited Vs. limo search Limited, 60 Company Cases Page 702 and single Bench decision of the same court in Delhi Cloth & General Mills Co. Ltd Vs. Stepan Chemicals Limited, 60, Company Cases Page 1046 to the effect that the forum of the Company Judge is the appropriate forum for determining as to whether the creditor is entitled to interest where the company admits its liability and, in fact, pays the amount. 12 The aforesaid judgment of the Delhi High Court is not only distinguishable on facts where a case of inability to pay the company was established on the basis of supply of certain goods by the petitioner and invoices raised against the respondent company and taking resort to S.61(2) of the Sale of Goods Act, the court considered it appropriate to award interest at a reduced figure of 12% p.a. as against 18% p.a. claimed Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 20/23 by the creditor whereas the present is a case of a loan given by the ex- director of the company without any agreement in writing of advancing such loan with interest rate stipulated therein and there is neither the period of loan is specified, nor the manner in which it was to be repaid is specified much less the rate of interest payable on such repayment. Therefore, for such unascertained liability of interest for which there exists admittedly no specific contract, the winding up proceedings is not only the least suited but an absolutely ill-suited remedy, in the considered opinion of this Court. Since the principal loan itself has been disputed and denied by the respondent company in the present case, the mere fact that it had to pay the same under the threat of winding up petition being pending in this Court, does not convert an un-admitted and disputed liability into an admitted one. On the contrary, there is ample material on record to indicate that the present petitioner was hell bent upon coercing the respondent company to cough up whatever he has demanded from the respondent company and one after the another, several legal proceedings have been initiated by him against the respondent company. It is also worthy to note that this Court in Company Application 12/2009 under Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 21/23 S.10 F of the Act filed by the same petitioner against the respondent company itself, in a matter arising against transfer of shares under S.111 of the Companies Act, dismissed the said company application of the present petitioner with costs of Rs.6,000/- with the following observations: There is a great distinction between the first appellant being a member of company and having locus to maintain a petition for rectification within the scope of S.111 of the Act and the first appellant being entitled to challenge the legality of the claim for ownership put forth by the second and the fourth respondent, on the basis of the transfer forms sent by the erstwhile owner/member and that question could become an issue only at the instance of the legal heir of the deceased person and not at the instance of a person like the first appellant herein, who is an outsider to the question. It is for this reason, we opine that the petition filed by the first appellant herein along with other appellants did not merit examination before the Company Law Board within the scope of a petition under S.111 of the Act and the Company Law Board has rightly dismissed such a petition and even assuming that it had ventured into make certain observations not really necessary, the conclusion being a proper conclusion, we are not inclined to disturb the order of the Company Law Board and accordingly this appeal is dismissed at the admission stage and as we had issued notices respondents and certain respondents are represented by counsel, the appeal is the to Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 22/23 dismissed by levying cost of Rs.6,000/- (Rupees six thousand only) on the appellants to be apportioned amongst the respondents 2, 4 and 5 in equal proportion. 13 This Court is also of the view that the judgment of the Hon’ble Supreme Court in the case of Vijay Industries (supra) relied upon by the learned counsel for petitioner is distinguishable on facts. The said case, like the case before the Delhi High Court, pertained to supply of goods with interest rate of 2% mentioned on the foot note of the invoice received by the petitioner and in the said case also, invoking S.61(2) of the Sale of Goods Act and S.3 of the Interest Act, 1978 as well as S.5 & 6 of interest on delayed payment of Small Scale and Ancillary and Industrial Undertaking Act, 1993, vide para 50 of the judgment, the Court directed payment of interest at the rate of 12% p.a. as against 24% claimed. This judgment is, with great respect, not applicable to the facts of the present case and therefore, found to be distinguishable, on facts. 14 In view of the aforesaid, this Court is of the clear opinion that no ground as is set out in S.433(e) of the Act viz., the inability to pay the Date of order: Friday, 22.07.2016 CoP2662013 Mr J R Srinivasa Vs Sree Gururaja Enterprises Pvt Ltd 23/23 admitted debt of the company, has been established in the present case to the extent of interest of 24% claimed by the petitioner, an ex-director of the company and therefore, the winding up petition has no merit and the same is liable to be dismissed. Accordingly, the winding up petition is dismissed. No costs. Sd/- Judge An