Smt. Vijayalakshmi Vs. Hari Hara Ginning and Pressing Pvt. Ltd. - Court Judgment

Excerpt:
company - winding up - sections 433 and 434 (1) of companies act, 1956 - petition filed under section 433 (b) for winding up of respondent company - in case company produce prima facie proof of facts on which defense depends and there is likelihood to succeed in point of law it cannot be said company has neglected to pay under section 434 (1) - held, application for winding up of company liable to dismissed. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. the school tribunal constituted under section 8 of the maharashtra act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. teacher employed in the school run by cantonment board being covered under rule 2 (f) of the cantonment fund servants rules, 1937 can file appeal under rules 13, 14 and 15 to authorities provided therein against any order imposing any penalties etc. [deolali cantonment board v usha devidas dongre, 1993 mah. lj 74; 1993 lab ic 1858 overruled]. -- maharashtra employees of private schools (conditions of service) regulations act, 1978 [act no. 3/1978]. sections 9 & 2(21): jurisdiction of school tribunal whether a school run by cantonment board is not a recognised school within the meaning of section 2(21)? - held, the act is enacted to regulate recruitments and conditions of employees in certain private schools and provisions of the act shall apply to all private schools in the state whether receiving any grant-in-aid from the state government or not. private school is defined in section 2(2) of the act as a recognised school established or administered by a management other than the government or a local authority. recognised means recognised by director, the divisional board or state board. thus as far as the first part of the definition of being recognised is concerned, it includes, as stated above, four directors, the divisional boards and four state boards. the second part of this definition which comes after the comma refers to any officer authorised by director or by any of such boards. the question to be examined is whether school run by the cantonment board could be said to be one run by any such boards. a private school has to be recognised by the state or the divisional board or by any officer authorised in that behalf. when this phrase namely: recognised by any officer authorised by the director or by any such boards, is included in the latter part of section 2(21), such boards will be of the level of the state board or the divisional board. the boards referred to in the definition of the word recognised means the boards which deal with education at levels other than that of the level at which primary schools are operating. thus for being recognised, the school has to be recognised by the board and therefore, it has to be operating at a higher level i.e., secondary level. section 2(21) of the act defines the term recognised. the last clause therein is by any of such boards. the term such is defined in oxford dictionary as of the kind or degree indicated or implied by the context. therefore, the term such board will have to mean a divisional board of or the level of divisional board or the state board. the divisional board holds the examination and issues certificates after 10th and 12th standard examinations. the state board advises the state government on policy matters, ensures uniform pattern of secondary and higher secondary education, lays down principles for determining syllabi, prescribes text books, etc. the cantonment board does not discharge any of such duties nor is there any other board or body under the cantonments act discharging any such duties. the duties of the cantonment board are laid down in section 62 and amongst others, clause (xiv) lays down the duties of establishing and maintaining or assisting primary schools only. the cantonment board is not required to enter into the area of secondary education. therefore, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. that being the position, it is not possible to accept it to be a recognised school for being a private school under the act. for the reasons state above, the school tribunal constituted under section 8 of the act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. [deolali cantonment board v usha devidas dongre, 1993 mah.lj 74; 1993 lab ic 1858 overruled]. - the first argument is that the admission in the balance-sheet of the respondent-company is not an admission of liability and on this count only the applicant has no cause of action and the second argument is that the applicant did not come forward with pressing work to be done by the respondent-company in pursuance of the second clause of the agreement dated february 6, 1994, and, therefore, it cannot be said that the respondent-company had failed or neglected to discharge its liability particularly when an amount of rs. 9. it is well-settled that the procedure under section 433 of the indian companies act is summary.krishna saran shrivastav, j.1. this is an application filed under sections 433(e) and (f) and 439 of the companies act, 1956 for winding up of the respondent-company.2. it is no longer in dispute before me that on february 6, 1994, an agreement was executed between ch. savithri, s. padma and muralidhar on the one part and sampat and v. vijayalakshmi on the other part regarding' the payment of rs. 3,53,330. the first party, that is to say, ch. savithri, s. padma and muralidhar had paid an amount of rs. 1,50,000 to the second party, that is to say, sampat and v. vijayalakshmi and had agreed that the balance amount of rs. 2,03,330 shall be paid to them. the manner and the mode of payment was agreed upon between them and the first party had undertaken the pressing work and the amount due to the first party towards charges of pressing work done in the past was also be taken into account in arriving at the value of rs. 2,03,330 and the first party was entitled to obtain receipt for the same from the second party. there are other terms in the agreement in question with which i am not concerned at present, except clause 15, which speaks that in order to legalise this agreement, a board meeting shall be held and the minutes shall be placed before the elders and the registrar of companies within one week therefrom. it is not disputed before me that the board of directors of the respondent-company did not approve this agreement.3. the case of the applicant in brief is that the respondent-company was liable to pay the original amount of rs. 5,62,231 by virtue of the agreement arrived at on february 6, 1994. the respondent-company owed an amount of rs. 2,03,330 which has been shown in the balance-sheets for the relevant years. the applicant was one of the members of the second party to said agreement. the respondent-company did not pay the amount of rs. 2,03,330 with interest, and, therefore, it was liable to pay interest at the rate of 24 per cent, per annum. the total amount comes to rs. 7,89,575. this amount has not been repaid by the respondent-company in spite of notice and, therefore, the respondent-company should be wound up.4. notice before admission was served on the respondent-company, to which it has filed its counter through the chairperson and managing director, smt. s. padma, who is one of the members of the first party to the agreement dated february 6, 1994. the defence of the respondent-company in short is that the agreement was not accepted and approved by the board of directors of the respondent-company and, therefore, this agreement is not binding on the respondent-company, that mere acknowledgment of liability in the balance-sheet of the respondent-company does not give rise to cause of action, because it is not actually an admission of liability to pay that amount to the applicant and that in pursuance of clause 2 of the agreement dated february 6, 1994, the amount of rs. 82,500, being the charges of the past pressing work done by the respondent-company, was adjusted against the amount of rs. 2,03,330 and the applicant did not come forward for pressing work to be done by the respondent-company subsequent to february 6, 1994, and, therefore, the remaining amount could not be adjusted and that the applicant has filed the civil suit on the same cause of action and, therefore, the application for winding up of the respondent-company deserves to be dismissed particularly because the financial condition of the respondent-company is in sound condition.5. i have heard learned counsel for the applicant and the respondent at length on admission. the second clause of the agreement dated february 6, 1994, reads as under :'for the value of rs. 2,03,330 (in words two lakh three thousand three hundred thirty only) the first party shall undertake the pressing work and the amounts due to the first party towards the charges of pressing done in the past shall also be taken into account in arriving at the value of rs. 2,03,330. the first party shall also obtain receipt for the same from the second party.'6. the argument of the respondent-company is two-fold. the first argument is that the admission in the balance-sheet of the respondent-company is not an admission of liability and on this count only the applicant has no cause of action and the second argument is that the applicant did not come forward with pressing work to be done by the respondent-company in pursuance of the second clause of the agreement dated february 6, 1994, and, therefore, it cannot be said that the respondent-company had failed or neglected to discharge its liability particularly when an amount of rs. 82,500 has been adjusted against the past pressing work done by the respondent-company.7. i shall deal with the second argument first. the second clause of the agreement dated february 6, 1994, speaks that the first party to that agreement of which the chairperson and the managing director of the respondent-company was a party has undertaken the pressing work and the amounts due to the first party towards the charges of pressing done in the past shall also be taken into account in arriving at the value of rs. 2,03,330. in pursuance of this clause, according to the respondent-company, an amount of rs. 82,500 has been adjusted against the due amount. in para. 12 of the affidavit of the petitioner the applicant has admitted that an amount of rs. 82,500 has been paid, but it is alleged that it was paid through sampath industries as a part payment towards agreement dated february 6, 1994. no affidavit on behalf of the said sampath industries has been filed in support of the same. the fact alleged in the counter-affidavit that the said amount has been adjusted being the past pressing work done by the respondent-company has not been denied in the reply affidavit. it is noteworthy that the second clause of the agreement in question has not been correctly reproduced in the petition. thus, it appears that the amount of rs. 82,500 was adjusted against the due amount of rs. 2,03,330 being the charges of the past pressing work of the respondent-company.8. the case is based on the terms of the agreement in question. oral evidence would also be required to decide the question regarding the liability of the respondent-company on the basis of the agreement dated february 6, 1994. the disputed questions of fact cannot be decided in the company petition.9. it is well-settled that the procedure under section 433 of the indian companies act is summary. when the company produces prima facie proof of facts on which the defence depends and which is probable and there is likelihood to succeed in point of law, it cannot be said that the company has neglected to pay within the meaning of section 434(1)(a) of the companies act. bona fide dispute implies the existence of substantial ground for the dispute raised.10. as noted above, prima facie, it appears probable that there was an agreement for payment of dues by adjustment of pressing charges. a civil suit is already pending in the civil court. thus, the defence appears bona fide and probable and i am not inclined to embark upon a detailed enquiry regarding the rival contentions of the parties. on this count only, the petition deserves to be dismissed.11. in the case of state bank of india v. hegde and golay ltd. [1987] 62 comp cas 239 (kar), the respondent has admitted the loan amount granted by the petitioner-bank which had also filed civil suit for recovery of the same. in answer to the notice, the defendant had also requested the petitioner time for payment of loan amount. in a company petition, the defendant-company had raised the question of limitation. as also had taken the defence that the civil suit is pending in the civil court. under the circumstances, it was held by the learned single judge of the karnataka high court that acknowledgement of debt in the balance-sheet of the company has enlarged the period of limitation and the defence was not found to be genuine. the civil suit was not found to be an impediment for filing ah application for winding up of the company. this case is distinguishable on facts. because as noted above, the defence appears to be genuine and probable and on this count only the application deserves to be dismissed, though the pendency of the civil suit may not be an impediment in instituting the petition for winding up of the company.12. in the result, the application for winding up the respondent-company is dismissed at the admission stage. no costs.