R.V EASWAR, J.:
The petitioners Shahi Exports Pvt. Ltd. and Ms. Surabhi Sindhu have filed the company petition for winding up of CMD Buildtech Pvt. Ltd, hereinafter referred to as “the Company”, under section 433(e) read with sections 434 and 439 of the Companies Act, 1956 on the ground that the Company is unable to pay its debts allegedly amounting to Rs. 17,05,13,764/-. The petition came to be filed in the following circumstances. On 27.11.2007, a sum of Rs. 8 crores was advanced for interest to the Company. Sarla Fabrics Pvt. Ltd. advanced Rs. 4 crores and Ms. Surabhi Sindhu advanced the other sum of Rs. 4 crores. The agreement was signed by the lenders, the Company as well as two personal guarantors, out of which Sunita Narula, a Director of the Company, was one. The loan was for a period of three months.
2. By orders of this Court dated 24.2.2011, 9.3.2011 and 21.3.2011, Sarla Fabrics Pvt. Ltd. was amalgamated with Shahi Exports Pvt. Ltd., one of the present petitioners. On 28.11.2011, the petition for winding up the company was filed in this Court. Initially, after issuing notice to the Company, there was some effort towards mediation and conciliation but ultimately these efforts failed. On 8.11.2012, the following order was passed by this Court (Indermeet Kaur, J):
“The authorised representative of the respondent is present. It is not in dispute that the principal figure which is owned by the respondent to the petitioner is Rs. 6 crores; legal notice had been sent by the petitioner for an amount of Rs. 17,05,13,764/-; the balance amount is the interest portion which figure is disputed. To express his bonafide, the respondent shall on the next date bring a sum of Rs. 3 crores by way of demand draft in favour of the petitioner and the payment for the balance sum shall be worked out; payment schedule for the said amount shall also be brought on the affidavit of the Managing Director of the Company. Learned counsel for the respondent states that he will be able to arrange these funds by the sale of his property at Solan; he prays for three months time to make the aforenoted first payment. This enlarged period has been opposed by the learned counsel for the petitioner; however, in view of the difficulty expressed by the respondent, the payment be made on or before 08.02.2013 It is made clear that no further enlargement of time shall be granted. The Managing Director of the respondent Company shall also be present on the next date. In the meanwhile, reply be filed by the respondent with advance copy to the petitioner who may file rejoinder before the next date.
Renotify for 22.02.2013”
When the matter was taken up again on 22.2.2013, another proposal was submitted on behalf of the Company under which it would transfer three immoveable properties in favour of the petitioners. These properties were at Solan and Yamuna Nagar. This proposal was not acceptable to the petitioners. Thereupon it was agreed in Court on behalf of the Company that a more concrete proposal acceptable to the petitioners would be made. The Court accordingly adjourned the matter to 1.3.2013 but stayed the alienation or creation of any third party interest in the properties at Solan and Yamuna Nagar. When the matter was taken up on 1.3.2013, the stay in respect of the three properties was vacated as there was no possibility of any settlement; however, the Company was restrained from selling, transferring, creating any third party interest etc. in respect of all its immoveable assets. On 22.5.2013, when the matter was taken up again an adjournment was sought on behalf of the Company which was vehemently opposed. The adjournment was, however, allowed subject to payment of costs and an order was passed directing the Company not to transfer or create any charge in respect of its stock-in-trade also.
3. Thereafter, the matter has come up for hearing now before me. It was again pleaded on behalf of the Company that some time may be given so that a concrete proposal or settlement can be made or arrived at. This was vehemently opposed on behalf of the petitioners. This Court was not inclined to adjourn the matter any further since it appeared to it, as pointed out on behalf of the petitioners, that the disposal of the petition was being delayed for no plausible reason, particularly, when there were no prospects of a settlement. The parties were accordingly directed to address arguments.
4. The learned counsel for the Company raised a preliminary objection to the maintainability of the company petition. The objection is in two parts. It is submitted that Shahi Exports Pvt. Ltd., petitioner no. 1, is not competent to file the present petition since the loan was not given by it, but was given by Sarla Fabrics Pvt. Ltd.. This objection has only to be stated to be rejected, since Sarla Fabrics Pvt. Ltd. got amalgamated under orders of this Court with Shahi Exports Pvt. Ltd. in March, 2011 itself. All the assets and liabilities of Sarla Fabrics Pvt. Ltd. stood transferred to Shahi Exports Pvt. Ltd. which has filed the present petition for winding up. On the directions of this Court by order dated 7.9.2012, the orders of this Court under which the amalgamation was sanctioned were filed by the petitioners, accompanied by an affidavit of the authorised signatory of petitioner no. 1. The Registrar of Companies was also duly intimated about the amalgamation in the prescribed form which was acknowledged and the merger was approved by him. The present petition was filed on 28.11.2011 after the amalgamation. In the light of these facts, the first preliminary objection fails.
5. The second preliminary objection to the maintainability of the winding up petition is that the debt is barred by limitation. To recapitulate, a sum of Rs. 4 crores was lent for interest on 27.11.2007 to the Company by Sarla Fabrics Pvt. Ltd. On the same date and under the same loan agreement, Ms. Surabhi Sindhu also advanced a sum of Rs. 4 crores to the Company. This was for a period of three months. Till 30th June, 2009, the Company was paying interest and thus servicing the debt. A sum of Rs. 10,02,665/- being interest was paid by the Company by a cheque dated 10.8.2009 issued in favour of Sarla Fabrics Pvt. Ltd. which stood credited to its bank account on 13.8.2009 as shown by Annexure P1 to the rejoinder filed by the petitioner. If the period of three years is taken from the date of the cheque, the period of limitation gets extended under Section 18 of the Limitation Act to 9.8.2012 Secondly, in the balance sheet of the Company as on 31.3.2010, on amount of Rs. 4 crores due to Sarla Fabrics Pvt. Ltd. is shown under the head “unsecured loan” in the liabilities side and the amount of Rs. 2 crores due to Surabhi Sindhu is shown under the head “share application money”. It may be noted here that out of the amount of Rs. 4 crores borrowed from Surabhi Sindhu, the Company had repaid Rs. 2 crores and the balance of Rs. 2 crores was transferred to the “share application money account”. The shares, however, have not been allotted. The balance sheet was signed by the Directors as well as the Chartered Accountants on 1.9.2010 and if this date is taken as the date of acknowledgment of the debt, as it ought to be in the light of the settled legal position in this behalf, the period of limitation gets extended upto 31.08.2013 Lastly, as shown by Annexure P18 to the winding-up petition, on 19.5.2011, the following letter was written by the Company to the petitioner:
“CMD/2011-12 MAY 19, 2011
Sarla Fabric Pvt. Ltd. Faridabad (Haryana)
K.A Mr. B. Parameshwaran Sub : LOAN FOR RS.4 CR.
Dear Sir,
As discussed with you we are enclosing the following cheques in favour of M/s Sarla Fabrics Pvt Ltd.
S. No. CHEQUE NO. DATE AMOUNT DRAWN ON
1. 848581 19.05.2011 4,00,00,000/- UBI-Mall Road Branch (A/c CMD Built-Tech (P) Ltd.)
(In lieu of Ch. No. 846148, Dt.30.11.2010, for Rs. 4 crores drawn on UBI)
2. 031861 19.05.2011 4,00,00,000/- UBI-Mall Road Branch (A/c CM Narula)
(in lieu of Ch. No. 033319, Dt.30.11.2010, for Rs. 4 crores drawn on UBI)
Kindly return the previous cheques issued in lieu of the above.
Thanking you
Yours faithfully
For CMD Built-Tech Pvt. Ltd.
Authorised Signatory
Note : Kindly handover the previous Ch. No. 841991.Dt.06.04.2010 for Rs. 4 crores and Ch. No. 834700.Dt.06.04.2010 for Rs. 4 crores which we have not received till date.”
Reckoning the period of limitation of three years from the above date, the limitation gets extended upto 18.5.2014 The winding-up petition having been filed on 28.11.2011 is well within the period of limitation reckoned from any of the three dates namely, 10.8.2009 or 1.9.2010 or 19.5.2011
6. In addition to the aforesaid position, it is also noticed that on 8.11.2012, the authorised representative of the Company was present in Court when the order quoted in the earlier part of this order was passed by this Court observing that there was no dispute that the principal amount owed by the Company to the petitioners was Rs. 6 crores. No dispute was raised by the Company before this Court on that date or at any time thereafter whenever the matter was taken up for hearing. On 8.11.2012, the Company even stated that it will be able to arrange the funds by sale of the property at Solan and a prayer was made that three months' time may be given to make the first payment. On 22.2.2013, a settlement was proposed in writing on behalf of the company that three immoveable properties (at Solan and Yamuna Nagar) would be transferred in favour of the petitioners in discharge of the debt. This was however not acceptable to the petitioner and therefore, the learned senior counsel appearing for the Company stated before the Court that he will give a more concrete proposal which may be acceptable to the petitioner positively by 25.2.2013 On this date also the company did not dispute the debt on grounds of limitation. When the matter was again taken up on 1.3.2013 and 22.5.2013, the Company did not raise the issue of limitation but sought adjournment. Thus, apart from the fact that the winding-up petition was filed before the debt was barred by limitation and that the Company went on extending the period of limitation by acknowledgments in its accounts as well as by part payment of the loan or by payment of the interest, it also stood up in Court to make a categorical admission of its liability to pay the monies to the petitioners. At no point of time prior to the hearing before me did the Company raise the issue of limitation. Proceedings were allowed to go on and orders were passed by this Court on the basis of the unequivocal stand taken by the Company that it was liable to pay the amount in question to the petitioners. In these circumstances, it appears to me that the plea of limitation taken on behalf of the Company is an act of despair, not well-intentioned, frivolous and represents a ploy to delay the proceedings.
7. It is hardly necessary to cite authorities in support of the well-established position that an entry made in the company's balance sheet amounts to an acknowledgement of the debt and has the effect of extending the period of limitation under Section 18 of the Limitation Act, 1963. However, I may refer to only one decision of the learned single judge of this Court (Manmohan, J.) in Bhajan Singh Samra v. Wimpy International Ltd.185 (2011) DLT 428 for the simple reason that it collects all the relevant authorities on the issue, including some of the judgments cited before me on behalf of the petitioners. This judgment entirely supports the petitioners on this point.
8. An earlier decision of a learned single judge of this Court (H.L Anand, J.), in Diwan Chand Kapoor v. The New Rialto Cinema Pvt. Ltd.28 (1985) DLT 310 was cited on behalf of the company. The point decided in that case was that a claim which became time-barred during the pendency of a winding-up petition at the show-cause notice stage could not be a legitimate basis for winding up proceedings, even if it was within time when the petition was filed. This judgment becomes irrelevant to the case on hand, given the position that neither at the initial stage nor at the present stage has the debt become time-barred. Moreover, it is unfortunate that the judgment was cited without taking care to verify if it holds the field. A Division Bench of this court (Leila Seth & Rajinder Sachar, JJ) reversed the order of H L Anand, J., (supra) and the judgment of the Division Bench is reported in (1986) 60 Comp. Cas.276 (Delhi). The Division Bench, agreeing with the reasons and judgment of the Bombay High Court in Modern Dekor Painting Contracts P. Ltd. v. Jenson & Nicholson (India) Ltd.(1985) 58 Comp. Cas. 255 (Bom.) held that there is nothing in the Companies Act, 1956 to the effect that a petition for winding-up which was properly maintainable when filed, ceased to be so maintainable, if at the date of the winding-up order, the debt on which the petition was based had become barred by limitation. In view of the judgment of the Division Bench (supra) the argument of the counsel for the company cannot be given effect to.
9. A faint attempt was made by the learned counsel for the company to contend that the amount of Rs. 2 crores shown under the “share application money” in favour of Surabhi Sindhu cannot be considered as a debt due by the company. The contention cannot be accepted because till shares are allotted, the money is due to the applicant and the amount due represents a debt due by the company to the share-applicant. Moreover, the company sought to be wound up is a private limited and the provisions of section 73 of the Companies Act relating to the deposit of the share application monies in a separate bank account do not apply. The monies remain with the company until shares are allotted. It is only when shares are allotted that the debt ceases to exist, but till that point of time is reached there is a debt created in favour of the share-applicant.
10. In the result, the preliminary objections of the company are over-ruled and the Company Petition No. 468/2011 is held maintainable. Petitioners are entitled to costs of Rs. 25,000/- from the respondent-company.
11. In Co. App. No. 2249/2011, the petitioners have prayed for an order (a) restraining the respondent-company or its agents/servants from disposing of or otherwise alienating or transferring or creating any third-party interest in any of its properties/funds including its interest in the lands located in Kondli (Sonepat) and Yamunanagar given as security to the petitioners; and (b) restraining the respondent-company or its agents/servants from disposing of or otherwise alienating or transferring or creating any third-party interest in Kundli property belonging to Mrs. Sunita Narula in terms of the letter written by her on 24.11.2007 to the respondent-company. The prayers are accepted and the respondent-company and Mrs. Sunita Narula are restrained accordingly.
12. Re-notify the company petition No. 468/2011 for hearing on 9 September, 2013.