SHADIRAM Vs. SOUTHERN AVIATION PRIVATE LIMITED

JUDGEMENT

(1.) THIS appeal is directed against the judgment and decree of Sethuraman J., who refused to wind up a company which was sought to be wound up on an application filed by the appellant as petitioning creditor on the only ground that the respondent-company is unable to pay its debts. The appellant-firm is a partnership. It seeks the winding up of a private limited company. The promoters of the company were S. K. Somani and his wife, Hemalatha. His two brothers, N. K. Somani and M. K. Somani, are the directors of the respondent-company. They vacated at one particular point of time since they did not have the requisite qualifications to hold the office. The case of the petitioning creditor as disclosed in the petition is as follows : In or about January, 1971, S. K. Somani, one of the promoters of the respondent-company started a business under the name and style of "Shadiram and Sons" as guardian of his minor son. THIS firm at some point of time, due to certain civil proceedings between S. K. Somani and his brothers, was converted into a partnership. Accordingly, a partnership was formed with the wives of the two brothers and the minor son of S. K. Somani who was admitted to the benefits of the partnership. THIS partnership came into effect on April 1, 1971. Even on a fair appreciation of the constitution of the partnership firm and the private limited company, it is fairly clear that one is telescopicable into the other and some of the members of the family or their wives were interested either in the partnership or in the private limited company.

(2.) THERE were transactions between the private limited company and the partnership firm. It is claimed that a sum of Rs. 4, 47, 511.58 was payable by the company together with interest at 12 per cent. per annum and a statutory demand was made as against the company for repayment of the same and as the reply thereto by the company was not satisfactory, the appellant came up with an application under section 433 of the Companies Act for winding up of the company under section 433(e) of the Act. The debt is not in dispute by the company but their case is one of discharge. They would say (and this was their case even in the reply to the statutory notice as is seen from exhibit R-16) that a sum of Rs. 1, 50, 000 was paid by the company to one Hanuman Steel Traders for the supply of M. S. Plates and B. P. Sheets to the partnership firm (petitioning creditor) a further sum of Rs. 46, 000 was paid to the Calcutta branch of the petitioner-firm towards their dealings which that branch had with them and by payment of a sum of Rs. 2, 51, 511.28 to Hemalatha Somani, the wife of one of the promoters of the company in adjustment of certain inter se transactions to which we shall presently refer, no amount as claimed was due. The petition for winding up was thus opposed mainly on the ground that the debt was no longer subsisting as according to the company it has been discharged by payment to the creditors of the partnership or to those who are interested in getting monies from the partnership and thus there is a dispute which is obviously bona fide as regards the existence of the debt itself.

(3.) THIS significant answer by one of the director of the company establishes that this private limited company which sprung from the partnership-firm or was formed with the common object of benefiting the members of the family, though in the eye of law are two constituent elements yet in practice they were treated as one which enabled the company to have recourse to the money of the partnership and vice versa. But we are unable to agree with the learned counsel for the appellant that because there is no entry in the books of account of the appellant-firm regarding the supply made by Hanuman Steel Traders to them the payment said to have been made by the limited company to the Hanuman Steel Traders cannot be taken into account at all for any purpose. Rightly, therefore, the learned judge observed that it is not disputed that the appellant-firm has been dealing in iron and steel materials and they could have shown by producing their accounts whether the materials were supplied or not. We add that they could have also established by summoning Hanuman Steel Traders to produce their accounts to prove that they had no such commercial dealings with them at all. We, therefore, find that there is prima facie evidence that the company did pay a sum. of Rs. 1, 50, 000 on behalf of the appellant-firm to Hanuman Steel Traders.The next item is a sum of Rs. 46, 000 which amount is said to have been sent by the limited company to the Calcutta branch of the appellant-firm. Exhibit R-8 is the letter which supports the company's case. The branch office of the appellant-firm at Calcutta writes to N. K. Somani of Madras as follows :"We thank you for your letter No. SS/MDS/SK/68 4735 of 24th June, 1971. We await to hear from your regarding Calcutta office.Torsteel 6mm/ 10mm/ 12mm are available in the market at Rs. 1, 600 per tonne, ex-godown, Calcutta. Materials have to be lifted by making advance payment. At present there is no commission agent in our view who is interested to take delivery of the materials and despatch it as per our requirements.