K K VASUDEVA KURUP Vs. PHULCHAND EXPORTS LTD

JUDGEMENT

(1.) THE petitioner is a learned advocate practising in the City Civil Court and in the High Court. He has filed the present two petitions under Section 439 read with Sections 433 and 434 of the Companies Act, 1956, alleging failure on the part of the companies to pay his debt as mentioned in the petition which according to him is the amount of his professional fees payable by the companies as per his memo dated March 24, 2001. The petitioner appears to have been practising law for a period of 35 years. According to him, ordinarily he does not accept any High Court brief without advance payment of Rs. 10,000. He has further averred that since he knew Shri Sharma, the manager of the company at his request certain small amounts were accepted by the petitioner in the beginning and work was done by him. According to the petitioner, the bills for the professional work done by him were absolutely reasonable considering the fact of the number of years of practice which he has put in and considering the fact of the work which he was doing for the companies. The petitioner has further averred that the companies have no defence of any nature and that they are liable to pay the bill amounts claimed by the petitioner as the debt. According to the petitioner, since the companies have failed to pay the aforesaid debt it shows their financial insolvency and, therefore, he prayed for winding up of the companies. According to the petitioner, such companies have no right to exist and continue and if allowed to be continued they shall incur further liabilities which they would not be in a position to discharge. He has further alleged that the scheming directors of the companies shall fraudulently misappropriate the properties of the companies and make it appear that the companies do not have sufficient finance and put their creditors in a helpless condition. On the basis of the aforesaid allegations, the petitioner prayed for appointment of the provisional official liquidator with all powers to take over all assets, credits and properties of the companies. The petitioner has further alleged that if no provisional official liquidator is appointed the companies are likely to play fraud with their creditors. The learned advocate has specifically averred that he had sent several letters and telegrams calling upon the company to make payment of the debt being his professional fees payable to him. The petitioner has further averred that that two representatives of the company met him in his office for settling all the matters together. But instead of paying the bill amounts the petitioner was offered a very small amount which he refused to accept. The petitioner has further averred that thereafter he sent a statutory notice under Section 434 of the Act to which there was no reply. The petitioner has also averred that he was also attending the legal work of the sister concerns of the company. The petitioner has also averred that at the time of filing of the suits the company was making payment of court fees and very small amount towards the professional fees of the petitioner. It further appears that the company sent a telegram requesting the petitioner to hand over all the files which he was holding and also to send his fee-account and amounts received so far and utilised for court fee etc. The company had also stated in the said telegram that on getting the statement checked from their records they will settle the account and pay the outstandings. It appears that the said telegram was responded by the petitioner by sending the notice dated August 8, 2001, under Section 434 of the Companies Act.

(2.) I have heard Shri Kurup, the learned advocate in person as the petitioner himself. I have also heard Shri Kanchan the learned advocate for both the companies. In my opinion, the purpose of the petition is absolutely clear. The petitioner has filed the present petitions to pressurise the companies to pay his professional fees. The purpose of the provisions of winding up is not proceedings to pressurise the company for recovery of the debts which are bona fide disputed. In the present case the company has sent a telegraphic reply requesting the petitioner to send the account in order to check up their records and to strike the balance payable to the learned advocate for his professional fees and to account for the court fees paid by the company to the petitioner for filing the suits. From this reply it is clear that the company has never refused to pay the alleged debt which the petitioner is claiming from the company. What the company wanted from the petitioner was a statement of account, as both of them appear to have a long standing relationship of advocate and client. I do not find anything wrong on the part of the company in requesting its advocate to furnish a full statement of account to tally with its own record to find out what amount was actually payable to the petitioner. It is an admitted position by the petitioner that he has been doing the professional work for the company as well as its sister concerns. It is also an admitted position that the company has been making payment towards the court fees and also some advance payment to him at the time of filing of the suits, If in such circumstances the company wanted to settle the entire account with the learned advocate after getting the statement from him it cannot be said that the company has failed and neglected to make payment of its debt. Every client has right to get full details and information from his advocate in respect of the payment of court fees and also in respect of payments made by the client to his advocate towards the professional fees. It is not that the legal practitioner is not accountable to his client. It is more so in the case of corporate clients as their accounts are subjected to audit. In fact the advocate must disclose the receipts and expenditure incurred by him while performing the professional work for his client from time to time. The petitioner ought to have furnished all the details which the company required, instead, however he sent a statutory notice of winding up of the company. From the facts which are disclosed by the company it cannot be said that the debt claimed by the petitioner is not bona fide disputed. It in fact wanted to know from the petitioner the particulars of his fees and the court fees amounts to enable it to ascertain the debt before it could be disputed. It is not even disputed by the company as it merely requested the petitioner to furnish the details to enable it to draw the final balance payable to the petitioner, if any. In the aforesaid circumstances in my opinion the company petition for winding up of the company cannot be maintained at all.

(3.) BEYOND the memo of fees sent by the petitioner to the company there is nothing on record to establish the debt of the company which is admitted or accepted as payable to the petitioner. On the contrary the company has requested the learned advocate to furnish the details of the court fees paid by him on behalf of the company and also the amounts received by him towards the advance payment made by the company as professional fees. It is a simple case of running account between the petitioner and the company as his client. In my opinion such proceedings are nothing but oppressive in nature which cannot be entertained. I am also of the opinion that the present petition is nothing but an abuse of the process of the law. The learned advocate who himself is the petitioner ought not to have filed such a petition. He ought to have availed of the remedy of filing of a civil suit for claiming his professional fees on the basis of the contract between the parties. Further, beyond making a bare statement and allegation of defamatory nature that the directors of the company are "scheming" and that they would fraudulently misappropriate the properties of the companies and that the companies are financially insolvent, there is absolutely no case made out even to prima facie substantiate such serious statements of allegations made against the running business of companies. There is nothing on record to show that the companies' net worth is much lower than their liabilities or that they have lost their substratum to enable this court to consider the case for winding up of the companies. The petitioner as a responsible senior member of the Bar ought to have avoided to make such serious allegations in order to recover his professional fees of Rs. 54,500 from these companies. I am of the considered opinion that the petitioner has not been able to make out a case for winding up of the companies under Section 433 (e) or (f) of the Act. It is not at all just and equitable to entertain such a petition filed by the petitioner who has equally efficacious alternative remedy of filing a civil suit to recover his alleged professional fees. The petitions therefore are liable to be dismissed.