AAR KAY CONCAST LTD. Vs. RELIANCE CAPITAL LIMITED

JUDGEMENT

(1.) This appeal has been preferred against order of learned Single Judge admitting the petition under Sections 433/434 of the Companies Act, 1956 for the deemed inability of the Appellant company to pay its debts.

(2.) Case of the Respondent-original Petitioner before the learned Company Judge is that it is an assignee of the State Bank of India who had granted various loans to the Appellant. The loans were assigned to the Respondent vide assignment agreement dated 30.3.2007. The Appellant was in arrears of more than Rs. 2.66 crores as on 1.10.1998. The Respondent issued legal notice to the Appellant on 31.12.1998 followed by another notice dated 15.3.2000. The State Bank of India filed application for recovery before the Debt Recovery Tribunal (DRT) on 5.2.2001 which was still pending. Proceedings have also been initiated under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Securitisation Act). The Respondent also issued notice dated 12.9.2007 under Section 434 of the Companies Act claiming that sum of more than Rs. 13.30 crores was due as on 31.8.2007. The Appellant gave reply, disputing assignment of the debt in favour of the Respondent. According to the Respondent, the Company was unable to pay its debts and was, thus, liable to be wound up.

(3.) The Appellant contested the company petition on the ground that since recovery proceedings were pending before the DRT, the jurisdiction of the Company Court could not be invoked. The Appellant did not deny advancement of loans by the State Bank of India. The admitted debt of the Appellant was more than Rs. 500/-.