Arnav Corporation Ltd v. Sharad Construction

1. None for the Appellant or Respondent.

2. This Appeal challenges order dated 21 July 2010 made by the learned Company Judge in Company Petition No.995 of 2009. The operative portion of the impugned order reads as follows: - “(i) The company is directed to deposit in this court a sum of Rs.10,00,000/- on or before 30th September, 2010.

(ii) Upon the amount being deposited, the same shall be invested in a nationalized bank initially for a period of one year and thereafter for like periods of one year each.

(iii) In the event of the amount being so deposited and in the event of the Petitioner filing a suit within twelve weeks from the date of the Petitioner’s advocate being informed of the same in writing, the amount shall stand transferred to the credit of that suit. The Petitioner shall be at liberty to make an application in the suit for withdrawal of the amount.

(iv) In the event of the suit not being filed as aforesaid, the petition shall stand dismissed and the amount with interest thereon shall be refunded to the Respondent-Company.

(v) In case of failure on the part of the Company to deposit the amount as aforesaid, the Petition shall stand admitted and to be advertised in Free Press Journal, Maharashtra Times and Maharashtra Government Gazette. The Petitioner to deposit an amount of Rs.10,000/- with the Prothonotary and Senior Master of this Court within four weeks from the date of default.”

3. This Court admitted this Appeal on 29 September 2010, and the contents of this order are also transcribed below for the convenience of reference:- “P.C.

1. Admit.

2. During the pendency of the appeal, the impugned order of the learned Single Judge is stayed. It is clarified that pendency of the appeal should not be taken as a ground by the concerned Court not to proceed with the complaint under Section 138 of the Negotiable Instruments Act. On the contrary, the Court before whom the proceedings under Section 138 of the Act, is pending, may try to decide the same expeditiously.”

4. Since neither the Appellant nor the Respondents or their Advocates have appeared, we cannot know anything about the fate of the proceedings under Section 138 of the Negotiable Instruments Act.

5. Be that as it may, we have considered the grounds raised in the Appeal memo. Most of the grounds are quite vague, and in any event, they are not made good by producing any credible documentary evidence or otherwise.

6. Admittedly, in this case, the Appellant-company issued cheques of Rs. 10 lakhs each towards the discharge of the debt. These cheques were dishonoured. The only argument was that a letter was written to the Respondent and the other two firms, instructing them not to deposit the cheques. There is no evidence that the Respondents received such a letter. The next defence is that the Respondents were not entitled to the amount in question because they had not complied with a condition precedent, viz. writing a letter to M/s. Sunflam Wind Energy Private Limited stating that the amounts lying in the credit of the company-Petitioner’s account may be given to the company.

7. The learned Company Judge has correctly noted that such a contention is not well-founded. The writing of such a letter was never a condition precedent.

8. Accordingly, from the material on record, it is apparent that the Appellant company owed an undisputed debt to the Petitioning Creditor. The defences raised were far from bona fide. The cheques issued towards the discharge of such debt were also dishonoured.

9. On cumulative consideration of all these circumstances, we see no error in the impugned order. The learned Company Judge has exercised discretion fairly and reasonably. The Company Petition was not immediately admitted, but the company was allowed to deposit Rs. 10 lakhs by 30 September 2010. Only in case of failure, the company Petition was to stand admitted and advertised.