JUDGMENT
Vikram Nath, J.
1. Both these appeals have been filed under Section 483 of the Companies Act, 1956 (for short referred to as the Act) against Judgment and order of the learned Company Judge dated 8.12.1999 passed in Company Petition No.43 of 1998, in the matter of M/s Gangeshwar Ltd. The learned Company Judge by the order impugned in the two appeals had issued the following directions-
(i) M/s Gangeshwar Ltd. to pay an amount of Rs. 23,31,072/95p to M/s India Coal Traders within one month.
(ii) M/s Gangeshwar Ltd. to submit Fixed Deposit Receipts of Rs. 12,58,830/- with the Registrar General of this Court within two months.
(iii) M/s Gangeshwar Ltd. to file Suit for declaration regarding interest liability; and
(iv) M/s Gangeshwar Ltd. to file Suit for declaration regarding its other liability.
2. Special Appeal No. 16 of 2000 has been filed by M/s Gangeshwar Ltd. for setting aside the Judgment of the learned Single Judge dated 8.12.1999 and further to dismiss the winding up petition (Company Petition No. 43 of 1998).
3. Special Appeal No. 1387 of 1999 has been filed by M/s India Coal Traders for modification in the order dated 8.12.1999 passed by the learned Company Judge for award of full interest claimed by it and further for passing orders for winding up of the Company namely M/s Gangeshwar Ltd. as it was unable to pay its debts.
4. The Division Bench while admitting the Appeal No. 16 of 2000 passed an interim order dated 06.01.2000 staying the operation of the impugned Judgment of the learned Company Judge dated 8.12.1999 provided the appellant M/s Gangeshwar Ltd. deposits a sum of Rs. 23.31,072.95 by means of Bank Draft with the respondents within eight weeks. The effect of the interim order passed in the Appeal is that other three directions given, by the learned Company Judge in the impugned were stayed by this Court. It has come on record by means of Supplementary Affidavit that the said amount of Rs. 23,31,072/- has been paid through three different Bank Drafts dated 18.2.2000 and received by M/s India Coal Traders on 19.2.2000.
5. M/s Gangeshwar Ltd. is a Company registered under the Companies Act, 1956 (hereinafter referred to as the Act) and is carrying on the activity of manufacturing sugar. It was placing orders for purchase of coal from M/s India Coal Traders. The supplies were regularly being made by M/s India Coal traders, the last one having been made on 25.6.1992. Certain payment with regard to the supplies made remained pending whereupon M/s India Coal Traders issued notices demanding the pending amount. During the period 20.11.1993 to 8.4.1995 M/s Gangeshwar Ltd. made part payment of Rs. 19,000,00/- in instalments, the last payment having been made on 8.4.1995. M/s India Coal Traders after waiting for some time issued another notice raising demand for the balance amount. However, when it was not paid, it filed Company Petition No. 43 of 1998 for winding up, after expiry of statutory period of notice under Section 434 of the Act alleging that the said company was unable to pay its debts which included principal amount of Rs. 23,31,072/- being the price of coal supplied plus interest @ 18% amounting to Rs. 41,60,623/-. Notices were issued to M/s Gangeshwar Ltd. Upon notice M/s Gangeshwar Ltd. appeared and contested the matter and claimed that full and final payment have been made and there was no amount due against them and winding up petition deserves to be dismissed. It raised various other objections. Despite effort by the Company Judge for reconciliation, when the parties did not agree, after hearing the parties and after considering the material on record, before advertising under Rule 24 of the Rules framed under the Act the learned Company Judge passed the order dated 8.12.1999 which is impugned in these two appeals.
6. We have heard Sri R.P. Agrawal, learned Counsel for M/s Ciangeshwar Ltd. and Sri P.K. Jain, learned Counsel appearing for M/s India Coal Traders in both the appeals and have also perused the record of the Appeals as also the record of the Company Petition No. 43 of 1998.
7. Submission of Sri R.P. Agrawal on behalf of M/s Gangeshwar Ltd. is firstly that as there was a bonafide dispute with regard to the alleged debt, the learned Single Judge erred in directing it to pay the principal amount of Rupees 23 lacs and odd to M/s India Coal Traders and further to deposit part of the interest claimed. According to him, the law provides that only admitted debts could have been directed to be paid and not any disputed amount of debt.
8. Second submission of Sri Agrawal is that M/s Gangeshwar Ltd. was a running financially solvent company giving employment to 2500 employees and therefore, in the facts and circumstances of the case, the winding up of the petition was not maintainable, for recovery of the amount, if any, rather M/s India Coal Traders ought to have filed a Suit for recovery of the amount.
9. Third submission on behalf of M/s Gangeshwar Ltd. is that the direction for depositing the part amount of interest is also not proper as in the winding up proceedings interest could not have been awarded.
10. Lastly, it was submitted that once the learned Company Judge was relegating the parties to settle the dispute before appropriate Civil Court, then the entire dispute should have been referred and not only part of the dispute and while referring the matter for adjudication by Civil Court, the learned Company Judge ought not to have directed it to pay the alleged disputed amount and part of the interest.
11. On the other hand, Sri Jain has submitted that the directions issued by the learned Company Judge were justified in the facts and circumstances of the case. M/s India Goal Traders had established by means of cogent evidence, which also included the admission of M/s Gangeshwar Ltd. regarding their liability and therefore, to that extent the Judgment of the learned Single Judge does not suffer from any infirmity. His submissions with regard to the appeal filed by M/s India Coal Traders is that learned company Judge erred in not awarding the entire interest amount of Rupees 41 lacs and odd and only directing for depositing part of the interest amount and further that there was no justification for relegating the parties for adjudicating their claims in appropriate Civil Forum.
12. Having considered the submissions made by learned Counsel Tor the parties and having perused the Judgment of the learned Company Judge we are of the view that the learned Company Judge has rightly directed for payment of the principal amount due against M/s Gangeshwar Ltd. to M/s India Coal Traders. The finding recorded by the learned Company Judge is based upon material evidence on record and it also takes into consideration the fact that M/s Gangeshwar Ltd. did not file the statement of account with regard to the business with M/s India Coal Traders and secondly M/s Gangeshwar Ltd. did not ever dispute the claim of M/s India Coal Traders raising their demand through various notices issued between 1992-1996, rather they made part payment of Rs. 19 lacs towards the claim/demand raised by M/s India Coal Traders. It was for the first time that M/s Gangeshwar Ltd.. disputed the claim in response to the notice under Section 434 of the Act. We do not find any infirmity in the reasoning given by the learned Company Judge with regard to the finding of the debt. It was a clear case where the company had failed to clear its debts.
13. With regard to the interest part we may notice that it is a debatable question as to whether interest could or could not be awarded in winding up proceedings. Both the parties do not dispute that out of the 19 bills, some of them contained an endorsement with regard to the interest and the others did not contain any such endorsement.
14. A Division Bench of this Court in the case of Ultimate Advertising and Marketing Co. v. G.B. Laboratories Ltd. (1989) 66 Company Cases 232, 2139 (All) has laid down that winding up could not be ordered where principal debt was paid but interest was not paid and disputed also. It accordingly remitted the creditor to file Suit before the Civil Court for award of interest.
15. In view of this decision and further in view of the fact that the liability of interest was not totally admitted, it would be appropriate that the M/s India Coal Traders file a Suit for award and recovery of interest before the Civil Court.
16. However, with regard to the disputed amount we do not find any justification for relegating the parties to file Civil Suit. The amount of debt stands established and it would not be necessary to file any Suit for the same. Further more, the amount has already been paid by M/s Gangeshwar Ltd. and received by M/s India Coal Traders as already recorded above, in February, 2000, pursuant to the interim order passed by the Division Bench on 6.1.2000 in Special Appeal No. 16 of 2000. Therefore, this aspect of the matter needs to be laid to rest.
17. In view of the discussions made above the Special Appeal No. 1387 of 1999, claiming further interest amount is found to be lacking in merit and is accordingly dismissed. It would however, be open for M/s India Coal Traders to take appropriate steps by filing Suit for award of interest.
18. Special Appeal No. 16 of 2000 is partly allowed to the extent that the direction Nos. 2, 3 & 4 contained in the Judgment of the learned Company Judge dated 8.12.1999 are set aside. However, the direction No. 1 along with the finding on which such direction is based, as contained in the Judgment dated 8.12.1999 of the learned Company Judge, is affirmed.
19. Both the Special appeals are decided as above. In view of the nature of the order that we have passed nothing further is required to be done in the Company Petition No. 43 of 1998 giving rise to the present appeals. It accordingly stands disposed of in terms of this order.
20. There shall, however, be no order as to costs.