JUDGMENT
K.V. Sankaranarayanan, J.
1. This petition for winding up was originally filed by two firms claiming to be creditors of the first respondent-company, sought to be wound up.
2. The first respondent-company was engaged in business as growers and dealers in hill produce like, coffee, ginger, copra, etc. The company was the pooling agent for the Coffee Board for collecting coffee seeds from growers and curing and supplying it to the Coffee Board. The petition was filed by the two firms dealing in gunny bags, claiming that the company was indebted to the tune of Rs. 1,34,987 to the first petitioner and Rs. 2,71,342 to the second petitioner on account of supply of gunny bags. The petition was presented on March 30, 1990. It was preceded by a notice dated February 12, 1990, claiming the above-said amounts and threatening a winding up petition to which, the first respondent-company had sent a reply on the same day admitting the claim and stating that the company was financially not in a position to pay the amounts immediately on account of various contingencies and offering earnest efforts to pay the amounts and praying for time.
3. When the petition was presented, the respondent-company entered appearance and took notice. There was labour trouble in the company and the company was finding it impossible to conduct business. It is stated that the directors were not even allowed by the workers to move out of their residence. So they also wanted some arrangements and protection of the goods in the godowns and wanted a receiver to be appointed. The court, after hearing the parties, appointed the official liquidator as the provisional liquidator who was asked to take charge of the godown and other properties of the first respondent-company. A number of interested parties got themselves impleaded as additional respondents in the petition. The Coffee Board was also impleaded as the 22nd respondent. Thereafter, the company made proposals for revival. It appears that the financial position of the management improved and they could pay off the debts due to the petitioners in the winding up petition and also make arrangements with the bank which had advanced loans to the company on security of the properties. The original petitioners were not interested in prosecuting the petition for winding up. The company, at one stage, filed C. A. No. 486 of 1991 with a proposal for revival of the company. That was opposed by the Coffee Board which claimed that substantial amounts were due to it. But, at that stage, the claim of the Coffee Board, that it was a creditor, was rejected. However, the petition was dismissed on technical grounds by order of the company judge dated October 23, 1992. Still later, the Coffee Board filed C. A. No. 96 of 1996 under Rule 101 of the Companies Court Rules praying that it may be substituted for the original petitioners. That application was opposed on behalf of the company. After hearing both sides, the petition was allowed by the company judge by order dated August 1, 1997 (since reported in L. R. Rangaier and Sons (P.) Ltd., In re [1999] 96 Comp Cas 579 (Ker)). It was taken in appeal before a Division Bench as M. F. A. No. 1009 of 1997. The order transposing the Coffee Board as a petitioner was upheld by judgment dated January 4, 1999 (since reported in L.R. Rangaier And Sons (Under Liquidation) v. Coffee Board [1999] 97 Comp Cas 205 (Ker)). However, the company was allowed to file an affidavit-in-opposition under Rule 103 of the Rules and take up its contentions against the maintainability of the application. The company has filed an affidavit-in-opposition to the petition as amended after transposition of the Coffee Board as a petitioner. The Coffee Board has also filed C. A. No. 341 of 1997 for judges summons for appropriate order under Rule 102 of the Companies (Court) Rules.
4. It is contended for the first respondent-company that the Coffee Board is not entitled to maintain this petition as it does not qualify to file a petition under Section 433 of the Companies Act, 1956. It is pointed out that the Coffee Board has not issued three weeks’ notice as contemplated by Section 434 of the Companies Act, it is also contended that, as on the date of the original petition, the Coffee Board cannot be treated as a creditor. The liability, if at all, has arisen only for the claims after the petition. The first respondent has also contended that actually, no amount is due to the Coffee Board, but a substantial amount is due to the company and the Coffee Board was not justified in enforcing the bank guarantee and collecting Rs. 16,59,000.
5. As noted earlier, the claim made by the Coffee Board arises on the basis of the pooling arrangement for which, amounts have been advanced by the Coffee Board as the company had stocks of coffee seeds procured for the Board. After the appointment of the provisional liquidator, a commission was also issued by this court to assess the stock in the godown of the company. As per the report, there was a shortage of about 17 tonnes of coffee worth more than Rs. 43 lakhs. The available stock has been delivered to the Coffee Board also. The contention of the first respondent-company is that the company or its officers are not liable for the shortage or for the damage to the coffee stock after the date of the order appointing the provisional liquidator. The company has also pointed out that there were regular joint stock verifications by the company and the Coffee Board and the customs officials were also inspecting the stock. The Coffee Board relies upon a report by a chartered accountant assessing the shortage. Anyhow, it is not necessary to go into the details, as evidence has not been taken on these aspects for fixing the liability. As it is, the Coffee Board has a claim against the company, but the liability is not determined.
6. It is true that for a creditor to file a petition for winding up, there must be three weeks’ notice under Section 434 of the Act. Such a notice has not been issued by the Coffee Board. But the original petition had been filed by the petitioners therein after due notice. The company had sent a reply on the same day, admitting the claim and also conceding financial difficulties and expressing inability for immediate payment. So the original petitioners had complied with the requirement of sending a notice before filing the petition. As already noticed, the company entered appearance and virtually conceded the appointment of the provisional liquidator, as there was labour trouble and the company was not in a position to conduct the regular business. At that time, the company had stock of coffee procured for the Coffee Board as per the pooling agency arrangement and the claim is mainly for the shortage on that account. So, in a way, the liability can be said to have arisen on or after the date of petition only. This aspect was considered by the company judge in C. A. No. 96 of 1996, the application for transposing the Coffee Board as a petitioner. As observed by the learned judge in the order, such compliance with the requirements of Section 434 of the Companies Act cannot be insisted on for purposes of transposition. For pursuing this petition after substitution, it is sufficient that the substituted petitioner will be entitled to file a petition, if necessary, after sending due notice. Since the Coffee Board has a claim against the company, it is entitled to give a notice and file a petition. So, as the substituted petitioner, the Coffee Board is entitled to pursue this petition also. As about 10 years have elapsed after the original petition was filed, and the Coffee Board had already filed a claim soon after the petition, at this stage, it is not proper to direct the Coffee Board to pursue its remedies in a civil court. Such a civil suit will be time-barred also. However, as the liability is disputed, it must be determined. Only if it is found that actually amounts are due to the Coffee Board and if the company fails to pay the amount, a winding up order can be passed in this matter. So the proper course is to determine the claim of the Coffee Board and decide what, if any, is the amount due to it. It must be done either by taking evidence in this court or by recourse to arbitration as provided in the pooling agreement.
7. In the circumstances, the parties will be given an option to state whether they would prefer to go in for arbitration for determination of the amount. If both parties are willing to go for arbitration, an arbitrator can be appointed for determining the claim. Otherwise, evidence will be recorded in this court itself for deciding the liability.
8. In the light of the above discussion, the Coffee Board and the respondent-company are directed to state whether they are willing to settle the dispute by arbitration ; if so, submit panels of arbitrators within three weeks from today. Post the case for the purpose on December 12, 2000.