Spanco Limited v. Barclays Bank Plc

-1VPH/bdpps

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL (L) No. 681 OF 2015 IN COMPANY PETITION No. 619 OF 2013 ALONGWITH NOTICE OF MOTION (L) No. 2476 OF 2015 IN APPEAL (L) No. 681 OF 2015 SPANCO Ltd.

Appellant / Applicant SREI Equipment Finance Ltd. ...

WITH APPEAL (L) No. 682 OF 2015 IN COMPANY PETITION No. 782 OF 2014 ALONGWITH NOTICE OF MOTION (L) No. 2477 OF 2015 IN APPEAL (L) No. 682 OF 2015 SPANCO Ltd.

Appellant / Applicant Redington (India) Ltd.

WITH APPEAL (L) No. 684 OF 2015 ALONGWITH NOTICE OF MOTION (L) No. 2478 OF 2015 IN APPEAL (L) No. 684 OF 2015 SPANCO Ltd.

Appellant / Applicant

-2JM Financial Asset Reconstruction Company Pvt. Ltd.

WITH APPEAL (L) No. 683 OF 2015 ALONGWITH NOTICE OF MOTION (L) No. 2479 OF 2015 IN APPEAL (L) No. 683 OF 2015 SPANCO Ltd.

Appellant / Applicant Rapid Radio Solutions Pvt. Ltd.

WITH APPEAL (L) No. 686 OF 2015 ALONGWITH NOTICE OF MOTION (L) No. 2486 OF 2015 IN APPEAL (L) No. 686 OF 2015 SPANCO Ltd.

Appellant / Applicant Hewlett - Packard Financial Services (India) Pvt. Ltd.

WITH APPEAL (L) No. 688 OF 2015 IN COMPANY PETITION No. 286 OF 2013 ALONGWITH NOTICE OF MOTION (L) No. 2487 OF 2015 IN APPEAL (L) No. 688 OF 2015 SPANCO Ltd.

Appellant / Applicant CISCO Systems Capital (India) Ltd. .... Respondents

-3WITH APPEAL (L) No. 689 OF 2015 IN COMPANY PETITION No. 571 OF 2013 ALONGWITH NOTICE OF MOTION (L) No. 2488 OF 2015 IN APPEAL (L) No. 689 OF 2015 SPANCO Ltd.

Appellant / Applicant Barclays Bank PLC WITH APPEAL (L) No. 690 OF 2015 IN COMPANY PETITION No. 293 OF 2014 ALONGWITH NOTICE OF MOTION (L) No. 2489 OF 2015 IN APPEAL (L) No. 690 OF 2015 SPANCO Ltd.

Appellant / Applicant Indusland Bank Ltd.

WITH APPEAL (L) No. 687 OF 2015 IN COMPANY PETITION No. 179 OF 2012 ALONGWITH NOTICE OF MOTION (L) No. 2490 OF 2015 IN APPEAL (L) No. 687 OF 2015 SPANCO Ltd.

Appellant / Applicant Hewlett - Packard Financial

-4Services (India) Pvt. Ltd.

WITH APPEAL (L) No. 691 OF 2015 IN COMPANY PETITION No. 474 OF 2014 ALONGWITH NOTICE OF MOTION (L) No. 2491 OF 2015 IN APPEAL (L) No. 691 OF 2015 SPANCO Ltd.

Appellant / Applicant United Bank of India WITH APPEAL (L) No. 692 OF 2015 IN COMPANY PETITION No. 137 OF 2013 ALONGWITH NOTICE OF MOTION (L) No. 2494 OF 2015 IN APPEAL (L) No. 692 OF 2015 SPANCO Ltd.

Appellant / Applicant M/s. Indusland Bank Ltd.

WITH APPEAL (L) No. 694 OF 2015 IN COMPANY PETITION No. 398 OF 2012 ALONGWITH NOTICE OF MOTION (L) No. 2495 OF 2015 IN APPEAL (L) No. 694 OF 2015 SPANCO Ltd. - L65990 MH 1984 PLCO 32422 Appellant / Applicant

-5Dewan Housing Finance Corporation Limited WITH APPEAL (L) No. 696 OF 2015 IN COMPANY PETITION No. 606 OF 2014 ALONGWITH NOTICE OF MOTION (L) No. 2498 OF 2015 IN APPEAL (L) No. 696 OF 2015 SPANCO Ltd. - L65990 MH 1984 PLCO 32422 Appellant / Applicant Lakshmi Vilas Bank Ltd.

WITH APPEAL (L) No. 695 OF 2015 IN COMPANY PETITION No. 186 OF 2012 ALONGWITH NOTICE OF MOTION (L) No. 2499 OF 2015 IN APPEAL (L) No. 695 OF 2015 SPANCO Ltd.

Appellant / Applicant IBM India Pvt. Ltd.

WITH APPEAL (L) No. 697 OF 2015 ALONGWITH NOTICE OF MOTION (L) No. 2500 OF 2015 IN APPEAL (L) No. 697 OF 2015 SPANCO Ltd.

Appellant / Applicant

-6ICICI Bank Ltd.

*** Mr. Zal Andhyarujina a/w Ms. Shruti Sardesai, Ms. Jyoti Singh i/b Phoenix Legal for the Appellant in APPL 681/2015, APPL 682/2015, APPL 684/2015, APPL 683/2015, APPL 686/2015, APPL 688/2015, APPL 689/2015, APPL 690/2015, APPL 687/2015, APPL 691/2015, APPL 692/2015, APPL 694/2015, APPL 696/2015, APPL 695/2015. Mr. Zal Andhyarujina a/w Ms. Shruti Sardesai i/b Sandip Karnik for the Appellant in APPL 697/2015.

Mr. Rohit Gupta a/w Ms. S. Gandhi, Ms. Anaisha Zachariah i/b PKA Advocates, for Respondents in APPL 681/2015.

Ms. Amrita Sarkar i/b Argus Partners, for the Respondents in APPL 682/2015.

Mr. Nikhil Rajani i/b M/s V. Deshpande & Co. for the Respondents in APPL 684/2015.

Mr. Prasad Joshi i/b I. R. Joshi & Co. for the Respondents in APPL 683/2015.

Mr Shanay Shah i/b M/s Solomon & Co. for the Respondents in APPL 686/2015 & APPL 687/2015.

Ms. Isha Abrol, for the Respondents in APPL 688/2015. Mr. Hiren Mehta a/w Parikshit Desai, for the Respondents in PPL 689/2015.

Mr. Chirag Balsara a/w Nikhil Chandania i/b K. Ashar & Co. for the Respondents in APPL 692/2015 and 690/2015.

Mr. Rakesh L. Singh a/w Ms. Jasmine Upadhye i/b M. V. Kini & Co. for the Respondents in APPL 691/2015.

Mr. Rajesh Vanzare a/w Mr. S. B. Pawar a/w Nikita Jacob, Swati Sawant i/b S. K. Legal Associates, for the Respondents in APPL 694/2015.

Ms. Soma Singh a/w Shubro Dey i/b Vivek Sharma, for the Respondents in APPL 695/2015.

-7Mr. Rohan Rajadhyaksha a/w Omkar Bhade, Debashshri Dey i/b Desai & Diwanji & Co. for Respondents in APPL. 697/015 *** CORAM : V. M. KANADE, & Dr. SHALINI PHANSALKAR-JOSHI, JJ.

DATE : SEPTEMBER 16, 2015 PC.

1.

Appellant has challenged the order passed by the learned Single Judge dated 12/08/2015 whereby order of winding up of the Appellant - Company was passed and the Official Liquidator was appointed and he was directed to take charge of the assets/property of the Appellant. This order was modified by order dated 31/08/2015. 2.

Respondent had filed Company Petition against the Appellant - Company on account of Company's inability to pay its debts. The Appellant did not dispute the fact of its inability to pay the debts. However, it was contended that instead of passing the order of winding up, the various divisions of the Company could be sold and the sale proceeds could be generated for the benefit of creditors of the Company. It is an admitted position that many creditors of the Company are unsecured creditors. The learned Single Judge, after taking into consideration the contention of the Appellant, came to the conclusion that the offer given by the Company was not acceptable since it was vague. The learned Single Judge, therefore, came to the conclusion that Respondent had clearly made out a case of the

-8Appellant being commercially insolvent and there was no prospect of the Company being brought out of the financial crisis. 3.

Mr. Andhyarujina, the learned Counsel appearing on behalf of the Appellant again strenuously urged that the Company, over the years, had earned goodwill in the market and also had developed its own area of expertise in certain fields. He submitted that these fields are - (a) Power Segment (distribution);

(b) Power Segment (system Integration);

(c ) Business process outsourcing;

(d) Mobile banking;

(e) E-governance; and (f) Network Integration.

He has elaborated the progress made by the Company in these sectors and submitted that if these Segments were offered for sale to interested parties, considerable amount would be generated from the sale of these Segments. He submitted a proposal in the form of a Chart giving particulars of development made by the Appellant in each of these Sectors. He candidly admitted that considerable amount was spent in creating the program and software technology in these Segments. He, however, was not in a position to tell us who could be the potential buyer of these Segments. He then submitted that the Company was

-9awarded major contracts by Government, Public Sector Agencies etc. but on account of recession the Company had suffered financial difficulties.

4.

On the other hand, the learned Counsel appearing on behalf of the Respondent submitted that this proposal was vague and, in fact, some of the creditors of the Company viz. Hewlett Packard Finance Services India Pvt Ltd and IBN India Pvt Ltd were in a better position to exploit these Sectors. He submitted that such an offer was never given to these Creditors. It is an admitted position that total liability of the Company is over Rs 468 crores. 5.

In our view, the submission made by the learned Counsel appearing on behalf of the Appellant though appears to be attractive, on a closer scrutiny from the proposal which is given it can be seen that this proposal cannot become successful if ground realities are taken into consideration. Moreover, the said proposal is very vague and has been submitted in a very generalised terms. The learned Single Judge, therefore, has rightly rejected the said submission of the learned Counsel for the Appellant.

6.

Mr. Andhyarujina, the learned Counsel appearing for the Appellant relied on the Judgment of the Apex Court in Shankarlal

-10Aggarwala and Others vs. Shankarlal Poddar and Others1 and also on the Judgment of the Gujarat High Court in Tata Iron and Steel Co. vs. Micro Forge (India) Ltd.2 He also relied upon the judgment of Chancery Division in Great Western (Forest Of Dean) Coal Consumers' Company3. There cannot be any dispute about the proposition and the ratio laid down in these judgments. However, in our view, taking into consideration the factual matrix of the present case, ratio of these judgment would not apply to the facts of the present case.

7.

We do not see any infirmity in the order passed by the learned Single Judge. We are therefore not inclined to interfere with the order passed by the learned Single Judge. All these appeals are therefore dismissed. Since all these Appeals are dismissed, Notices of Motion taken out therein do not survive and they are also disposed of accordingly.

[Dr. SHALINI PHANSALKAR-JOSHI, J.] [V. M. KANADE, J.] (1964) 1 SCR 717 : AIR 1965 SC 507: (1965) 45 Com cas 1 2001 (Vol.104) Company Cases 533.

Vol.XXI Chancery Division 769