STANTECH PROJECT ENGG. PVT. LTD.versusNICCO CORPORATION LTD.

                    [2015] 9 S.C.R. 165


         STANTECH PROJECTENGG. PVT. LTD.                        A
                             v.
               NICCO CORPORATION LTD.
            (Civil Appeal No. 7373 of2005 etc.)
                                                                B
                    AUGUST 13, 2015
   [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]

     Concession - Winding up petitions against respondent-
company - Concession by counsel of the respondents to           c
pay the due debts in 10 and 8 equal instalments respectively
- Company Judge disposed of the petition in view of the
concession - Order of Company Judge challenged upto
Supreme Court wherein the Court directed the respondent
to move the Company Judge for modification of its order -       D
Company Judge refused the modification - Division Bench
of High Court by impugned order held that the counsel made
the concession by mistake and set aside the order of
Company Judge - On appeal, held: Order of the Division
Bench is unjustified legally as well as equitably - Since the   E
respondent-company had failed to discharge the admitted
debt even after service of statutory notice, the Company
Judge had no alternative but to proceed for the winding-up of
the Company- The counsel of the respondent had displayed
legal sagacity in getting the winding-up postponed and          F
avoided the publication in the petition - Had he not done so,
the respondent would have had to pay the entire debt at once
or face certain commercial death as a consequence of
publication/citation of winding-up petition - The respondent    G
abused the judicial process in order to delay the discharge
of an acknowledged debt for almost a quarter of a century
during which period he continued his business - However,
order of Company Judge modified - The respondent• is
directed to pay all the amounts due, alongwith the cost         H
                              165
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A imposed by the Company Judge and the cost of the present
      proceedings within 45 days of this judgment - Appeals
      allowed - Companies Act, 1956 - s. 439 -Administration of
      Justice -Abuse of Judicial Process.

 B         Administration of Justice - Proliferation and
      prolongation of litigation - Unwarranted lenient approach of
      the courts, results in proliferation and prolongation of litigation,
      leading to insurmountable pendency of litigation.

 C        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
      7373 of2005

       From the Judgment and Order dated 29.09.2003 of the
   High Court at Calcutta in T 490 of 2003 in C.P. No. 432 of
 D 2000

                                    WITH
      C.A. No. 7374 of 2005

 E        S. D. Singh, Bharti Tyagi, Vishwajit Singh for the
      Appellant.

           R. C. Kohli for the Respondent.

           The Judgment of the Court was delivered by
 F
           VIKRAMAJIT SEN, J. 1. Both these Appeals assail the
   common impugned Order passed by the Division Bench of
   the High Court at Calcutta on 29.9.2003, setting aside the Order
   passed by the Company Judge rejecting the plea of the
 G Respondent that the so-called concession made by the Junior
   Counsel should not be given curial recognition.

        2. The facts, succinctly stated, are that the Appellant had
  fileo Winding-up petitions against the Respondent on the
H asseveration that debts admittedly payable by the Respondent
    STANTECH PROJECT ENGG. PVT. LTD. v. NICCO                     167
      CORPORATION LTD. [VIKRAMAJIT SEN, J.]

to the Petitioner had remained outstanding even subsequent A
to the issuance of a statutory Notice issued under Section 434
of the Companies Act. 1956. Keeping in perspective the
nature of the question of law raised before us, we need not go
into the genesis or the characteristics of the contract between
the parties. So far as Civil Appeal No. 7373 of 2005 is B
concerned, the claim was for a sum of Rs.3,54,500/- together
with interest at the rate of ten per cent per annum together with
Rs.1,09,958/- deducted by the Respondent on account of the
tax deducted at source (TDS). These amounts have remained
unpaid even after the receipt of the statutory notice. It is C
palpably clear that the statement made by the learned counsel
for the Respondent that these amounts would be paid in ten
equal installments commencing from 16.8.2002, was so done
in order to avert the ordering of an advertisemenUcitation in D
the proceedings by the Company Judge. In Civil Appeal No.
7374 of 2005, the claim was for a sum of Rs.8,08,314/- ·
together with interest at the rate of ten per cent per annum
together with Rs.1,24,984/-which had been deducted by the
Respondent on account of TDS. It appears that these amounts E
were admitted by the Respondent in terms of its letter dated
8.2.2000 as also in the Affidavit of the Manager (Corporate)
of the Respondent who, at the material time, was its Principal
Officer. In the said Affidavit, it was admitted that the total amount
payable was Rs.8,05,664/-which was being retained awaiting F
final clearance from TISCO who had floated the subject turnkey
project. As in the foregoing instance, the Company Judge
recorded the statement of the counsel for the Respondent
offering to pay the principal sum of Rs.8,05,664/-togetherwith
Rs.1,24,984/- in four equal installments commencing from G
6.8.2002. It had been made clear by the Company Judge vide
Orders dated 24. 7 .2002 that if these payments were not made,
the Winding-up petitions would stand admitted and it would
be open to the Appellant to pray for advertisemenUcitation. A
fortnight later, i.e. on 8.8.2002, the foregoing Orders were H
    1.68         SUPREME COURT REPORTS                     [2015] 9 S.C.R.



     A     modified by the consent of the parties to the effect that it would
           be open to the Respondent to pay off the dues together with
           the interest accrued in eight monthly installments instead of
           four monthly installments as was directed in the Order dated
           24.7.2002.
     B
             3. In these circumstances, these orders passed on the
       concession of the learned counsel for the Respondent were
       challenged by the Respondent before the Division Bench of
       the High Court, which we cannot but view as extraordinary.
     C The Division Bench disposed of the Appeal in terms of its Order
       dated 6.1.2003 with the observation that aJ;l application should
       be preferred before the learned Company Judge for
       modification of the order, which were assailed before this
       Court. We had disposed of the Special Leave Petition on
•
     D 3.3.2003 thus:- "Whether such application for modification is
       at all maintainable is a question which is expressly left along
       with other questions for being decided by the learned Single
       Judge if and when such application for modification is filed by
       the Respondent".
     E
             4. Thereafter, a detailed Order came to be passed by the
       learned Company Judge on 22.8.2003 rejecting the prayer
       for re-hearing or modification of the consent Order, primarily
       on the premise that the so-called junior and an inexperienced
     F counsel had rightly made the statement that the admitted debt
       would be paid in installments. The learned Company Judge
       had recorded that the Respondent Company was fully aware
       that Winding-up petitions were going to be admitted, which
       situation is always stigmatic and therefore to be strenuously
     G avoided since it inexorably leads to a commercial death. The
       learned Company Judge found the conduct of the Respondent
       not to be bona fide. The second salvo of litigation, therefore,
       proved to be unsuccessful so far as the Respondent is
     H concerned as the petition/application was dismissed by the
    STANTECH PROJECTENGG. PVT. LTD. v. NICCO                     169
      CORPORATION LTD. [VIKRAMAJITSEN,J.]

Company Judge with costs assessed at 600 GMs. Thereafter,        A
these Orders dated 24.7.2002 came to be assailed once again
before the Division Bench, which then passed the Orders now
impugned before us. The Division Bench was of the view that
the concession was made mistakenly by the counsel appearing
forthe Respondent and on this predication, the Order was set     B
aside and the Company Petition was remanded to be heard
once again.

       5. We find no justification whatsoever, in law or in equity,
for the rationale adopted by the Division Bench in the impugned C
Order. The Company Judge had no alternative but to proceed
for Winding up of the Respondent Company since it had failed
to discharge the admitted debt even after the service of the
afore-noted statutory notice. The said junior Advocate of the
Respondent had, in fact, displayed legal sagacity in getting D
the winding-up of the Company postponed and avoided the
publication in the Winding-up petition by praying for and
obtaining leave to pay the debt in installments. Had he not
done so, the Respondent would have had to pay the entire
debit at once or face certain commercial death as a E
consequence publication/citation of Winding-up petition. It is
note worthy that the Respondent so is transacting business
even today. The Division Bench has been inexplicably and
unjustifiably considerate towards the Respondent. It is this F
kind of leniency that results in proliferation and prolongation of
litigation, which approach has led to an almost insurmountable
pendency of litigation. Learned counsel for the Appellant rightly
relies on the decisions of this Court in Shrimati JamilabaiAbdul
Kadarv. Shankarial Gulabchand (1975)2 SCC 609 and State G
of Maharashtra v. Ramdas Shrinivas Nayak (1982) 2 SCC 463.

     ·6. We accordingly set aside the common impugned Order
of the Division Bench of the High Court. The Respondent has
abused the judicial process in order to delay the discharge of   H
170          SUPREME COURT REPORTS                [2015] 9 S.C.R.


 A    an acknowledged debt for almost a quarter of a century, in
      which period it has continued in business.

           7. These Appeals are allowed. We, however, modify the
      Orders of the learned Single Judge by directing the
. B Respondent to pay the said admitted dues of Rs.3,54,500/-
      and Rs.8,08.314/-togetherwith interest atthe rate often per
      cent per annum, as also the costs imposed by the learned
      Company Judge at 600 GMs. If the two sums of TDS of
      Rs.1,09,958/- and Rs.1,24,984/- have not been deposited with
  C the Income Tax Department, these sums shall also be paid to
      the Appellant. The Respondent shall also pay to the Appellant
      the costs of these proceedings quantified at Rs.20,000/-. All
      these amounts are payable within 45 days from today. No
      extension for payment shall be granted since the
  D . accommodation and the indulgence granted by the learned
      Company Judge has been abused by the Respondent. In the
      event of failure to make the above mentioned payments, the
      Appellant shall be entitled to once again move the learned
      Company Judge, who will thereupon admit the Winding-up
  E petition, and proceed with expedition under the relevant
      provisions of law.

      Kalpana K. Tripathy                           Appeals allowed.