IN THE HIGH COURT OF ANDHRA PRADESH AT HYDERABAD 

Y. RATNAKAR, Advocate, for the appellant. 

SMT. S. RAVI, Advocate, for the respondent. 

JUDGMENT 

P. VENKATARAMA REDDI, J. - This is an appeal against the order of the learned Single Judge dismissing the petition for winding up of the respondent company on the ground of inability to pay the alleged debt due to the appellant company. According to the appellant petitioner, the respondent is liable to pay Rs. 48,61,786 which remained Unpaid inspite of statutory notice issued. It appears that the directors associated with the companies are closely related and there is a long drawn litigation between them respect of various affairs of the companies. The defence of the respondent company is that on account of an understanding between Sri O. P. Jalan (representing the appellant company) and Sanjay Jalan (representing respondent company), the amount which was initially due to the petitioner company was adjusted by way of payment to another company by name Jalan Commercial and Industrial Corporation to whom the petitioner company was indebted. The more important defence of the respondent has been that the suit claim is barred by limitation and the alleged acknowledgments given by Sri O. P. Jalan on behalf of the respondent company (with which he was also associated as director) are ante dated documents fabricated at one time. It is also the contention of the respondent that Sri O. P. Jalan having ceased to be the director or managing director of the respondent company from 7.11.1991, the acknowledgments which were given were of no avail. 

2. It is not in dispute that but for the acknowledgments made by Sri O. P. Jalan and the finance secretary, Sri P. K. Chamariya, against whom the allegation of collusion with the petitioner is made, the debt is barred by limitation. Therefore, the question whether the acknowledgments are genuine and were given by authorised officer of the company loom large in the face of pleadings and the documents brought on record. The learned Judge took a prima facie view that no reliance can be placed on the alleged acknowledgment of debts by Sri O. P. Jalan and if that is excluded from consideration, the claim is barred by limitation. The learned Judge observed that the respondent company has a bona fide and probable dispute to be raised in the civil court regarding the legality of the petitioner company' and the question of limitation which depends on facts and law has to be decided after thorough enquiry by the civil court rather than going into that question in a summary proceeding. 

3. The learned senior counsel for the appellant pointed out that the learned Judge in recording his prima facie opinion was under the impression that the resolution passed in the extraordinary general meeting of the company held on 7.11.1991 removing Sri O. P. Jalan from directorship, is still in force in view of the status quo order passed in C.M.A No. 1199 of 1994. That C.M.A. was filed against the order in I.A. No. 827 of 1992 vacating the ex parts injunction restraining Sri O. P. Jalan from acting or claiming as director of respondent company. It is pointed out that I.A. No. 827 of 1992 was finally disposed of on 12.9.1994 vacating the earlier ex parte injunction. It is submitted that the status quo order does not in any way put back Sri O. P. Jalan to office. By reason of vacation of ex parte injunction and the status quo order granted by this court, Sri O. P. Jalan is entitled to continue as director notwithstanding the purported removal. The learned counsel submits that the learned Single Judge did not properly appreciate the effect of the order vacating the injunction order. Moreover, it is submitted that, on the same day, the general body meeting decided to continue Sri O. P. Jalan as director to the respondent company. Thus, there were two parallel meetings on the same day in which contradictory resolutions were passed as regards the status of Sri O. P. Jalan. It is further submitted that the resolution passed in favour of Sri O. P. Jalan has not been set aside or declared invalid. In this regard, the learned counsel for the respondent submits that the resolution removing Sri O. P. Jalan from the office of the directorship was communicated to the Registrar of Companies and there was an in junction subsequently restraining him from acting as director till September, 1994, when it was vacated and the order of the High Court granting status quo in such a situation had the effect of keeping Sri O. P. Jalan out of office notwithstanding the vacation of injunction. The learned counsel for the respondent further submits that a bare look at the original acknowledgments would show that they were all prepared and signed at one and the same time, and they are fabricated for the purpose of the claim. It is then submitted that the account statements in the acknowledgments themselves show that there were prior adjustments. The learned counsel also comments on the conduct of the appellant in filing winding up petition against the respondent company of which he claims to be the director incharge of its affairs. 

4. Having regard to the contentious issues involved and having regard to the pleadings of the parties, we consider that it would be more appropriate for the civil Court to go into the issues and the proper remedy for the appellant would be to file a civil suit. We cannot say that the approach of the learned Single Judge is against the settled legal position. We are, therefore, not inclined to interfere with the order of the learned Company Judge. The learned senior counsel appearing for the appellant has referred to the decision of the Calcutta High Court in Ofu Lynx Ltd. v. Simon Carves India Ltd. (1970) 1 Comp LJ 340 (Cal) : AIR 1970 Cal 418 and submitted that this is a fit case to direct security to be furnished for the debt claimed by the appellant pending the suit to be filed. The circumstances in which the security was directed to be furnished by the High Court while dismissing the winding-up petition are not comparable to the circumstances obtaining in the present case. We are therefore, not inclined to grant any such direction. However, we leave it open to the appellant to move the competent civil court for appropriate interim orders for securing the payment of the alleged debt. We further direct that every endeavour shall be made by the concerned civil court to dispose of the suit, if filed, expeditiously and without avoidable delay. The civil court will decide the suit uninfluenced by the observations made by the learned Single Judge on a prima facie consideration. The O.S.A. is dismissed subject to the above observations. No costs.