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2013 (3) TMI 346 - HC - Companies LawWinding up petition - as per the appellant the respondent company did not come forward and make payment of the third installment of 60% and the balance 40%, as agreed upon as per the agreement entered - Held that:- If the case in hand and the facts as available on record are evaluated it would be seen that after the statutory notice was sent by the petitioner company to the respondent on 17.5.2011, and when a demand was made for payment of the aforesaid amount of Rs. 61,85,951=90, the respondent company submitted its objection on 14.6.2011 and disputed its liability to pay the amount and raised various objections. It was pointed out that the petitioner company wrongly represented about its business, made false claim and the respondent company has raised various grounds with regard to breach of agreement by the petitioner company as a result it is stated that no amount is to be paid and it has denied its liability to pay the debt and have disputed the claim. If the claim made by the petitioner and the reply submitted by the respondent in response to the statutory notice is meticulously scrutinized, it would be seen that there is serious disputed questions of fact between the parties and by giving various justifiable reasons, respondent company has stated that they are not liable to make payment and even breach of agreement on the part of the petitioner company is raised as a ground for denying the payment. It is, therefore, a case where the debt in question is disputed and it is not a case where debt is admitted or acknowledged by the respondent. On the contrary, it is a case where the debt is bonafidely disputed by the respondent company and they have substantively made out a defence, thus this Court cannot direct the winding up of the company in question as seeked as a procedure for winding up cannot be used as a substitute for proceeding with recovery of a debt in accordance to the common law nor is it be used to pressurize, coerce or enforce payment of a debt, which is bonafidely disputed by the respondent company. A winding up petition cannot be used as a substitute for a civil suit. If the company petition for winding up is filed with oblique motive and only to put pressure on the respondent company, the same should be dismissed. This is the principle of law laid down as it emerges on a complete reading of various judgments on the question. It is only when a legitimate claim is made out and the material available shows that the company is unable to pay the debts and its financial position is so precarious that it would not be able to meet the demand that action should be taken in a company petition else it is liable to be dismissed.
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