2012 (12) TMI 1249 - HC - Companies Law

Summary

Issues Involved:

1. Whether the respondent company is liable to be wound up under Section 433(e) of the Companies Act, 1956 due to its inability to pay debts.
2. Whether the petition for winding up is barred by limitation.
3. Whether the petition for winding up filed by an unregistered partnership firm is barred under Section 69 of the Partnership Act.

Detailed Analysis:

1. Liability for Winding Up under Section 433(e):

The petitioner, a partnership firm engaged in fabrication and installation work, sought the winding up of the respondent company under Section 433(e) of the Companies Act, 1956, claiming the respondent's inability to pay debts. The petitioner completed the installation and commissioning work for the respondent's factory but alleged non-payment of dues amounting to Rs. 43,14,386/-, with interest at 18% per annum. The respondent contended that the petitioner failed to complete the work and supplied sub-standard materials, thus breaching the contract. However, the court found that the final invoice dated 30.10.1998 for Rs. 48,53,443.65 was accepted by the respondent and their consultants, and the last payment of Rs. 5,39,058/- was made on 16.04.1999. The respondent failed to rebut this evidence, leading to the presumption under Section 434(1)(a) that they neglected to pay the debt. Consequently, the respondent was deemed unable to pay its debts, warranting winding up under Section 433(e).

2. Limitation of the Petition:

The respondent argued that the petition was barred by limitation, as the petitioner waited over three years for payment. However, the court noted that the last payment was made on 16.04.1999, and the company petition was filed on 18.06.2001, which is within three years from the final invoice date of 30.10.1998. Therefore, the petition was not barred by limitation.

3. Bar under Section 69 of the Partnership Act:

The respondent contended that the petition was filed by an unregistered partnership firm, thus barred under Section 69 of the Partnership Act. The court examined whether a winding up petition is akin to a suit for enforcement of a right arising from a contract. It held that a winding up petition is not a "suit" within the meaning of Section 69(2) and is based on a statutory right under the Companies Act, not arising from a contract. The court also addressed the argument that a winding up petition falls under "other proceedings" in Section 69(3), concluding that it does not seek enforcement of a contractual right. Thus, the bar under Section 69 does not apply, and the petition is maintainable.

Conclusion:

The court ordered the winding up of the respondent company under Section 433(e) of the Companies Act, appointing the Official Liquidator attached to the High Court of Andhra Pradesh as the liquidator. The petitioner was directed to advertise the winding up order in specified newspapers.