TMI Blog1977 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... company, refused to pay the amount due under the said bills stating that he was willing to pay, "but at present there are no sufficient funds". The presentation and non-payment of the said bills was duly noted and protested under the seal of a notary, Maharashtra State. After this, the company paid to the petitioners a sum of Rs. 49,140 being the amount due under one of the bills, viz ., bill No. 19. This payment was made by the company by a cheque which was forwarded by the company to the petitioners along with a letter dated 30th December, 1975. This letter will be discussed in some detail later. As per the company's directions the petitioners have appropriated the said payment of Rs. 49,140 against the amount due under the said bill No. 19. The company, however, failed and neglected to pay to the petitioners the balance of the amount. By their attorney's letter dated 25th August, 1976, the petitioners recorded the facts and called upon the company to pay a sum of Rs. 3,03,132.50 being the aggregate amount claimed by the petitioners under the remaining seven bills. By the same letter, the petitioners also called upon the company to pay interest. This notice was expressly issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cient funds or supplies to convert their debit account into a credit account. The Everkeen Blade Company had already made some payments towards the debt under the said bills of exchange. It is admitted by the company that the letter of 25th August, 1976, was duly received by the company, but it is alleged that no reply was sent thereto because, to the knowledge of the petitioners, the company was not liable to pay the amount claimed therein. In a further affidavit filed by R.D. Kharkar, a director of the company, reference is made to a letter dated 24th September, 1976, addressed by the manager of the Aurangabad branch of the petitioners to the Everkeen Blade Company. In this letter, it is stated, inter alia , that a cheque for Rs. 40,000 was sent by the Everkeen Blade Company in payment of the overdue bills, which, it can be seen from the letter, are the bills of exchange referred to in the petition. In the affidavit of one, N.R. Patkar, divisional manager of the petitioners, in reply to the said further affidavit of Kharkar, it is averred that the Everkeen Blade Company had two accounts with the petitioners, viz. , a bills discounting account and a cash credit hypothecation acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of insolvancy proceedings to bear upon the company in order to make it pay cheaply and expeditiously a heavy debt which it desired to dispute in the civil court. In my view, there can be no doubt that where there is a bona fide and honest dispute raised by the company regarding its liability for the debt claimed and investigation of such dispute would require an elaborate inquiry, such a dispute cannot be determined in winding-up proceedings and a winding-up petition is not a proper remedy for the adjudication of such a dispute. This decision, however, nowhere lays down that even if the company raise3 a dispute which does not appear to be bona fide or honest, still, merely because a dispute is raised by the company, it should not be adjudicated upon in a winding-up petition. In this regard, reference may be made to the decision of Kantawala J. (as he then was) in In re British India General Insurance Co. Ltd. [1970] 40 Comp. Cas. 554 (Bom.). It was held in this case that where the defence is that the debt is disputed all that the court has to see first is whether the dispute on the face of it is genuine or merely a cloak for the company's real inability to pay just debts. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its liability to pay the same there is no reason why the petition should not be proceeded with. I propose now to discuss whether the dispute raised by the company is bona fide or genuine. In this regard certain facts must be taken note of. It is admitted that the aforesaid eight bills of exchange have been accepted by the company. On the face of the said bills there is nothing to show that the acceptance was in any manner conditional as alleged by the company. It is significant that although in the affidavit in reply of Nabar it is alleged that there was an agreement and understanding that the acceptance was conditional as set out earlier, there are no particulars given of such agreement. It is not set out between which persons the said agreement was arrived at and in particular as to who on behalf of the petitioners is alleged to have entered into the same. It is not stated as to when the said agreement was arrived at or where it was arrived at. On 20th August, 1977, on the application of Mr. Chinoy the hearing of the petition was adjourned to enable the company to put on record the original letter dated 24th September, 1976, which the company has, in fact, done by the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normally be expected is that the company would have set off the amount due by the company to the Everkeen Blade Company against the larger amount due by the Everkeen Blade Company to the company. It is common ground that the Everkeen Blade Company and the company are closely connected. In my view, the story of the company regarding this alleged agreement is utterly improbable and can be believed only by one who believes in the dictum, "truth is stranger than fiction". The dispute raised by the company regarding the debt, on the basis of conditional acceptance of the said bills, in my view, is not a bona fide dispute but a dispute raised to cover up the company's inability to pay. As far as the payment of Rs. 49,140 made by the Everkeen Blade Company to the petitioners, as set out in the letter dated 24th September, 1976, addressed by the manager of the Aurangabad branch of the petitioners, is concerned, it is true that the petitioners' said manager in the said letter has stated that this payment would be treated as against the amounts overdue under the bills discounting account. The affidavit of Patkar which is filed in reply to this states that this payment was ultimately credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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