TMI Blog2001 (8) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... any issued a credit advice. It further appears that the respondent-company made payment from time to time to the petitioners to the tune of Rs. 84,14,021 reducing the balance to the tune of Rs. 92,18,693. To this amount the petitioner company has added interest at the rate of 20 per cent p.a. to the tune of Rs. 4,70,271 to which the petitioner company has further added interest for delay alleging failure on the part of the respondent-company in making payment. The petitioner-company appears to have sent a debit note alleging failure to furnish the C Forms under the Central Sales tax Act in respect of the sales and supplies made to the respondent company. The petitioner-company has totalled up its entire claim to the tune of Rs. 1,20,75,041 and had sent a notice under sections 433 and 434 calling upon the respondents to pay the aforesaid amount with interest. 3. The respondent-company in reply to the said statutory notice by its letter dated 12-9-2000 raised several disputes in respect of the claim of the petitioner-company. The first dispute raised by the respondent-company was in respect of the inferior quality and defect in the material supplied to the extent of Rs. 24,15,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the unjust amount claimed by the petitioner company. It has also pointed out that the aforesaid petition was filed on 25-11-2000 while on 8-2-2001 the petitioner company filed a summary suit bearing No. 39 of 2001 in the court of civil Judge Sr. Division at Pune claiming a sum of Rs. 1,16,01,574. The said suit is pending consideration before the civil court at Pune. The respondent company has also made it very clear in the affidavit that its intentions are to make payment of the debt but only the correct amount of the debt and that it had offered to pay off the whole debt by instalment of Rs. 10 lakhs per month. The petitioner company having accepted the proposed settlement by instalment and after receiving the amounts has filed not only the company petition but has also filed a civil suit for recovery of the amounts which were inflated by the petitioner company. According to the respondent company, the claim was correctly stated by the respondent company in its correspondence with the petitioner company. The respondent has also alleged suppression of certain facts by the petitioner company. It has also alleged that there was mutual correspondence between the parties which has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has vehemently submitted that the debt due to the petitioner company was an ascertained and liquidated amount on the basis of the terms and conditions of the supply of material under various invoices, debit notes and credit notes. Shri Samdani has pointed out that a part of the claim is admitted by the respondent company while the payment of interest was not disputed. In any case, the debt would exceed Rs. 500 and the respondents have not made payment after the statutory notice and, therefore, the petition deserves to be admitted. Shri Samdani has taken me through the petition as well as the several other documents. He has also submitted that filing of the civil suit was no bar for admission of the winding up petition. He has relied upon the following judgments in support of his contentions. ( i ) Seksaria Cotton Mills Ltd., In re [1969] 39 Comp. Cas. 475 (Bom.). ( ii ) Focus Advertising (P.) Ltd., In re [1974] 44 Comp. Cas. 567 (Bom.). ( iii ) Fibex Inc. v. A.B.K. Publications Ltd. [1999] 97 Comp. Cas. 947 (AP). ( iv ) Sree Lakshmi Silks v. Remanika Silks (P.) Ltd. [1998] 94 Comp. Cas. 440 (Ker.). ( v ) Smt. Deepa Anant Bandekar v. Rajaram Bandekar ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commerce and trade world is that "errors and omissions are excepted". (EOE) According to me, the petitioners ought to have discussed the points as offered by the respondent company. There is no doubt that the respondent company has been in financial difficulties but at the same time it has recovered itself to meet the difficult situation with the help of the financial institutions. It must be borne in mind that had the respondent company been a commercially insolvent and economically unviable unit, the financial institutions would certainly not have come forward to help and salvage the respondent company. The financial institutions have considered it proper to help the respondent company in its rehabilitation scheme. The financial institutions have been satisfied with the economic viability of the potential of the respondent company. I, therefore, do not agree with the submissions of Shri Samdani, the learned counsel for the petitioner company, that the respondent company has become commercially insolvent, more particularly because it has not agreed to make payment of the whole amount of debt of the petitioner company as dictated by the petitioner company in their statutory not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a bona fide dispute with regard to any debt, whether there is a bona fide dispute or not will necessarily depend on the facts and circumstances of each particular case. Again, it is well settled that a detailed inquiry at the preliminary stage of admission should be avoided. All the same, the court has to consider the dispute raised by the company. This can be achieved by assessment and appreciation of the affidavit evidence before the court at the stage of the admission. It is for the limited purpose of arriving at a conclusion whether a bona fide , serious and substantial dispute arises or not, that the court examines the matter. The court looks out for a prima facie case. If a petitioner makes out a prima facie case, then the court would exercise its discretion." (p. 432) 8. Applying the aforesaid tests construed by the learned Judge to the facts and the circumstances of the present case, I am of the opinion that there is neither inability on the part of the respondent company to pay the debt nor is there negligence on its part to pay the debt of the petitioner company. I do not smell any ulterior motive in the case put forward by the respondent company. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of substance. If the defence is likely to succeed on a point of law and the company adduced a prima facie proof of the facts on which the defence depends, no order of winding up would be made by the court. Further under section 557 of the Companies Act, 1956, in all matters relating to winding up of a company the court may ascertain the wishes of the creditors. If, for some good reason the creditors object to a winding up order, the court, in its discretion, may refuse to pass such an order. Also, the winding up order will not be made on a creditor s petition, if it would not benefit the creditor or the company s creditors generally. (1)In the present case, the claims of the appellants were disputed both in fact and in law. The company had given prima facie evidence that the appellants are not entitled to any claim. The company had also raised the defence of lack of privity and of limitation. (2)One of the claims of the appellants was proved by the company to be unmeritorious and false, and as regards the admitted debt the company had stated that there was a settlement between the company and the appellants that the appellants would receive a lesser amount and that the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. I have followed the aforesaid principles by applying the same in the present case. As far as other cases cited by the learned Counsel for the petitioner are concerned, each one of them is decided on the facts and circumstances present in that particular case and I need not burden this judgment by referring to all of them. As far as the principles are concerned, there is no doubt and dispute and there cannot be one. 11. I am in complete agreement with the submissions of Shri Diwan the learned counsel for the respondents that the petitioners have filed the present petition with a motive to pressurise the respondent company to surrender or to yield to the dictates of the petitioner company. He has rightly submitted that it is not a legitimate means to be resorted to, to recover any debt which is bona fide disputed by the debtor. I have narrated the entire material to show how the respondent company has bona fide disputed the claim of the petitioner company. Shri Diwan has also pointed out that the petitioner company has opened two fronts for the respondent company to fight, by way of this petition as well as the civil suit filed in the court of Pune. This fact itself is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present winding up petition on the basis of the same debt. 12. The law laid down by the Supreme Court in the judgments quoted below is crystal clear that the winding up petition is not a legitimate remedy for recovery of a debt which is bona fide disputed. ( i ) Hind Overseas (P.) Ltd. v. Raghunath Prasad Jhunjhunwalla AIR 1976 SC 565. ( ii ) Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 Comp. Cas. 456 (SC). ( iii ) Pradeshiya Industrial Investment Corpn. of U.P. v. North India Petrochemicals Ltd. [1994] 3 SCC 348. In the case of Amalgamated Commercial Traders (P.) Ltd. (supra) the Supreme Court has held as follows : "It is well settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigamatised as a scandalous abuse of the process of the court. At one time petitions founded on disputed debt were directed to stand over to believe that the debt, if established by action. If, however, there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the nature of a last resort when other remedies are not efficacious enough to protect the general interests of the company." (p. 575) In the case of Pradeshiya Industrial Investment Corporation of U.P. (supra) the Supreme Court in para 29 has observed as follows : "It is beyond dispute that the machinery for winding up will not be allowed to be utilised merely as a means for realising its debts due from a company. In Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 Comp. Cas. 456 (SC) this court quoted with approval the following passage from Buckley on the Companies Acts, (13th Edn. p. 451) : "It is well settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a scandalous abuse of the process of the court ." 30. Examined in the light of the above, we are unable to uphold the judgments of the courts below on the facts narrated above. Our reasons are as under : (1)The basis of the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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