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TMI Blog2007 (9) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... king in this appeal) under section 433(e) and (f) of the Act, seeking winding up of the appellant-company on the ground that certain dues have remained unpaid to the respondent-company by the appellant-company despite demand by the former to the latter by issuing statutory notice. (b)After the said petition was filed, the appellant appeared in the said case and contested the same by filing his statement of objections and addi tional statement of objections annexed therewith to the relevant docu ments in support of his contentions. After perusing the averments in the petition and the statement of objections and also the documents produced by both parties, the learned company judge passed the impugned order admitting the said company petition and directing the petitioner to take advertisement in "The Hindu", dairy newspaper, on or before March 29, 2006, fixing therein the date of hearing as April 19, 2006. Questioning the correctness of this order the present appeal is filed. We have heard the arguments of learned counsel appearing for the respective parties and perused the entire material on record. Though the appellant has not stated in the appeal memo, the question of law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount under the said bills to the respondent-company. As such, there has been a bona fide dispute between the appellant and the respondent-companies. (c)Though the respondent-company has admitted that some of the adhesive materials supplied by it to the appellant-company were returned to it by the appellant-company on the ground that the same were not as per the specified quality, it has further contended that the said return was quite earlier to the supply of the materials under the said bill and that the appellant-company had already deducted the value of the returned materials from out of the amount under other relevant bills. The appellant-company, in order to show its bona fides in not making payment of the amount under the said bill, and also to show that it has never been unable to pay its debts, has deposited into this court in the said petition, a sum of Rs. 3,27,488 alleged to be due by it to the respondent-company. Learned counsel for the appellant strongly contended that the learned company judge committed serious error in admitting the said company petition on the ground that the dispute raised by the appellant-company by reason of which it withheld the payment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials under the said four bills, the price of which has remained unpaid. However, neither the appellant-company has stated in its statement or additional statement of objections as to what was the exact cost of the said materials which were returned by it to the respondent-company nor has the respondent-company stated, in the affidavit of its officer sworn to in response to the additional statement of objections of the appellant-company, as to what was the exact value of the said material. Besides this, it is also not stated in the said affidavit when the value of the said returned materials came to be deducted by the appellant-company while making payment of the price of the materials to the respondent-company on earlier occasion. Therefore, having regard to these facts of the case it is quite clear that there exists dispute between the parties as to the exact amount due by and against each other. It is the contention of learned counsel for the respondent-company that the appellant-company should have taken the said defence at the earliest opportunity when it received the legal notice from the respondent-company demanding payment of the said amount with interest thereon but, inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hon'ble Supreme Court in Madhusudhan Gordhandas and Co. v. Madhu Woollen Industries P. Ltd., AIR 1971 SC 2600; [1972] 42 Comp Cas 125 , wherein it is held as under : "(A) Companies Act, 1956 (1 of 1956), section 433(e)-Company-Non-payment of disputed debts-Court can rightly refuse a petition for winding up of the company when the claim of the petitioner is bona fide disputed by the company (para. 21). The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends, (para. 21)" Further, learned counsel for the respondent-company herein has placed his reliance on the decision of this court in Divya Export Enterprises v. Producin P. Ltd. [1991] 70 Comp Cas 692 , wherein it was observed as under (headnote) : "The question as to the maintainability of a petition under section 433 of the Companies Act, 1956, depends upon the nature of the petitioners claim and the relationship between the parties. If, on the proved facts and circumstances, it is found that the validity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be wound up by court.-A company may be wound up by the court-. . . (e) if the company is unable to pay its debts ; (f) if the court is of opinion that it is just and equitable that the company should be wound up." Though the said petition is filed under both the clauses (e ) and (f) of section 433 of the Act, the grounds urged in the petition attract clause (e) only. The appellant-company has deposited a sum of Rs. 3,27,488 which is the principal amount claimed by the respondent-company as due to it by the appellant. It is the contention of learned counsel for the appellant that since it has returned some materials to the respondent-company the receipt whereof is admitted by the respondent, and therefore this appellant has withheld the payment of the said amount for the reason that it is entitled to recover from the respondent the loss sustained by it by reason of return of the adhesive tape by its customers which was manufactured by it by using the sub-standard materials of the respondent and therefore it cannot be said that the appellant-company is unable to pay its debt. He further urged that the appellant-company, by depositing the said amount in this case, has shown its bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is court in the case of Shakti Prakash Metal Finishers P. Ltd. v. Hindustan Machine Tools Ltd. [2002] 108 Comp Cas 310 ; [2002] 1 ILR Kan. 19, while interpreting the provisions of section 433 of the Act, has observed thus : "Any violation of the terms of the contract cannot ipso facto come within the purview of section 433. It is not the legislative intent that company court should be converted itself into an ordinary civil court and proceed to hold a trial at the instance of individual claiming to be a creditor of the company on the basis of a contract. Non-payment of bill amount under a contractual agreement cannot be said to be an admitted debt, even when it is disputed. Debt is something which is borrowed by a person on settled terms and conditions and at settled rate of interest and it can also be resettled between the parties. The respondent-company deposited the amount and disputed the claim for interest. The petitioner withdrew the amount without prejudice to its rights. Held, order of the company court refusing to order for winding up of the respondent-company was proper and need no interference. Shakti Prakash Metal Finishers P. Ltd. v. Hindustan Machine Tools Ltd. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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