TMI Blog2009 (8) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to approach the Company Court for winding up, and, hence, the impugned order is sustained. Appeal dismissed. - OS APPEAL NO. 166 OF 2003 - - - Dated:- 12-8-2009 - M. CHOCKALINGAM AND R. SUBBIAH, JJ. D. Ramesh Rai for the Appellant. R. Thiagarajan for the Respondent. JUDGMENT M. Chockalingam, J. - Challenge is made to an order of dismissal of C.P. No. 242 of 1998 filed under section 433( e ) and 433( c ) of the Companies Act, for winding up of the respondent-company, made by the learned Single Judge of this Court. 2. The said petition was filed with the following averments : ( a )The appellant placed a work order dated 2-8-1996 with M/s. Vibrant Investment and Properties Limited (VIPL) for laying and paving heavy duty pavement for 4.50 lakhs sq.ft. using heavy duty pavers as per specifications for a total value of Rs. 5,23,87,500. They paid a mobilisation advance of Rs. 10 lakhs with a condition that the said company would perform all obligations in this regard. The respondent-company stood guarantee for the said company, and a guarantee deed was executed on 25-7-1997. Since some defects in the work were noticed by the appellant, the said company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent-company from 26-2-1996 to 17-6-1997; that he was also the Chairman of the Board of Directors of the respondent-company from 20-3-1995 till 11-12-1997; that he and his associates abused their fiduciary relationship with the respondent and had done several acts of misfeasance and malfeasance; that he entered into an ante-dated guarantee and an agreement involving the respondent; that the deeds of guarantee and agreement are not genuine, and they are fabricated and perpetrated by him in collusion with the appellant for obvious purpose; that VIPL is simply attempting to bring this respondent into the dispute; that copies of certain documents have not been furnished to the respondent; that in the agreement dated 1-4-1997, a reference has been made about an event which took place on 2-4-1997, namely, the amended work and it is not a typographical error; that the performance guarantee has been contemplated well before the work order dated 2-8-1996; that the respondent was not the guarantor of the said company and the agreement in question is not enforceable against them, and, hence, the petition lacks bona fide and is liable to be dismissed. 4. The appellant also file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the same was duly approved by the resolution passed by the respondent-company on 18-9-1996. 7. Added further the learned counsel that the learned Single Judge has arrived at a wrong conclusion that in the guarantee agreement dated 25-3-1997, there is a mention about a sum of Rs. 41,32,631 being paid to VIPL based on the letter of intent dated 25-3-1997; that the above amount was admittedly paid on 26-3-1997 and 27-3-1997; that the payment of money to VIPL was admitted and the same was paid to VIPL at the request of the guarantor; that apart from that, there was no discrepancy with regard to the payments made to and received by VIPL; that the non- mention about the manufacture of the pavers by the respondent-company cannot be given any importance; that equally, the non-mention of the guarantee dated 25-3-1997, in the fresh work order dated 2-4-1997 and the non-mention of the guarantee agreement in the work order will not in any way absolve the liability of the respondent guarantor since as per the respondent s balance sheets for two consecutive years, the guarantee was issued; that there was no legal necessity to mention the guarantee in the work order; that it is not corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk order dated 2-8-1996 with M/s. Vibrant Investment of Properties Limited (VIPL) for laying and paving heavy duty pavement for 4.50 lakh sq.ft. using heavy duty papers as per specifications for a total value of Rs. 5,23,87,500 for its container yard and paid a mobilisation advance of Rs. 10 lakhs; that the respondent-company which is sought to be wound up stood guarantee for the said company and also executed a gurantee deed dated 25-7-1997 for the due performance of the terms and conditions in respect of the work entrusted to the said company; that there was exchange of notices and discussions following the complaint made by the appellant-company that part of the work done was defective; that on the request of the VIPL, a revised work order was issued for Rs. 4,13,30,168 after getting indemnity bond and guarantee from the respondent in lieu of bank guarantee for the payment of mobilisation advance of Rs. 41.33 lakhs for the due performance of the work by the said company; that the appellant paid a mobilisation advance of Rs. 31.33 lakhs after adjusting the advance already paid; that the appellant-company has made part payment of Rs. 35.12 lakhs as requested by the company; but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso not produced before the Court. Equally, the letter alleged to have been issued by VIPL on 25-7-1996, was also not produced. A perusal of the work order dated 2-8-1996, issued by the appellant to VIPL does not make any reference to a third party guarantee. That apart, though the appellant relied on a meeting held on 26-11-1996, and also contended that the General Manager of the respondent-company also participated, nowhere the minutes refer to the third party guarantee. Even the revised proposal submitted by VIPL on 21-3-1997, was not produced before the Court. In the letter of intent issued by the appellant on 25-3-1997, there is no reference as to the third party guarantee. 12. The specific case of the appellant was that the guarantee agreement was executed on 25-3-1997 by the respondent-company. A reading of clause 2 of the agreement would indicate that the appellant has paid an advance of Rs. 41.33 lakhs following the respondent s letter of intent dated 25-3-1997. It is a matter of surprise to note that in the agreement dated 1-4-1997, much relied on by the appellant, there was a reference to the subsequent work order dated 2-4-1997. It cannot be taken to be a typographi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, no reliance could be placed on those balance sheets. All would go to show that it is highly doubtful whether these documents could be relied and acted upon for fastening a liability on the respondent. On the contrary, the respondent-company was able to show that there was a bona fide dispute regarding the genuineness of the two documents, namely, guarantee agreement dated 25-3-1997 and also the agreement dated 1-4-1997. It is well-settled proposition of law that when the respondent who was sought to be wound up was able to show that there was a bona fide dispute with regard to the liability in question, the winding up proceeding is not the proper remedy to resolve the dispute. Apart from that, the appellant was unable to show that there was a debt due and payable by the respondent-company. It is true that two documents were produced before the Court; but the execution, validity and genuineness of the documents have been questioned by the respondent. In such circumstances, it would not be fit or proper to place reliance on those documents to fasten any liability on the respondent or to hold that there was a debt due and payable by the respondent. Hence, the learned Single ..... X X X X Extracts X X X X X X X X Extracts X X X X
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