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TMI Blog2012 (11) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the petitioner-Company that thereafter the petitioner advanced a sum of Rs. 5,00,000/- on 23.10.2002 carrying interest @ 18% p.a. It is the case of the petitioner that the respondent Company repaid the amount of Rs. 1,00,000/- on 02.12.2002. On the basis of the said factual premises, it is the case of the petitioner that the respondent is liable to pay interest for 40 days on Rs. 5,00,000/-, which comes to Rs. 9,863/- and Rs. 1,19,704/- for 911 days of Rs. 4,00,000/-. It is also the case of the petitioner that the petitioner-Company further advanced a sum of Rs. 3,00,000/- on 29.03.2003 and the respondent-Company is liable to pay an amount of Rs. 1,17,468/- towards the interest for 794 days. It is further the case of the petitioner that the petitioner is entitled to recover an amount of Rs. 7,00,000/- towards properties of Rs. 3,13,446/- towards interest total aggregating to Rs. 10,13,446/-. The petitioner, in order to prove the aforesaid facts, has relied upon the extract of account of the petitioner-Company. 4. It is contended by the petitioner that as the said amount was not paid by the respondent Company the petitioner issued a notice dated 18.07.2005 under Section 433(e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/- as the invoices which were raised by the petitioner-Company, were much higher than the price prevailing in the market. It is therefore contended by the respondent-Company that merely by raising higher amount in the invoices does not entitle the petitioner to receive the payment as per the invoices raised. The respondent-Company has therefore contended that no dues are outstanding and the petitioner-Company is not entitled to recover amount of Rs. 10,13,446/-. It is also contended that the averments made in the petition are untrue. It is the case of the respondent-Company that the financial substratum of the respondent-Company has not gone down and has denied the fact that it has become commercially insolvent. 6. In response to the aforesaid affidavit-in-reply of the respondent-Company, rejoinder was also filed by the petitioner-Company denying the contentions raised by the respondent-Company in the affidavit-in-reply and has contended that the averments made in the affidavit-in-reply are not true. It is also contended that the petitioner-Company has never received any such debit note and such debit note is not even produced by the respondent-Company and has reiterated the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his right for filing civil suit for recovery and has approached this Court after a long period of three years only with a view to pressurize the respondent-Company to pay the amount in spite of the fact that such amount is not due and payable. 9. In response to the aforesaid affidavit-in-reply of the respondent-Company, affidavit-in-rejoinder was filed by the petitioner-Company denying the contentions raised by the respondent-Company in the affidavit-in-reply and has specifically contended that no disputes were raised when the invoices were raised. It is contended that only in order to create a facade of a bona fide dispute in the present petition dispute of price variation is brought forward by the respondent-Company. The petitioner-Company has denied the contentions raised by the respondent-Company in the affidavit-in-reply and has reiterated what has been stated in the petition. 10. This court (Coram: M.R. Shah, J) vide order dated 13.12.2006 admitted both these petitions, passed an order of advertisement and fixed the matters for final hearing. It is a matter of record that the respondent-Company filed O.J. Appeal Nos.4/2007 and 5/2007 against the said order of admission and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties, we are of the considered view that there is a bona fide dispute with regard to the amount of claim made by the respondent company in the company petition which is substantial in nature. The Company Court while exercising its powers under Sections 433 and 434 of the Companies Act, 1956 would not be in a position to decide who was at fault in not complying with the terms and conditions of the deed of settlement and the compromise deed which calls for detailed investigation of facts and examination of evidence and calls for interpretation of the various terms and conditions of the deed of settlement and the compromise entered into between the parties. 30. A company petition cannot be pursued in respect of contingent debt unless the contingency has happened and it has become actually due. In the absence of any evidence, it is not possible to conclude that M/s. Solutions Protocol Sdn. Bhd. had in fact paid any amount to the appellant company towards commission charges due to the respondent company before the cut off date. A legal notice prior to the institution of the company petition could be served on the company only in respect of a debt (then due) and a company could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on proceedings against a company and later dismissed when a proper defence is made out on substantial grounds. A creditor's winding up petition implies insolvency and is likely to damage the company's creditworthiness or its financial standing with its creditors or customers and even among the public. PUBLIC POLICY CONSIDERATIONS 34. A creditor's winding up petition, in certain situations, implies insolvency or financial position with other creditors, banking institutions, customers and so on. Publication in the Newspaper of the filing of winding up petition may damage the creditworthiness or financial standing of the company and which may also have other economic and social ramifications. Competitors will be all the more happy and the sale of its products may go down in the market and it may also trigger a series of cross-defaults, and may further push the company into a state of acute insolvency much more than what it was when the petition was filed. The Company Court, at times, has not only to look into the interest of the creditors, but also the interests of public at large. 35. We have referred to the above aspects at some length to impress upon the Company Courts to be mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhusudun Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. [1972] 42 Com Cases 125 : AIR 1971 SC 2600. This Court has held that if the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. The principles on which the Court acts are : (i) that the defence of the company is in good faith and one of substance; (ii) the defence is likely to succeed in point of law; and (iii) the company adduces, prima facie proof of the facts on which the defence depends." 14. As can be seen from the petitions and as pointed out by the learned Counsel though it has been averred by the petitioner that the debt is not a disputed debt and that no objections were ever raised by the respondent-Company, as regards the quality of the goods supplied, in the affidavit-in-reply, however, the stand taken by the respondent-Company clearly borne out the fact that the debt is a disputed debt. 15. In view of the aforesaid factual background and considering the contentions of the petitioner and the defence raised by the respondent-Company it cannot be said that the amount due and payable as per the statutory notice is a bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule, viz., that the court will regard the wishes of the majority in value of the creditors, and if, for some goods reason, they object to a winding-up order, the court in its discretion may refuse the order.' The wishes of the creditors will, however, be tested by the court on the grounds as to whether the case of the persons opposing the winding-up is reasonable; secondly, whether there are matters which should be inquired into and investigated if a winding-up order is made. It is also well-settled that a winding-up order will not be made on a creditor's petition if it would not benefit him or the company's creditors generally. The grounds furnished by the creditors opposing the winding up will have an important bearing on the reasonableness of the case. (See P & J. Macrae Ltd. In re [1961] 1 All ER 302; [1961] 31 Comp Cas 424 (CA)." It is beyond dispute that the machinery for winding up will not be allowed to be utilized merely as a means for realising its debts due from a company. In Amalgamated Commercial Traders (P.) Ltd. v. Krishnaswami (A.C.K.)[1965] 35 Comp Cas 456, 463 (SC) this court quoted with approval the following passage from Buckley on the Companies Acts, 13th ed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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