TMI Blog2013 (3) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... nse to the statutory notice is meticulously scrutinized, it would be seen that there is serious disputed questions of fact between the parties and by giving various justifiable reasons, respondent company has stated that they are not liable to make payment and even breach of agreement on the part of the petitioner company is raised as a ground for denying the payment. It is, therefore, a case where the debt in question is disputed and it is not a case where debt is admitted or acknowledged by the respondent. On the contrary, it is a case where the debt is bonafidely disputed by the respondent company and they have substantively made out a defence, thus this Court cannot direct the winding up of the company in question as seeked as a procedure for winding up cannot be used as a substitute for proceeding with recovery of a debt in accordance to the common law nor is it be used to pressurize, coerce or enforce payment of a debt, which is bonafidely disputed by the respondent company. A winding up petition cannot be used as a substitute for a civil suit. If the company petition for winding up is filed with oblique motive and only to put pressure on the respondent company, the same shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory notice being sent under section 433(1)(a) of the Companies Act, 1956, respondent company has failed and neglected to clear the debts, therefore, steps for proceeding in the matter for winding up be initiated, this petition is filed. 6- Shri N.S. Ruprah and Shri Chaturvedi, learned counsel for the petitioner, took me through the correspondence between the parties, the notice sent under section 433(1)(a), the reply to the same by the respondent company and tried to emphasize that as a case is made out indicating negligence on the part of the respondent to make payment of the amount, which is admitted, statutory notice have been issued and in view of the neglect on the part of respondent company to pay the debt, steps be taken for winding up of the company. 7- Placing reliance on a judgment rendered by the Supreme Court in the case of Electron Industries Limited, Mumbai Vs. Soham Polymers (P) Limited, Mumbai, (2005) 13 SCC 86; and, another judgment in the case of M/s Vijay Industries Vs M/s NATL Technologies Limited, AIR 2009 SC 1695, and inviting my attention to certain other judgments of the Bombay High Court, Madras High Court, Allahabad High Court, Gujrat High Court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Court to initiate the process and if the Company Court comes to the conclusion that the material available are not sufficient enough to initiate action and it is found that the company petition has been filed malafidely, this Court can refuse to exercise jurisdiction in the matter. 10- Even though Shri Chaturvedi, learned counsel, indicated that the financial and commercial viability of the respondent company to pay the debt is not necessary and once it is found that the company is neglecting to pay the amount, proceedings can be initiated. The law contemplates in terms of section 433 of the Companies Act that a Court would order winding up of a company only after the company is unable to pay its debts. In the event of a claim being doubtful, requiring adjudicating, it would not be a debt as contemplated under section 433(e). It is also well settled principle of law that a Company Court cannot adjudicate disputed questions and pass orders on winding up. 11- The principle of law is that a petition for winding up should not be allowed until and unless it is proved to the satisfaction of the Company Court that the grounds for winding up, particularly with regard to inability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple, it would be seen that after the statutory notice was sent by the petitioner company to the respondent vide Annexure H, on 17.5.2011, and when a demand was made for payment of the aforesaid amount of ₹ 61,85,951=90, the respondent company submitted its objection vide Annexure I on 14.6.2011 and disputed its liability to pay the amount and raised various objections. It was pointed out that the petitioner company wrongly represented about its business, made false claim and the respondent company has raised various grounds with regard to breach of agreement by the petitioner company as a result it is stated that no amount is to be paid and it has denied its liability to pay the debt and have disputed the claim. 13- If the claim made by the petitioner and the reply submitted by the respondent in response to the statutory notice is meticulously scrutinized, it would be seen that there is serious disputed questions of fact between the parties and by giving various justifiable reasons, respondent company has stated that they are not liable to make payment and even breach of agreement on the part of the petitioner company is raised as a ground for denying the payment. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiating an action for winding up under section 433(e) of the Companies Act is a discretionary power. Before exercising the said power, it is required to be proved from the material available on record that (a) there is a debt; and, (b) that the respondent company is unable to pay the said debt. Even if these two conditions are satisfied, still the Court should be satisfied that a winding up order has to be passed. The company against whom the proceeding is prayed to be initiated should be shown to be commercially insolvent, its assets and liabilities are to be such that a reasonable apprehension can be made that it is insufficient to meet the existing liabilities. On the other hand, if a bonafide dispute regarding payment of debt is made out by the respondent company and the material available does not show that the company is financially insolvent or not in a position to pay the debt, the winding up petition should be dismissed. 17- In this regard, the principle laid down by the Supreme Court in the case of Pradeshiya Industrial and Investment Corporation of UP Vs. North India Petro Chemical Limited, (1994) 2 Company LJ 50 (SC), and the judgment of Delhi High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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