TMI Blog2014 (3) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... nce was never raised by the Respondent company either at the stage of executing the undertaking dated 29 July 2009 or at the stage of acknowledging the amount due in pursuance of the balance confirmation letters dated 25 March 2010 and 7 March 2011 - a claim in a petition for winding up is not for money. The petition filed under the Companies Act in a matter like this, is to the effect, that the company has become commercially insolvent and, therefore, should be wound up. The power to order winding up of a company is contained under the Companies Act and is conferred on the Court. An Arbitrator, notwithstanding, any agreement between the parties, would have no jurisdiction to order winding up of a company - Decided in favour of applicant. - APPEAL NO.181 OF 2013 & COMPANY PETITION NO.198 OF 2012 - - - Dated:- 21-10-2013 - DR. D.Y. CHANDRACHUD AND M.S. Sonak, JJ. For the Appellant : Pankaj Vijayan For the Respondent : Ajit Kulkarni JUDGMENT :- PER : M.S.SONAK,J. Admit. With the consent of the learned Counsel, the appeal is taken up for hearing and final disposal. 2. The Appellant (original Petitioner) appeals against the judgment and order dated 17 October 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice; (j) The Respondent company replied to the statutory notice (undated). Although there was no outright denial of debt, the Respondent company contended that the undertaking dated 29 July 2009 was subject to 'reconciliation'; That payment of Rs. 25 Lakhs effected in April 2011 was in 'full and final settlement'; and that the contract between the parties stipulated that the Respondent company shall pay the Appellant only after receipt of payments from HAL, for whom the Appellant was executing engineering contracts and the items purchased by the Respondent company from the Appellant, were for the purposes of such contract; (k) The Appellant thereupon instituted Company Petition No.198 of 2012 seeking winding up of the Respondent company under Section 433 (e) and Section 434 of the Companies Act,1956; and (l) The Respondent company filed a reply reiterating substantially the defences raised in its reply. 5. The learned Company Judge vide judgment and order dated 17 October 2012 has dismissed the petition. In dismissing the company petition, the learned Company Judge has held as under: (i) The defence that amount of Rs. 25 Lakhs was paid in 'full and fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt is virtually admitted. No payments are forthcoming. Clearly, therefore, the Respondent company is "unable to pay its debts". For all the aforesaid reasons, it was submitted that a case has been made out for admission of the petition for winding up of the company. 7. Mr. Ajit Kulkarni appearing on behalf of the Respondent company defended the impugned judgment and order by reiterating and elaborating upon the grounds/defences raised in the reply to the statutory notice and reply filed in response to the company petition. 8. Before, we advert to the rival contentions, reference can be usefully made to the judgment of the Supreme Court in case of Madhusudan Gordhandas Co. v. Madhu Woollen Industries (P.) Ltd. [1971] 3 SCC 632, which lays down the principle to be applied in entertaining the petitions for winding up of companies. In paragraphs 20 and 21, the Supreme Court has observed as follows: "20. Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 itself states that the amount stated therein is "subject to reconciliation". Therefore, he submitted that the undertaking cannot be relied upon to establish any debt. We are unable to accept this contention for the following reasons: (i) The undertaking, which otherwise, clearly and unequivocally acknowledges the liability and assures payments as per stipulated schedule, very vaguely states: "this amount due includes certain invoices which are under reconciliation for material cost". (ii) In the schedule of repayment contained in the undertaking, as against the amount of Rs. 41,84,426/-repayable by 15 September 2009, there is the following endorsement: "due after material cost reconciliation". (iii) Pitted against such vague endorsements are clear and unambiguous acknowledgements of debt and undertaking to pay total amount of Rs. 81,84,426/- to the Appellant. (iv) The Respondent company, neither in its reply to the statutory notice, nor in its reply to the petition for winding up has placed any material on record to suggest that any reconciliation was in fact carried out and that upon such reconciliation any amount was found as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e balance confirmation letters dated 25 March 2010 and 7 March 2011. In the circumstances, we find that the defence raised is neither a bona fide nor a substantial one. 13. The third defence that an amount of Rs.25 Lakhs was paid in full and final settlement by the Respondent company has not been accepted by the learned Company Judge. Even otherwise the same is not at all borne from the records. The E-mail communication does not support any such conclusion. 14. Mr. Kulkarni, finally submitted that the purchase orders which constitute a "contract" between the parties contained an arbitration clause and in view of the existence of such a clause a petition for winding up was not maintainable or in any case was rightly not entertained. This does not appear to be a defence raised by the Respondent company before the learned Company Judge. 15. In any case, as observed by the Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. [1999] 22 SCL 156, a claim in a petition for winding up is not for money. The petition filed under the Companies Act in a matter like this, is to the effect, that the company has become commercially insolvent and, therefore, should be wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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