TMI Blog2015 (6) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... o its notice dated December 29, 2009, in its counter-affidavit the respondent has abandoned the said stand and admitted that the cheques were issued to the petitioner by M. Venkat Rao, the erstwhile proprietary concern. In the face of this admission that the cheque was issued by M. Venkat Rao and the same was dishonoured, the burden heavily lies on the respondent to explain the circumstances under which the cheque was issued. The statement of account dated April 30, 2008, which was not controverted by the respondent by any contemporaneous correspondence coupled with the fact that M. Venkat Rao, the erstwhile proprietary concern, has issued the cheque which was admittedly dishonoured, would prima facie prove the debt of the petitioner owed by the respondent. In the light of the legal position discussed and the finding that the respondent has admitted its liability to pay the bills to the petitioner rendered above, the mere pendency of arbitration proceedings does not constitute a ground to reject the petition for winding up. The company petition is therefore admitted. - COMPANY PETITION NO. 69 OF 2011 - - - Dated:- 17-6-2014 - C.V. NAGARJUNA REDDY, J. For The Petitioner : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks and that once the final bill is settled by the employer, the bills of the petitioner will be settled. It was further stated that in case the employer levies any damages on account of delay in completion of the works, the same will be passed on to the petitioner. As regards the alleged dishonour of the cheque, the respondent has taken the stand that to their shock, they came to know that the cheque book bearing Nos. DBI 944751 to 944800 along with 23 unused cheque leaves vide cheque book No. VNI 209001 to VNI 209050 were found missing from the site office of the respondent and that their enquiries revealed that the managing director of the petitioner, with a criminal intention has stolen and misused the cheque by forging the signature of the respondent and filling up the blank cheque No. 944769, dated October 21, 2009, with a mala fide intention to gain himself and cause loss to the respondent. 4. By letter dated January 22, 2011, the petitioner has called upon the respondent to pay a sum of ₹ 7,52,11,528 along with interest within 15 days from the date of issue of notice and that failing such payment, the petitioner would initiate legal action. The petitioner has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of the petitioner who also happens to be the general power of attorney holder of M. Venkat Rao as on April 30, 2008, wherein the petitioner has claimed a sum of ₹ 6,52,45,144. (iii) Categorical admission made by the respondent in the reply notice dated December 29, 2009, to the legal notice dated November 23, 2009, about the debt with an assurance that as soon as the employer settles the final bill, the respondent will settle the petitioner's bills with the only rider that levy of any damages by the employer for non-completion of works in time will be to the petitioner's account. 8. Sri Vikram Pooserla, learned counsel for the respondent, advanced the following submissions : (i) that the debt is seriously disputed ; (ii) that the petitioner has already invoked the arbitration clause and got the dispute referred for arbitration, which fact reveals that there is a serious dispute regarding the debt ; (iii) that the respondent is commercially solvent ; and that (iv) the petitioner has taken inconsistent stands relating to the quantum of amount claimed by it. 9. The law is well-settled that the jurisdiction under section 432 of the Act is a speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed, the court will make a winding up order without requiring the creditor to quantify the debt precisely. 11. From the judgments in Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 Comp Cas 456 (SC), Pradeshiya Indl. Inv. Corpn. of U.P. v. North India Petro Chemical Ltd. [1994] 79 Comp Cas 835 (SC)Madhusudan Gordhandas and Co. (supra), Tweeds Garages Ltd. (supra), Mediqup Systems (P.) Ltd. v. Proxima Medical System GmbH [2005] 59 SCL 255 (SC) and IBA Health (I) (P.) Ltd. v. Info-Drive Systems Sdn. Bhd. [2010] 104 SCL 367, this court in Indiabulls Housing Finance Ltd. v. South Asian Agro Industries Ltd. [2014] 187 Comp Cas 205 (T AP), deduced the following legal principles (page 221 of 187 Comp Cas) : (1) If the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. Conversely, if the plea of denial of debt is a moonshine or a cloak, spurious, speculative, illusory or misconceived, the court can exercise the discretion to order the company to be wound up. (2) A petition presented ostensibly for winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l notice issued to M. Venkat Rao on November 23, 2009, in this regard, a reply notice was issued both on behalf of M. Venkat Rao and also the respondent. This reply notice is significant for it contains a clear and categorical admission of liability and the intention of the respondent to settle the bills of the petitioner. For proper appreciation, it is necessary to reproduce this part of the reply notice : ...... The work in M-27 package is completed in all respects and remaining works are completed substantially. Though KSHIP issued completion certificates, the same are subject to completion of snag list works. The final bill is yet to be raised inasmuch as there are balance works to be completed apart from delay in execution of project works. That once the final bill is settled by KSHIP, your client bills would be settled and if in case KSHIP levy any damages on account of delay in completion of works the same would be passed on to your client. So far as the claim of reimbursement, security deposit, sales tax, bank guarantee amounts, unpaid mobilisation amount and amount paid to procuring machinery, etc., are concerned, the same would arise only at the time of finalising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner-company would be settled. The petitioner is put to strict proof of the same. The respondent herein is not admitting any liability ...... 17. It is indeed consternating to notice the audacity of the respondent in denying the assurance given by it in its own reply notice, the authenticity of which is not disputed by it. Perhaps, there can be no better instance of denying the admitted debt. In fact, in the reply notice dated December 29, 2009, issued to the statutory notice, the stand of the respondent is wholly evasive. While denying entering into any sub-contracts with the respondent, it has pleaded that the petitioner was entrusted with contracts on job work basis and that they do not owe any money, much less ₹ 7,52,11,528 and with interest thereon. In my prima facie opinion, having made a categorical admission that the respondent will settle the petitioner's bill once the employer settles its own bills, subject to recovery of damages from the petitioner's bills if the same is levied by the employer, it lies ill in the mouth of the respondent to make a total denial of its liability to pay the debt to the petitioner. 18. With regard to the cheque, the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors taken in connection with the obligations under clause (1) of its memorandum of association. No further material needs to be discussed in order to show that the respondent owes debt to the petitioner and that its denial of debt completely lacks bona fides apart from the same being a cloak to avoid payment of the debt. 21. With regard to the submission of learned counsel for the respondent that the very fact that arbitration proceedings have been initiated would show that there is a dispute with regard to quantum of debt and that unless the same is ascertained, the petition for winding up of the respondent for its inability to pay the debt is not maintainable, I am afraid, I cannot accept this submission. The liability to pay a debt is different from the liability to pay an ascertained debt. If the petitioner is able to show that the respondent is liable to pay the debt in excess of ₹ 500 as prescribed under section 434(1)(a) of the Act and this court is satisfied that the denial of debt is not bona fide and that there is no substantial defence to justify non-payment of the debt, the court will order winding up irrespective of whether the debt is quantified or not. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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