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Vision Millennium Exports Pvt. Ltd. Versus M/s. Stride Multitrade Pvt. Ltd., M/s. Addax Trading Pvt. Ltd., M/s. Nova Trading Pvt. Ltd., M/s. Imperial Mark Trade (India) Pvt. Ltd., M/s. Utility Impex Pvt. Ltd., Vishal Victory Oiltech Pvt. Ltd., M/s. Frame Impex Pvt. Ltd., Arcadia Trading Pvt. Ltd. Amd Sear Trading Pvt. Ltd.

2017 (12) TMI 636 - BOMBAY HIGH COURT

Deposit of the amounts contained in the statutory notice - Held that:- Merely because the Petitioner did not enter into correspondence though breach was committed by the Respondent would not dent the case of the Petitioner in so far as their claim based on Soyabean Meal contracts is concerned. Since the parties had a running business relationship, it may be possible that the parties were trying to work out and in the said process time might have elapsed. In the said context it is required to be .....

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d the payment and the defences raised on behalf of the Respondent are therefore not bonafide. In our view, the learned Single Judge has in the facts and circumstances rightly issued the directions which are contained in the operative part of the impugned order. - APPEAL NO. 131 OF 2017, APPEAL NO.135 OF 2017, APPEAL (LODGING) NO.84 OF 2017, APPEAL NO.128 OF 2017, APPEAL NO.129 OF 2017, APPEAL NO. 130 OF 2017, APPEAL NO.132 OF 2017, APPEAL NO.132 OF 2017, APPEAL NO. 134 OF 2017 - Dated:- 8-12-201 .....

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OF 2017, NOTICE OF MOTION LODGING NO. 27 OF 2017, NOTICE OF MOTION LODGING NO.24 OF 2017, NOTICE OF MOTION LODGING NO. 30 OF 2017 AND NOTICE OF MOTION LODGING NO. 33 OF 2017 For The Appellant : Mr.Yusuf Iqbal Yusuf a/w Mr.Neville Majra, Ms. Shaista Pathan, Mrs.Anvee Mehta, Mr.Feroj Qureshi i/by Mr. Akhileshwar Sharma For The Respondents : Mr.Yusuf Iqbal Yusuf a/w Mr.Neville Majra, Ms. Shaista Pathan, Mrs.Anvee Mehta, Mr.Feroj Qureshi i/by Mr. Akhileshwar Sharma for the Appellant. Mr. Sharan Jag .....

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tained the direction to deposit the amounts claimed in the statutory notices issued by each of the Respondents in the above Appeals. The said directions are reproduced herein under for the sake of ready reference : (i) The respondents shall deposit amount of advances by them in each of these petitions in this Court within a period of 12 weeks from today. The amounts to be deposited in each of the Petition is specified in the Orders passed in those petitions. (ii) Accordingly in each of these pet .....

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ear each. (iv) If the deposit is not so made, the petition shall stand admitted, returnable within six weeks from the date of default and be advertised in two local newspapers i.e. Free Press Journal (in English) and Navshakti (in Marathi) and in the Maharashtra Government Gazette. (v) The Petitioner shall deposit an amount of ₹ 10,000/with the Prothonotary and Senior Master of this Court towards publication charges, within two weeks from the date of default, with intimation to the Company .....

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of 2015 filed by M/s. Stride Multitrade Pvt. Ltd. are referred to in the impugned order. 5 The facts giving rise to the filing of the above Appeals can in a nutshell be stated thus : The Appellant and the Respondents in each of the Appeals are all bodies Corporate engaged in the business interalia of high quality edible oils, soyabean meal and other agricultural commodities. The facts in all the above Company Petitions are identical, save and except the dates of the Sales Confirmation Notes, Co .....

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advance against the total purchase price of ₹ 101,34,00,000/. The said amount of ₹ 51,00,00,000/was transferred to the account of the Respondent by RTGS on various dates as mentioned in paragraph 9 of the Company Petition. The Petitioner in respect of the said payment has placed reliance on the bankers certificate annexed at Exhibit D to the Petition confirming that six remittances totalling to ₹ 51,00,00,000/have been made to the Respondents. The receipt of the advance in the .....

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n months 3 VMEPL/SBM/037/1 1­12 31.12.2011 14000 25.48 within months 4 VMEPL/SBM/011/1 2­13 28.04.2012 8500 24.14 within months 5 VMEPL/SBM/014/1 2­13 24/07/2012 2650 11.93 within months (The contracts entered into between the other Petitioners and the Respondent are identical except the contract value, quantity of the product, delivery schedule and the rate.) The amounts paid as advance by the Petitioner in the instant Company Petition and the other Petitioners in the companion Comp .....

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failure, the Petitioner had approached the Respondent to refund the advances paid which was not given heed to by the Respondent. The Petitioner persuaded the matter for refund, however, the Respondent declined to refund the said sum. It was the case of the Petitioner in the Petition that the receipt of the amount was not disputed by the Respondent, however, the Respondent did not deliver the Soyabean Meal to the Petitioners in each of the above Petitions. It appears that the Respondent vide let .....

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but this fell short of the requisite amount for supply of the 5500 MT of Guar Seeds. It was the case of the Respondent that at the request of the Petitioner, the Respondent reduced the advance by 30% of such price and the Petitioner agreed to pay further amounts against which the Respondent would supply Guar Seeds. It was the case of the Respondent that the amounts already paid were to be adjusted in the last lot of Guar Seeds to be supplied. It was the case of the Respondent that though the Pet .....

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tioner by letter dated 11/07/2013. The Petitioner denied the contentions of the Respondent and denied that there was any contract for supply of Guar Seeds. According to the Petitioner it had never agreed to purchase the Guar Seeds and such a contract was never signed by it. The Petitioner reiterated its case of having agreed to the purchase of Soyabean Meal for which it had paid the sum of ₹ 51,00,00,000/. The Petitioner contested the forfeiture of the advances and reserved its rights to r .....

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the statutory notice was denied and the Respondent's advocate reiterated the claim contained in the letter dated 15/06/2013. The Respondent further contended that though the Petitioner had agreed to purchase the Guar Seeds, the Petitioner failed to make balance payment and had since come up with a fabricated case seeking supply of Soyabean Meal and finally contended that a total sum of ₹ 105,62,90,000/would be payable by the Petitioner on taking delivery of the entire quantity of Guar .....

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was ₹ 6,62,90,000/. The Respondent accordingly called upon the Petitioner to pay the said amount. 6 It is in the background of the said statutory notice/notices that the above Company Petition along with the companion Company Petitions came to be filed by the Petitioners. In the said Company Petition the Appellant herein i.e. the original Respondent filed the affidavit of one Mr.Manish Bothra - Director of the Respondent opposing the above Company Petition interalia on various grounds. In .....

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e was any debt due to the Petitioner. A reference was also made in the said affidavit to the investigation conducted by the Director General, Competition Commission of India (for short the DG CCI ) in Case No.76 of 2012 pertaining to the sharp rise in the price of Guar Seeds during the period October 2011 and March 2012. In the said reply affidavit it is stated that various observations were made by the DG CCI during the course of investigation into the operation of Ruchi Group [to which the Pet .....

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and its acceptance against the advance without any objection/reservation was stated. A reference is made to the four Petitioners in Company Petition Nos.586 of 2014, 756 of 2015, 759 of 2015 and 760 of 2015 against whom it is the case of the Respondent that against the advances paid, certain quantities of Guar Seeds were supplied and that is how the balance amounts are shown against each of the said Petitioners. The discrepancy between various contracts dates supply dates as also the discrepanc .....

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2016 has disposed of the Company Petition as also the companion Company Petitions by issuing directions which are contained in the operative part amongst which as indicated above is the direction for the Respondent to deposit the advances paid by the Petitioner and the other Petitioners in the companion Company Petitions to the Respondent in this Court within 12 weeks. A further direction came to be issued that in the event the deposit is made and a suit is filed by the Petitioner and other Peti .....

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reasoning of the learned Single Judge as can be culled out from the impugned order is that though there is merit in the contention raised on behalf of the Respondent that the circumstances mentioned by the Respondent in its affidavit in reply indicating that the transaction is not a genuine transaction, according to the learned Single Judge what has been lost sight of is the fact that the said contracts have originated from the Respondent. The learned Single Judge further held that the contenti .....

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nt as regards the authenticity of the emails the learned Single Judge was of the view that the denial appearing is bare and bereft of particulars. The learned Single Judge has observed that though on the one hand the Respondent has alleged that the contracts are fabricated and data is created to match the credit balances, but on the other hand denies having sent any email as annexed by the Petitioner. The learned Single Judge has taken into consideration the fact that after the affidavit in repl .....

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inated from one Mr. Sujit/Betul Oils Ltd. whose email address has been referred to by the learned Single Judge. However, according to the learned Single Judge the fact remains that the deponent has not contended that the Respondent has not communicated through M/s. Betul Oils Ltd. (the group to which the Appellant belongs) The learned Single Judge has further observed that the signatures on the attachments of the emails have not been disputed nor has the Respondent disputed the fact that the rub .....

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ceived in their account as on that date i.e. on 26/02/2015. The learned Single Judge therefore held that if the amounts paid by the Petitioners were appropriated by the Respondent towards the price of Guar Seeds ordered by the Petitioners, the amounts would not have been shown as advance as on 26/02/2015. The learned Single Judge has also observed that the Respondent has not filed any proceedings against any of the Petitioners to recover the loss alleged to have been caused on account of they be .....

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quantities of Guar Seeds pursuant to the alleged repeated orders to purchase the Guar Seeds, the defence of the Respondent was not a plausible one. The learned Single Judge therefore as indicated above deemed it appropriate to direct the Respondent to deposit in this Court the amount claimed by way of the statutory notices by the Petitioners in the above Company Petition as also the Petitioners in other companion Company Petitions. As indicated above it is the said order dated 17th/18th October .....

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he Respondent has a bonafide defence to the Company Petition as filed; C] That the learned Single Judge failed to appreciate that though the Petitioners claim to have entered into 5 contracts for supply of Soyabean Meal, the originals of the said contracts have not been produced by the Petitioners and therefore their case ought not to have been accepted; D] That the learned Single Judge erred in proceeding on the basis that the signatures of Mr. Bothra and the rubber stamp of Mr. Bothra were not .....

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te and the delivery Date. F] That the learned Single Judge has failed to take into consideration the report of the Director General of Competition Commission of India (DG CCI) in Case No.76 of 2012 wherein a finding has been recorded that the amounts advanced by the Petitioners to the Respondent towards the purchase of Guar Seeds. G] That the learned Single Judge failed to take into consideration the very pertinent aspect viz that the Respondent had supplied Guar Seeds to 4 of the group companie .....

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to the correspondence almost for a period of one year though it was the case of the Petitioner that it had not been supplied the Soyabean Meal under the said 5 contracts; I] That the learned Single Judge failed to appreciate that the Petitioners could not have continued to enter into new contracts for purchase of Soyabean Meal and paid advance despite consistent default in earlier contracts for purchase of Soyabean Meal. J] That the learned Single Judge failed to appreciate that since the Petiti .....

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an Meal contracts as signed by the Respondent with the rubber stamp of the Respondent appearing on the same. The Petitioners have also produced evidence of payment of ₹ 51,00,00,000/as advance to the Respondent. That being done so, the onus therefore shifted upon the Respondent to show that the defence raised is in good faith and is one of substance and it is likely to succeed; ii] That though the defence of the Respondent was that the amount was advanced for purchase of Guar Seeds which f .....

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by filing Notice of Motion (L) No.1548 of 2017 in the instant Appeal; iv] That the Respondent has failed to produce nor has made any reference in any of the pleadings of any email/ letter/correspondence through which the Respondent sent the alleged Guar Seeds contracts to the Petitioners or vice versa. v] That the Respondent has not produced even a single document showing the purchase of Guar Seeds on behalf of the Respondent through the broker Edelweiss Trading & Holdings Pvt. Ltd. vi] Tha .....

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paid by the Petitioner are shown as advances received in the account of the Respondent; ix] That the case of the Respondent that the Petitioner failed to make balance payment on account of sharp fall in price of Guar Seeds cannot be accepted in the teeth of the fact that the Petitioners would not have made payment of ₹ 6,00,00,000/on 26/07/2011 i.e. the day prior to the delivery date. x] That the reliance placed on the findings contained in the preliminary report of the DG CCI is misplace .....

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s evidentiary value of the said report, reliance is placed on the judgment of the Apex Court reported in (2008) 12 SCC 73 in the matter of Raymond Woollen Mills Ltd. v/s. Director General (Investigation and Registration) & Anr. to contend that the said report does not have any evidentiary value. xiii] That the report of DG CCI is solely based on the bank statement of the parties. The DG CCI did not have the benefit of material facts necessary to determine the inter se disputes between the pa .....

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for Soyabean Meal can be adjusted through some other product i.e. guar seeds which Betul seems to be holding. Hence on a bare reading of the email it talks about a proposal to the Respondent i.e. the Appellant herein that the advances can be adjusted with Guar Seeds. xv] That the supply of the Guar Seeds to the sister concerns of the Petitioners is of no avail. The said supply has to be considered in the context of the fact that as per the alleged Guar Seeds contracts between the Respondent and .....

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urt is misplaced as the contract in issue before the Hon'ble Madhya Pradesh High Court was different. In the said case Betul Oils Ltd who was the Respondent therein had produced a contract for purchase of Guar Seeds bearing a signature of M/s. Nova Trading Pvt. Ltd. whereas the present Respondent has failed to produce any such contract. xvii] That though it is the case of the Respondent that the Soyabean Meal contracts were received by Respondent from the Petitioners by emails, there is not .....

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d therein being 27/07/2012, the Respondent also did not address any correspondence for almost a year before addressing the said letter dated 15/06/2013. xx] That it is well settled that the commercial solvency does not constitute a stand alone ground to avoid winding up. In the event the company refused to pay on no genuine and substantial grounds, there is a presumption that the company is unable to pay its debts and thus the company ought to be wound up. Reliance is placed on the judgment of t .....

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of the Apex Court reported in 1990 (Supp) SCC 727 in the matter of Wander Ltd. and another v/s. Antox India P. Ltd. xxii] Having regard to all the aforesaid facts, the order passed by the learned Single Judge of this Court need not be interfered with as the Respondent i.e. the Appellant herein has not raised any substantial or genuine ground to avoid payment or defences raised by the Respondent i.e. the Appellant herein are not bonafide. CONSIDERATION : 12 Having heard the learned counsel for t .....

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ection as can be seen from the impugned order is that the defence raised by the Respondent was not found to be genuine, bonafide and plausible one by the learned Single Judge and therefore the learned Single Judge deemed it appropriate to put the Respondent to terms. It is required to be noted that the only defence taken by the Respondent in the reply to the statutory notice and in the affidavit in reply to the above Company Petitions is the defence that there were never any contracts for purcha .....

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by way of an application filed under Order XLI Rule 27 of the Code of Civil Procedure being Notice of Motion (L) No.1548 of 2017 which is filed in the instant Appeal. Hence the defence which was sought to be taken by the Respondent admittedly has not been buttressed by producing any cogent material in that regard. In so far as the Petitioners i.e. the Respondents herein are concerned, they have produced emails which according to them have been received from the Respondent comprising 5 contracts .....

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additional evidence being Notice of Motion (L) No.1548 of 2017. The additional evidence which is sought to be produced interalia contain the alleged Guar Seeds contracts. Hence it is for the first time at the Appellate stage that the Guar Seeds contracts are sought to be produced. By an order passed today the said Notice of Motion (L) No.1548 of 2017 has been dismissed for the reasons stated in the said order. 14 In so far as the 5 Soyabean Meal contracts which have been received by email by th .....

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d herein under : The Respondent states that the alleged contracts annexed by the Petitioners are also fabricated. The date are created to match the existing position of credit balance with the Respondent Company. The Respondent denies having sent any mail as annexed by the Petitioner. The following error is patent in the contracts. Hence a reading of the said paragraph indicates that though the Respondent has alleged that the contracts are fabricated and the dates are created to mach the existin .....

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re sent to the Petitioners. There is no reference to any email/ letter/correspondence by which the said Guar Seeds contracts were sent to the Petitioners. 16 Another aspect which dents the case of the Respondent in so far as the said defence is concerned is that its Director Mr. D Narsimhan and the representative of the Chartered Accountants of the Respondent Mr. P Bhargava have admitted before this Court that the amounts paid by the Petitioners are shown as advance received in the account of th .....

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ail dated 15/02/2012 addressed by Mr. Rajkumar Goyal to the Respondent is concerned, it is required to be noted that the said email is dated 14/02/2012 whereas the alleged Guar Seeds contracts are also dated prior in point of time. A reading of the said email indicates that the said email is in the nature of the proposal to the Respondent that the advances can be adjusted against the Gaur Seeds. The alleged Guar Seeds contracts are all prior in point of time to the email. Hence there would be no .....

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ot for purchase of Soyabean Meal is concerned. The contracts relating to Guar Seeds, according to the Respondent are dated 14/01/2012 whilst the Guar Seeds are alleged to have been supplied even prior to the contract date i.e. 28/11/2011. It is only in respect of the alleged Guar Seeds contract between the Respondent and M/s. Nova Trading Pvt. Ltd. (one of the Respondents in the companion Appeals) that the contract date is prior to the delivery date. Hence the aforesaid fact also does not suppor .....

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comprising the said Act indicates that the investigation carried out by the DG CCI is a preliminary fact finding inquiry and is not by way of quasijudicial proceeding. In the said fact finding inquiry there is no opportunity given to the concerned parties to make submissions but only statements are recorded and material considered. In so far as the instant report of the DG CCI is concerned, reading of paragraphs 5.12.10, 5.12.11 and 5.12.14 indicate that the DG CCI's finding is solely based .....

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or of the Respondent and, Mr. P Bhargava the representative of the Chartered Accountants of the Respondent wherein they have stated that the amount paid by the Petitioner was shown as advance in the account of the Respondent. The DG CCI cannot be said to be conducting any inquiry as regards the inter se disputes between the Petitioner and the Respondent but was only conducting the inquiry into whether there was any monopolistic activities being carried out in the sale of Guar Seeds. 19 In our vi .....

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which provisions can be said to be almost paramateria to Section 26 of the present Competition Act, 2002. The Apex Court held that any reference to the contents of the said report which have not been put in evidence and subjected to cross examination cannot be looked into. Paragraph 36 of the said report is material and is reproduced herein under : 36. The learned senior counsel for the respondents referred to the "preliminary investigation report" submitted by the Director General (I .....

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n, cannot be looked into. This is without prejudice to the contention that there is nothing stated in the preliminary investigation report, which in any way establishes that any competition was affected within the meaning of Section 2(o) of the Act and that competition was affected to any "material degree" in the relevant trade or industry, as contemplated under Clause (h) of Section 38(1) of the Act. In our view, therefore the findings of the DG CCI as contained in its report do not f .....

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ancies if any cannot lie at the door of the Petitioner and it is for the Respondent therefore to explain such discrepancies. Hence the case of the Respondent that the Soyabean Meal contracts are fabricated and that the Respondent did not send any email does not seem to be bonafide and is devoid of merits as rightly held by the learned Single Judge. In our view, merely because the Petitioner did not enter into correspondence though breach was committed by the Respondent would not dent the case of .....

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ter dated 15/06/2013. Hence the aforesaid fact suggests that the parties being in continuous business relationship did not desire to precipitate the matter and were trying to resolve the same. 21 The contention as urged on behalf of the Respondent that the emails do not contain the signature made on behalf of the Petitioner and therefore the said fact impinges upon whether there were any contracts for purchase of Soyabean Meal. In our view, the said contention misses the point that the said cont .....

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ils Ltd had produced the contract for purchase of Guar Seeds bearing the signature of M/s. Nova Trading Pvt. Ltd.; whereas in the instant case the Respondent has failed to produce any such Guar Seeds contracts. Further before the Madhya Pradesh High Court there was no admissions as are in the present case by the Director Mr. D Narsimhan and the representative of the Chartered Accountants Mr. P Bhargava. In so far as the said order passed by the Madhya Pradesh High Court is concerned, it is requi .....

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t it owes any debt to the Petitioner in the Company Petition. 23 In so far as the contention that urged on behalf of the Respondent that the Respondent is commercial solvent and therefore the order of the nature passed by the learned Single Judge was not required to be passed. In the said context, reference could be made to the judgment of the Apex Court in M/s. Madhusudan Gordhandas & Co.'s case (supra) and IBA Health (I) Pvt. Ltd.'s case (supra) . In Madhusudan Gordhandas & Co. .....

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ntitling 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 quantity the debt precisely (See Re. Tweeds Garages Ltd. 1962 Ch.406. (3) The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. I .....

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as such, would be sufficient to reject the petition for winding up, unless substantial grounds for its rejection are made out. A determination of examination of the company's insolvency may be a useful aid in deciding whether the refusal to pay is a result of the bona fide dispute as to liability or whether it reflects an inability to pay, in such a situation, solvency is relevant not as a separate ground. If there is no dispute as to the company's liability, the solvency of the company .....

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ay it debts, the law should take its own course and the company of course will have an opportunity on the liquidation application to rebut that presumption. Apart from the aforesaid legal position, it is sought to be pointed out on behalf of the Petitioners that the net worth of the Respondent as per its last balance sheet is much lesser than outstanding debts of the Petitioners. It is further sought to be pointed out that the amount lying in the bank account of the Respondent is also not suffic .....

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Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to re .....

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