1986 (2) TMI 271 - HC - Companies Law

Summary

Issues:
- Petition for winding up under sections 433, 434, and 439 of the Companies Act
- Dispute over outstanding payment due from respondent to petitioner
- Respondent's defense of delay due to alleged contract violation
- Respondent's plea for installment payments and financial circumstances

Analysis:
The judgment pertains to a petition for winding up a company under sections 433, 434, and 439 of the Companies Act due to outstanding payments. The petitioner had entered into an agreement with the respondent for the installation of a Sulphuric Acid Plant. The respondent failed to pay the due amount of Rs. 14,48,740, along with additional sums, as agreed upon. Despite multiple reminders and agreements for installment payments, the respondent only made partial payments, leading to a balance of Rs. 12,28,740 at the time of the petition. The respondent contested the petition, citing delays caused by the petitioner in plant installation and requested installment payments over two years, which the court found to be a delaying tactic.

The court dismissed the respondent's defense of losses due to delayed installation, noting that the respondent had admitted liability and had not raised any substantial dispute earlier. The court referred to the case law principle that a company's defense should be in good faith, likely to succeed, and supported by prima facie evidence, which was not the case here. The court rejected the respondent's plea for installment payments as a frivolous attempt to delay payment, emphasizing the lack of supporting documents or good faith in the defense.

Regarding the respondent's plea based on its financial circumstances and debts to financial institutions, the court found no merit in the argument at the preliminary stage of the proceedings. The court noted that such considerations are typically addressed after the petition has been advertised. The court distinguished a cited case where financial circumstances were considered at a final decision stage, whereas in this case, the matter was still preliminary. Consequently, the court ordered the petition to be advertised in local publications, indicating a procedural step in the winding-up process.