1989 (12) TMI 243 - HC - Companies Law

Summary

Issues:
- Winding up petition under sections 433/434 read with section 439 of the Companies Act, 1956.
- Dispute over outstanding amount owed by the respondent-company to the petitioner.
- Disagreement regarding the quality of goods supplied and rates charged.
- Claim for recovery of amount due to failure to supply Form 'C' for concessional rates of sales tax.

Analysis:
The petition before the High Court was filed under sections 433/434 read with section 439 of the Companies Act, 1956, seeking the winding up of the respondent-company due to its alleged inability to clear off debts and meet liabilities. The petitioner claimed an outstanding amount of Rs. 7,55,760.40 owed by the company for material supplied. The company, on the other hand, admitted the business dealings but disputed the quality of goods supplied and the rates charged. It contended that discrepancies in bills were rectified, and a lesser amount of Rs. 3,62,830.49 was due and paid during the proceedings. The company also argued that the petitioner's claim regarding Form 'C' for sales tax concessions was not valid as it was willing to supply the forms for accepted bills. The financial stability of the company was emphasized, supported by a certificate from a bank and the annual report for the year 1987.

The court, after considering the submissions and pleadings of both parties, held that the petitioner failed to establish the commercial insolvency of the company. The company had cleared a significant portion of the outstanding amount and demonstrated financial stability through bank certificates and annual reports. The court found the company's defense against the petitioner's claims to be genuine and not lacking good faith. Therefore, the petition for winding up was dismissed as the petitioner could not prove the company's commercial insolvency or the lack of bona fides in its defense.