1990 (9) TMI 272 - HC - Companies Law

Summary

Issues Involved:
1. Petition for winding up on the ground of inability to pay debts.
2. Dispute over the agreement and obligations of the parties, including the opening of letters of credit.
3. Claim of bona fide dispute by the respondent company.
4. Financial solvency of the respondent company.
5. Admission of the petition and directions for advertisement.

Issue-wise Detailed Analysis:

1. Petition for Winding Up on the Ground of Inability to Pay Debts:
The petitioner sought the winding up of the respondent company on the grounds of its inability to pay its debts amounting to Rs. 5,75,000 plus interest at the rate of 18% per annum. The respondent company had received advances from the petitioner for the supply of table top coated paper copiers but failed to deliver the machines or return the advance amount. Despite repeated promises and notices of demand, the company neglected to make the payment.

2. Dispute Over the Agreement and Obligations of the Parties:
The respondent company argued that no amount was due to the petitioner, claiming that the petitioner had agreed to finance the project and arrange for supplies from Develop Germany. The respondent company detailed various arrangements and expenses incurred, including obtaining industrial and import licenses, and alleged that the petitioner failed to open letters of credit, which led to the project's cancellation. The petitioner denied any agreement to open letters of credit and maintained that the company had agreed to furnish bank guarantees, which it failed to do.

3. Claim of Bona Fide Dispute by the Respondent Company:
The respondent company claimed that there was a bona fide dispute regarding the amount due, citing substantial losses incurred due to the petitioner's failure to open letters of credit and the subsequent cancellation of the project. The company detailed losses amounting to Rs. 85,00,000 and argued that the petitioner owed a substantial amount to the respondent, making the winding up petition false, frivolous, and malicious.

4. Financial Solvency of the Respondent Company:
The respondent company asserted its solvency, highlighting a turnover of Rs. 45,08,108.83 and net current assets of Rs. 38,07,252.89 as of March 31, 1986. The company contended that it was completely solvent and capable of meeting any debts due, thus arguing against the winding up petition.

5. Admission of the Petition and Directions for Advertisement:
The court found that the respondent company had not raised a bona fide dispute regarding a significant part of the debt. The court noted that the company admitted receiving the amount and failing to supply the machines or return the money. The court also observed that there was no agreement requiring the petitioner to open letters of credit. Consequently, the petition was admitted to hearing, and directions were given for its advertisement in specified newspapers and the Delhi Gazette. The court also provided a condition that if the company deposited Rs. 5,75,000 within four weeks, the advertisement would not issue.

Conclusion:
The court concluded that the petition for winding up was not liable to be dismissed without admission. The petition was admitted, and directions for advertisement were issued, with a provision for the respondent company to avoid the advertisement by depositing the due amount within the stipulated time.