1997 (1) TMI 419 - HC - Companies Law

Summary

Issues:
- Dispute over performance of agreement
- Alleged admission of liability by respondent
- Petition for winding up based on failure to meet liabilities

Dispute over performance of agreement:
The petitioner, a company supplying machinery, filed a petition seeking winding up of the respondent company for failure to clear debts. The respondent argued that a bona fide dispute existed regarding the performance of the agreement between the parties. The agreement involved the supply and erection of an automatic plant, with a specific delivery period of 15 to 18 months. The respondent contended that the petitioner failed to supply the equipment as per the agreement, leading to delays. Correspondence and letters were submitted as evidence of attempts to resolve the issue amicably. The court found that a genuine dispute existed between the parties regarding the performance of the agreement, rendering the petition for winding up unsustainable.

Alleged admission of liability by respondent:
The petitioner claimed that the respondent admitted liability of Rs. 1,77,107.75, which was due from them. However, the respondent clarified that this amount was retention money to be released after completion of erection and successful production running. The respondent asserted that the amount was adjusted against advances not supplied by the petitioner. The court noted that the alleged admission of liability was related to a specific context and had been adjusted against other financial transactions between the parties. As the petitioner did not contest this assertion or file a replication denying it, the court held that the petitioner could not rely on this admission to support the winding-up petition.

Petition for winding up based on failure to meet liabilities:
The petitioner sought winding up of the respondent company due to alleged non-payment of debts despite repeated requests. The court observed that even if the respondent had admitted liability for a certain amount, the claim had become time-barred as the petition was filed after the expiration of the limitation period. A claim that is barred by time holds no legal standing, and therefore, the court dismissed the petition for winding up based on failure to meet liabilities.

In conclusion, the court dismissed the petition for winding up the respondent company, citing the existence of a genuine dispute over the agreement's performance, the adjusted liability amount, and the time-barred nature of the claim.