1993 (10) TMI 290 - HC - Companies Law

Summary

Issues:
1. Winding up petition filed by Mayar Traders Ltd. against Akhil Service Ltd. for unpaid debts related to printing lottery tickets.
2. Dispute over non-payment of outstanding amount by Akhil Service Ltd. and counter-claim for damages due to delayed delivery of lottery tickets.
3. Legal implications of settlement letter dated January 29, 1992, acknowledging debt and subsequent non-payment by Akhil Service Ltd.
4. Interpretation of the settlement letter as an admission of liability under section 433(e) of the Companies Act.
5. Examination of arguments regarding the validity of the settlement letter and the absence of a bona fide dispute raised by Akhil Service Ltd.
6. Consideration of precedents related to acknowledgment of debt, liability admission, and the requirement to establish discharge of debt.

Analysis:
1. Mayar Traders Ltd. filed a winding up petition against Akhil Service Ltd. for unpaid debts arising from printing lottery tickets. The agreement between the parties stipulated delivery schedules for various lottery draws, leading to an outstanding amount of Rs. 1,78,000 owed by Akhil Service Ltd. Despite some payments made, a settlement letter dated January 29, 1992, confirmed an admitted liability of Rs. 1,02,721.03, which remained unpaid despite repeated reminders and a statutory notice issued by Mayar Traders Ltd.

2. Akhil Service Ltd. disputed the outstanding amount, claiming damages due to alleged delays in the delivery of lottery tickets by Mayar Traders Ltd. The respondent argued that the petitioner breached the agreement by not adhering to the delivery schedule, resulting in losses and damages. A counter-claim of Rs. 1,35,780 was raised by Akhil Service Ltd., contending that the settlement letter was not a valid acknowledgment of liability.

3. The settlement letter dated January 29, 1992, played a crucial role in the case, with Mayar Traders Ltd. asserting it as an admission of debt by Akhil Service Ltd. The court analyzed the legal implications of this letter, considering it as a valid acknowledgment of liability under section 433(e) of the Companies Act, establishing the debt due and payable by Akhil Service Ltd.

4. The court examined the settlement letter in light of legal precedents related to acknowledgment of debt and liability admission. It emphasized that the settlement amount of Rs. 1,02,721.03 was not a mere acknowledgment but a final settlement after discussions, indicating the present liability of Akhil Service Ltd. The petitioner's invocation of section 433 required proving the existence of a debt, which was established through the settlement letter.

5. Akhil Service Ltd. contested the validity of the settlement letter, arguing that it was procured and did not constitute a new contract or a basis for the winding up petition. The respondent's defense was scrutinized, with the court dismissing the claim of a bona fide dispute, as the settlement letter clearly acknowledged the debt, and no substantial defense was raised by Akhil Service Ltd.

6. The court referred to legal decisions regarding acknowledgment of debt and liability disputes to assess the validity of the settlement letter. It highlighted the absence of a bona fide dispute raised by Akhil Service Ltd., emphasizing that the admitted liability remained unpaid, justifying Mayar Traders Ltd.'s right to file the winding up petition. The court ordered the admission of the petition for further hearing and publication in specified newspapers.