1993 (12) TMI 198 - HC - Companies Law

Summary

Issues:
Winding up petition under sections 433, 434, and 439 of the Companies Act, 1956 based on inability to pay debts; Disputed contracts for supply of shredded scrap; Alleged delay in clearing goods and demurrage charges; Denial of liability by the respondent company; Disputed documents related to foreign exchange release; Authorization of petitioner's representative to file the petition; Failure to produce original purchase orders and debit notes; Company's financial status and employment impact; Court's decision on declining interference and suggesting civil suit remedy.

Analysis:
The petitioner, a US-based company, filed a winding-up petition against the respondent company, Punjab Con-Cast Steels Limited, under sections 433, 434, and 439 of the Companies Act, 1956, citing the respondent's inability to pay its debts. The dispute arose from contracts for the supply of shredded scrap, with the petitioner alleging that the respondent failed to clear goods promptly, incurring demurrage charges of 345,851.64 US dollars. The respondent denied entering into the alleged contracts and disputed the authenticity of documents, including letters to the Reserve Bank of India for foreign exchange release.

The respondent challenged the authority of the petitioner's representative to file the petition and questioned the validity of the power of attorney. The court noted conflicting claims and the absence of crucial original documents, such as purchase orders and confirmed debit notes. It highlighted the need for evidence to resolve disputed facts, including the authenticity of documents and the representative's authority. The court emphasized the importance of a civil suit to address these issues properly.

Despite the petitioner's claims, the court observed that the respondent, a financially stable company with significant employment and tax contributions, was not insolvent. Given the complexity and disputed nature of the case, the court declined to intervene and advised the petitioner to pursue a civil suit for a thorough examination of the facts. The court dismissed the petition without costs, emphasizing that its decision was specific to the current proceedings and did not preclude the parties from litigating the matter in a civil court with proper evidentiary support.