1998 (2) TMI 451 - HC - Companies Law

Summary

Issues:
- Application for winding up under sections 433(e) and 434(1)(a) read with section 439 of the Companies Act, 1956.
- Dispute over outstanding payment for painting work.
- Validity of statutory notice under section 434.
- Claim of debt barred by limitation.
- Acknowledgment of liability by the respondent-company.
- Dispute over the amount owed and payments made.
- Bona fide dispute regarding liability and insolvency.

Analysis:

1. The petitioner sought winding up of the respondent-company for outstanding payment for painting work. The respondent denied the allegations, claiming payments made and work done by another company. The petitioner issued a statutory notice demanding payment, which the respondent argued was invalid under section 434 of the Companies Act.

2. The court clarified that section 434 requires a demand for debts due, with non-compliance indicating inability to pay. The notice need not specify winding-up action, and its absence does not invalidate it. The court rejected the respondent's argument that the notice was invalid, as it complied with statutory requirements.

3. The respondent claimed the debt was barred by limitation, citing the last payment in 1991. However, the petitioner argued that the respondent acknowledged the debt in 1991, extending the limitation period. The court found the acknowledgment valid, rejecting the limitation defense.

4. The court analyzed the acknowledgment of liability by the respondent in correspondence, finding it sufficient to extend the limitation period. The acknowledgment indicated an intention to pay, preserving the petitioner's claim from being time-barred.

5. Disputes arose over the amount owed and payments made, with the respondent alleging payments through cheques and receipts. The court noted discrepancies in the accounts and payments, concluding that a bona fide dispute existed regarding the outstanding amount.

6. The court determined that the disputes over payments and work done required a full trial in a civil court for resolution. It found no evidence of the respondent's commercial insolvency, leading to the dismissal of the winding-up petition at the admission stage.

7. In conclusion, the court dismissed the company petition, leaving the parties to bear their own costs. The judgment highlighted the need for a full trial to resolve the disputes over liability and payments, emphasizing the absence of evidence of commercial insolvency.