1998 (5) TMI 345 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the winding-up petition in view of the pending civil suit.
2. Existence of a bona fide dispute regarding the debt.
3. Solvency of the respondent-company.

Detailed Analysis:

1. Maintainability of the Winding-Up Petition:
The primary issue is whether the winding-up petition under section 433(e) of the Companies Act, 1956 is maintainable given that the petitioner has already filed a suit (O.S. No. 1621 of 1995) for the same claim before the Sub-Court, Coimbatore. The petitioner argued that the pendency of the suit does not bar the winding-up proceedings. The court referenced several judgments, including *Central Bank of India v. Sukhani Mining & Engg. Industries (P.) Ltd.* and *State Bank of India v. Hegde & Golay Ltd.*, which support the principle that winding-up proceedings serve the interests of all creditors and shareholders and are not invalidated by the existence of a civil suit. Thus, the court concluded that the winding-up petition is maintainable despite the pending civil suit.

2. Existence of a Bona Fide Dispute:
The respondent claimed that there is a bona fide dispute regarding the debt, asserting that the goods supplied were damaged. However, the court found that the dispute was raised belatedly and was not substantiated by evidence. The petitioner had already deducted the value of returned goods and partial payments made by the respondent from the total claim. The court noted that the respondent's letters, including the one dated 7-2-1995, did not mention any dispute about damaged goods, which further weakened the respondent's claim of a bona fide dispute. The court held that the defense set up by the respondent was not in good faith and that the dispute was neither bona fide nor tenable.

3. Solvency of the Respondent-Company:
The respondent contended that it is solvent and capable of discharging its liabilities. However, the court emphasized that mere assertions in the counter-affidavit without supporting evidence are insufficient. The petitioner alleged that the respondent is commercially insolvent, with several suits filed by other creditors and financiers. The court found that the respondent failed to provide reliable evidence to prove its solvency and ability to meet current liabilities. Consequently, the court determined that the petitioner had established sufficient grounds for winding up the respondent-company under section 433(e).

Conclusion:
The court overruled the objections raised by the respondent, finding that the winding-up petition is maintainable, there is no bona fide dispute regarding the debt, and the respondent-company is not solvent. Thus, the court ordered the winding-up of the respondent-company.