1993 (11) TMI 198 - HC - Companies Law

Summary

Issues involved: Winding up petition based on outstanding dues from respondent-company and maintainability of the petition due to reliance on running account.

Judgment Summary:

Issue 1: Outstanding Dues and Winding Up Petition
The petitioner sought winding up of the respondent-company due to outstanding dues of Rs. 7,19,546.12, with a pending larger amount suit. Despite statutory notices and acknowledgments of liability, the respondent failed to pay. Ex parte proceedings were conducted, and evidence was presented, including the respondent's admission of the due amount. However, the court noted that reliance solely on a running account for a winding up petition was not appropriate, as per Section 34 of the Evidence Act and the decision in Chandradhar Goswami v. Gauhati Bank Ltd. The court emphasized that a winding up petition based on a running account is not suitable and that liability must be proven for each entry in the books of account.

Issue 2: Maintainability of Winding Up Petition
The court highlighted that the basis of the current petition, the running account, was not the subject of previous court decisions. It was noted that the Division Bench decision did not address the specific issue of the running account's suitability for a winding up petition. Referring to the Supreme Court's stance in Chandradhar Goswami case, it was concluded that proving each entry in the books of account is not feasible in a summary procedure under section 433 of the Companies Act. The court ruled that a civil suit, not a winding up petition, was the appropriate remedy for the petitioner in this case.

In conclusion, the court found the winding up petition not maintainable due to the reliance on a running account and directed the petitioner to pursue the appropriate remedy through a civil suit if deemed necessary.