1999 (2) TMI 479 - HC - Companies Law

Summary

Issues:
Petition for winding up under sections 433 and 434 of the Companies Act, 1956, Arbitration clause in the lease agreement, Jurisdiction of the Court, Dispute regarding lease agreement terms and default in payments.

Analysis:

1. Petition for Winding Up:
The petitioner, a limited company, filed a winding-up petition against the respondent-company for defaulting on lease payments. The respondent denied the claim, stating that cheques were honored except for one due to alleged default by the petitioner. The respondent raised a dispute regarding the financing terms of the lease agreement, alleging short financing by the petitioner. The Court noted the respondent's contentions and the lack of response from the petitioner to specific claims in the reply.

2. Arbitration Clause:
The respondent argued that the arbitration clause in the lease agreement ousted the jurisdiction of the Court. However, the Court held that an arbitration agreement does not automatically prevent a winding-up petition. Previous judgments clarified that the Court must decide on the merits before referring a matter to arbitration. The Court rejected the argument based on settled legal principles.

3. Jurisdiction of the Court:
The respondent claimed that jurisdiction was vested in civil courts in Delhi as per the agreement, but the Court ruled that parties cannot confer jurisdiction on a court if it lacks statutory authority. The Court affirmed its jurisdiction based on the location of the respondent's registered office, as per the Companies Act, disregarding the clause in the agreement.

4. Dispute on Lease Agreement Terms:
The respondent disputed the petitioner's claims, alleging default in financing terms and withholding payment due to the petitioner's actions. The Court noted the genuine dispute raised by the respondent regarding the stoppage of payment for one cheque. It emphasized that a winding-up petition is not for resolving disputed claims but for clear debts. The Court found the petitioner's failure to prove the debt and dismissed the winding-up petition.

In conclusion, the Court dismissed the winding-up petition due to the lack of evidence supporting the petitioner's claim as an admitted debt. The Court highlighted that a winding-up petition is not a means for resolving disputed claims and emphasized the limited jurisdiction of the company court in such matters. The parties were directed to seek other legal remedies, with no costs awarded in this case.