1998 (10) TMI 440 - HC - Companies Law

Issues Involved:
1. Whether the respondent-company owes the petitioner an ascertained sum of money.
2. Whether the debt is within the period of limitation.
3. Whether the defense raised by the respondent-company is bona fide.
4. Whether the court should consider the commercial insolvency of the company at the admission stage.

Issue-wise Detailed Analysis:

1. Whether the respondent-company owes the petitioner an ascertained sum of money:
The petitioner, Ficom Organics Ltd., claimed that the respondent, Leffans Petrochemicals Ltd., owed a sum of Rs. 16,27,422.15 along with further interest at 24% p.a. The petitioner supplied various quantities of Nonyl Phenol to the respondent under eight invoices, and the respondent issued post-dated cheques for payment. However, the respondent requested the petitioner not to deposit these cheques and later issued stop payment instructions, leading to dishonor of the cheques. The petitioner served statutory notice under section 138 of the Negotiable Instruments Act, 1881, which the respondent did not honor.

2. Whether the debt is within the period of limitation:
There was no dispute regarding the limitation period for the debt claimed by the petitioner. The transactions and the subsequent statutory notice were all within the permissible period under the law.

3. Whether the defense raised by the respondent-company is bona fide:
The respondent-company raised defenses related to the delay in delivery, quantity, and quality of the material supplied. However, the court found these defenses to be not bona fide. The respondent did not raise these issues prior to the statutory notice and provided no substantial evidence to support their claims. The court noted that the respondent's conduct, including issuing post-dated cheques and then stopping payment, indicated a lack of bona fide defense. The court concluded that the dispute raised by the respondent was not genuine and was an afterthought.

4. Whether the court should consider the commercial insolvency of the company at the admission stage:
The court discussed the principles laid down in various judicial precedents, including the Apex Court's decision in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. The court emphasized that if the debt is undisputed and the defense is not bona fide, the court should admit the winding-up petition. The court held that the commercial insolvency of the company should be considered at the final hearing stage rather than at the admission stage. The court also noted that the respondent-company's assertion of being a running concern and commercially solvent did not preclude the admission of the petition if the defense to the debt was not bona fide.

Conclusion:
The court granted the respondent-company time until 30-11-1998 to pay the petitioner the sum of Rs. 16,27,422.15. If the respondent provided a letter from Sunstar Chemicals agreeing to adjust Rs. 3,50,000 against the amount payable, the respondent would need to pay Rs. 12,89,608 instead. The court clarified that this payment would not affect the petitioner's claim for interest. If the respondent failed to pay by the stipulated date, the court would proceed with the admission and advertisement of the winding-up petition. The court rejected the respondent's request for a stay of the order, noting that sufficient time had already been granted for further recourse.

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