1997 (3) TMI 548 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the winding-up petition.
2. Authorization to file the petition.
3. Bona fide dispute regarding the debt.
4. Claim for interest and its basis.
5. Legal precedents and their applicability.

Issue-wise Detailed Analysis:

1. Maintainability of the Winding-Up Petition:
The petitioner sought the winding up of the respondent-company under section 433(e) of the Companies Act, 1956, on the grounds that the respondent was unable to pay its debts. The court considered whether the debt was bona fide disputed by the respondent. The respondent-company argued that the principal amount had been paid during the proceedings, and only the interest amount was disputed. The court emphasized that a winding-up petition is not a remedy for debt recovery, especially when the debt is bona fide disputed.

2. Authorization to File the Petition:
The respondent-company challenged the maintainability of the petition on the grounds that the petitioner did not provide evidence that Shri K.C. Thakur was authorized to file the petition. The respondent also argued that the petitioner-company had been leased out to another entity, United Ispaat, Baddi, which further questioned the petition's maintainability.

3. Bona Fide Dispute Regarding the Debt:
The respondent-company contended that there was no open mutual current running account, but rather a simple buyer-seller relationship. They disputed the amount claimed by the petitioner and argued that the claim was barred by limitation. The court noted that the principal amount had been paid, and the dispute was solely regarding the interest, which was not agreed upon in writing.

4. Claim for Interest and Its Basis:
The petitioner claimed interest at the rate of 18% per annum, which was not supported by any written agreement or specific plea in the petition. The court highlighted that there was no mention of the interest rate or the basis for claiming such interest in the pleadings. The court referred to various precedents, including Multimetals Ltd. v. Suryatronics Pvt. Ltd., which held that a winding-up petition based solely on disputed interest is not maintainable.

5. Legal Precedents and Their Applicability:
The court reviewed several precedents cited by both parties. The respondent relied on cases like Multimetals Ltd. v. Suryatronics Pvt. Ltd. and Ultimate Advertising and Marketing v. G. B. Laboratories Ltd., which supported the view that a winding-up petition should not be used to recover disputed interest. The petitioner cited cases like Ashoka Agencies and Business Forms Ltd., In re and Devendra Kumar Jain v. Polar Forgings and Tools Ltd., which suggested that the company judge could determine the interest rate in appropriate cases. However, the court found that the present case did not fall within the category of appropriate cases where such principles could be applied.

Conclusion:
The court concluded that the respondent-company had raised a bona fide dispute regarding the payment of interest. Since the principal amount had already been paid and the claim for interest was not supported by a written agreement or specific pleadings, the petition for winding up was disallowed. The parties were left to bear their own costs.