1999 (8) TMI 792 - HC - Companies Law

Summary

Issues:
1. Application for winding up under section 433(e) and (f) of the Indian Companies Act, 1956.
2. Dispute over payment for goods supplied on credit.
3. Allegations of defective goods supplied by the petitioner.
4. Denial of liability and claim of being commercially solvent by the respondent.
5. Challenge to the order of admission and subsequent evidence submission.
6. Confirmation of debt and liability through acknowledgments and balance confirmations.
7. Interpretation of interest payment agreement and terms of supply.
8. Examination of evidence regarding the quality of goods supplied.
9. Confirmation of liability through written acknowledgments and balance confirmations.
10. Verification of authority for acknowledging debt and submission of 'C' Forms.
11. Legal significance of 'C' Forms and balance confirmations in determining jural relationship.
12. Rejection of limitation plea based on previous court rulings.
13. Finding of commercial insolvency based on financial status and debt obligations.
14. Decision to wind up the respondent-company under the Indian Companies Act.

Analysis:
1. The petitioner filed an application for winding up the respondent-company under sections 433(e) and (f) of the Indian Companies Act, 1956, citing non-payment for goods supplied on credit. The petitioner claimed a total outstanding amount, including interest, and argued that the respondent's failure to pay rendered them commercially insolvent.

2. The petitioner alleged that the respondent received goods on credit but failed to make payments within the agreed timeframe, leading to a debt of Rs. 3,62,837.23 as of 31-3-1995. The respondent disputed the claim, citing defects in the supplied goods and denying liability. The court found in favor of the petitioner based on evidence of supply, acknowledgments, and balance confirmations.

3. Evidence presented by the petitioner, including invoices and acknowledgments signed by the respondent's authorized representative, supported the claim of non-payment and confirmed the debt amount. The respondent's argument of defective goods was refuted due to lack of evidence in rebuttal.

4. The respondent denied liability, claiming that the petitioner's allegations were false and that the debt acknowledgment was unauthorized. However, the court found the evidence of acknowledgments and balance confirmations to be credible, establishing the respondent's liability and rejecting the limitation plea.

5. The court upheld the order of admission and dismissed the respondent's challenge, emphasizing the legal significance of 'C' Forms and balance confirmations in establishing a jural relationship between the parties. The respondent's failure to provide evidence in rebuttal further strengthened the petitioner's case.

6. Based on the unchallenged testimony of a witness regarding the respondent's failure to submit financial statements and heavy indebtedness, the court concluded that the respondent was commercially insolvent. Consequently, the court ordered the winding up of the respondent-company under the Indian Companies Act.