1998 (12) TMI 516 - HC - Companies Law

Issues Involved:
1. Non-payment for supplied goods.
2. Allegation of defective goods.
3. Dishonoured cheque.
4. Evaluation of bona fide defense.
5. Justification for winding up order.

Issue-wise Detailed Analysis:

1. Non-payment for supplied goods:
The petitioner supplied H.D.P.E. containers to the respondent company, claiming an amount of Rs. 85,712.80 was due as per Invoice No. 206 and D.C. Nos. 136 and 137, dated 28-10-1995. Despite repeated reminders, the payment was not made. The petitioner also mentioned an earlier due of Rs. 10,000 for a supply made on 12-6-1995, which was settled by cheque dated 29-4-1997, almost two years later. The respondents issued a cheque for Rs. 10,000 on 25-9-1997 towards part payment, which was dishonoured due to "insufficient funds." The petitioner sent a statutory notice on 30-9-1997, which received a reply on 7-10-1997, indicating the cheque was an advance for goods not supplied and alleging the supplied containers were defective.

2. Allegation of defective goods:
The respondents contended that the containers supplied were defective, as stated in their letter dated 24-2-1996 and reiterated in their reply to the statutory notice dated 7-10-1997. They argued that since the goods were defective, they were not liable to pay the demanded amount and that the petitioners should have taken the goods back.

3. Dishonoured cheque:
The respondents claimed the dishonoured cheque for Rs. 10,000 was an advance for a future order, not related to the previous consignment. The court found no supporting documents for this claim and noted the cheque was dishonoured due to insufficient funds. The court concluded the cheque was part payment for the outstanding dues, and the respondents' defense was false.

4. Evaluation of bona fide defense:
The court evaluated whether the respondents' defense was valid and convincing. The court noted the respondents took delivery of the goods in October 1995 and only mentioned defects in February 1996, after a significant delay. The petitioners refuted the defect claim immediately, and the respondents retained the goods without further action. The court found the defense of defective goods lacked credibility and was not a bona fide defense.

5. Justification for winding up order:
The court considered whether the respondents' inability to pay their debts justified a winding-up order. The court noted the respondents' failure to pay over a considerable period and the dishonoured cheque indicated their inability to meet their debts. The court also reviewed the balance sheet, which did not demonstrate a healthy financial state. The court concluded the respondents' defense was sham and devoid of merit, justifying the winding-up order.

Conclusion:
The court directed the petitioners to advertise the winding-up petition in the local edition of the Times of India and scheduled the next hearing for further orders. The court emphasized that a party pleading a false defense and making a belated offer to pay does not deserve indulgence.

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