1998 (10) TMI 494 - HC - Companies Law

Summary

Issues Involved:
1. Petition for winding-up under section 433(e) and (f) of the Companies Act, 1956.
2. Dispute over the amount owed by the respondent to the petitioner.
3. Allegations of overcharging by the petitioner.
4. Bona fide dispute regarding the rates and amounts.
5. Financial condition and ability of the respondent to pay its debts.
6. Interest on the outstanding amount.
7. Costs of the proceedings.

Issue-wise Detailed Analysis:

1. Petition for winding-up under section 433(e) and (f) of the Companies Act, 1956:
The petitioner sought the winding-up of the respondent-company on the grounds of insolvency, claiming the respondent was unable to pay its dues despite receiving a statutory notice.

2. Dispute over the amount owed by the respondent to the petitioner:
The petitioner claimed an outstanding amount of Rs. 28,88,529.25 along with interest at 24% per annum. The respondent disputed this amount, asserting that there was a bona fide dispute regarding the accounts and that they were willing to settle the amount once the accounts were properly reconciled.

3. Allegations of overcharging by the petitioner:
The respondent alleged that the petitioner had overcharged for the rectified spirit supplied, contrary to the agreed rates. They claimed that the petitioner charged higher rates than agreed upon, leading to a dispute over the amounts billed.

4. Bona fide dispute regarding the rates and amounts:
The court found that the dispute regarding the rates and amounts was bona fide and substantial. The respondent had written letters protesting the overcharging, which were allegedly not received by the petitioner. The court noted that such disputed questions could not be decided in summary winding-up proceedings and required detailed evidence.

5. Financial condition and ability of the respondent to pay its debts:
The respondent argued that their financial difficulties were due to the significant expenses incurred in shifting their plant and setting up an effluent treatment plant, as mandated by the Supreme Court. Despite these challenges, the respondent had paid a substantial portion of the admitted amount, albeit in instalments. The court found no sufficient evidence to conclude that the respondent was commercially insolvent or unable to meet its liabilities.

6. Interest on the outstanding amount:
The petitioner claimed interest at 24% per annum based on trade custom and practice. The court, however, found no evidence of an agreement or established trade custom to support this claim. Instead, the court directed the respondent to pay interest at 15% per annum on the admitted amount from the date of the statutory notice until the date of payment.

7. Costs of the proceedings:
The court directed the respondent to pay costs amounting to Rs. 2,000 to the petitioner, to be paid within five weeks.

Conclusion:
The winding-up petition was dismissed. The court directed the respondent to pay interest at 15% per annum on the admitted amount and assessed costs of Rs. 2,000 to be paid to the petitioner. The court emphasized that the machinery for winding-up should not be used merely as a means for debt recovery, especially when there is a bona fide dispute regarding the debt. The petitioner was advised to pursue the matter in the civil court where a suit for recovery had already been filed.