1999 (10) TMI 690 - HC - Companies Law

Summary

Issues Involved:
1. Whether the petitioner is entitled to a winding-up order under sections 433 and 434 of the Companies Act, 1956.
2. Whether the bills submitted by the petitioner were fraudulent.
3. Whether the respondent's defense is bona fide and substantial.
4. Whether the petitioner should seek remedy through a civil suit.

Detailed Analysis:

1. Entitlement to Winding-Up Order:
The petitioner, United Construction Co., sought a winding-up order against Piccadily Sugar & Allied Industries Ltd. under sections 433 and 434 of the Companies Act, 1956. The petitioner claimed an unpaid debt of Rs. 11,40,246.62 for construction work completed, with the respondent having paid Rs. 88,07,224 out of the approved Rs. 99,47,970.62. The petitioner argued that the respondent had not paid the remaining amount despite notice.

2. Allegation of Fraudulent Bills:
The respondent contested the petition, alleging it was an abuse of the court process. They claimed that two bills (P11 and P13) were never submitted and were fraudulently created by the petitioner. The respondent asserted that the petitioner abandoned the project and failed to adjust a Rs. 25 lakh mobilization advance. The respondent denied the claimed amount, stating that the covering letters were doctored and no actual bills were attached.

3. Bona Fide and Substantial Defense:
The court referred to the Supreme Court's decision in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd., which established that a winding-up order could be made if the debt is undisputed, but if the debt amount is disputed, the court must ensure the company's defense is in good faith and substantial. The court also cited Tata Davy Ltd. v. Steel Strips Ltd. and Gleason Works v. Punjab Tractors Ltd., emphasizing that a bona fide dispute relegates the matter to civil court for resolution.

Revisiting the facts, the court noted that the disputed bills (8-A and 9-A) were out of sequence and appeared forged. The covering letters (P11 and P13) did not have attached bills and referred to road work, not the sugar factory construction. The court observed discrepancies in the letterheads used, indicating potential fabrication. Given these facts, the court found the respondent's defense to be in good faith and substantial.

4. Remedy through Civil Suit:
The court concluded that the nature of the dispute required adjudication through a civil suit rather than a winding-up petition. The court held that the petitioner had not established prima facie proof of the debt and that the defense was bona fide.

Conclusion:
The court dismissed the petition for winding up, stating it was without merit. However, it clarified that this judgment should not influence any civil suit the petitioner might file to resolve the dispute.