2002 (4) TMI 781 - HC - Companies Law

Issues Involved:
1. Whether the commission payable to MSIL by the respondent companies amounts to a "debt due" under section 433(e) of the Companies Act, 1956.
2. Whether the financial solvency of a company is an absolute bar to its being wound up.
3. Whether the respondent-company is liable to be wound up under section 433(f) of the Companies Act, in addition to section 433(e).
4. Whether the debt needs to be precisely quantified to maintain a petition under section 433(e).
5. Whether the respondent-company is bound to pay margin/commission to the petitioner-company as per the Supreme Court's observations in Khoday Distilleries Limited v. State of Karnataka.
6. Whether the petition is barred by limitation.
7. Whether the petitioner-company should approach the civil court instead of filing a winding up petition.

Detailed Analysis:

1. Commission Payable as "Debt Due":
The petitioner-company argued that the commission payable by the respondent companies amounts to a "debt due" under section 433(e) of the Companies Act, 1956. The petitioner asserted that the respondent-company withheld the margin money payable since 1989 and did not pay any part of it despite repeated requests and demands. The court referenced several cases, including Kudremukh Iron Ore Co. Ltd. v. Kooky Roadways Pvt Ltd., to support the argument that a debt must be a determined or definite sum of money payable immediately or at a future date. The court found that the claim for margin money was disputed and not free from doubt, requiring detailed examination, which is not permissible in a winding up petition.

2. Financial Solvency and Winding Up:
The petitioner argued that the financial solvency of a company is not an absolute bar to its being wound up if it fails to pay its debt. The court noted that the respondent-company is one of the leading breweries in the country with substantial assets and consistent profits, indicating its commercial solvency. The court emphasized that the winding up process should not be used as a pressure tactic for enforcing debt payment and that the company is solvent and able to meet its liabilities.

3. Winding Up Under Section 433(f):
The petitioner contended that the respondent-company should be wound up under section 433(f) of the Companies Act, as the public interest served outweighs the harm caused. The court referenced Hind Overseas Private Ltd. v. Raghunath Prasad Jhunjhunwala and other cases, concluding that the public interest and just and equitable grounds did not warrant the winding up of a commercially solvent company.

4. Debt Quantification:
The petitioner argued that the debt need not be precisely quantified to maintain a petition under section 433(e). The court noted that the exact amount of the debt was disputed and that the claim for margin money required detailed investigation, which is not suitable for a winding up petition.

5. Supreme Court's Observations in Khoday Distilleries Limited v. State of Karnataka:
The petitioner relied on the Supreme Court's observations in Khoday Distilleries Limited v. State of Karnataka, arguing that the respondent-company is bound to pay the margin/commission. The court found that the Supreme Court's observations were specific to the parties in that case and did not constitute a general law binding on all manufacturers. The court also noted that the amended rules did not authorize the petitioner-company to collect margin money from manufacturers.

6. Limitation:
The respondent-company argued that the petition was barred by limitation, as the claim related to the period 1989 to 1996, and the petition was filed in 1999. The court agreed, noting that the claim appeared to be time-barred under the Limitation Act, 1963, and required detailed investigation, which is not suitable for a winding up petition.

7. Civil Court Jurisdiction:
The respondent-company contended that the petitioner-company should approach the civil court for resolving the dispute. The court agreed, stating that the disputed questions of fact and the nature of the claim required a detailed examination, which is appropriate for a civil court rather than a winding up petition.

Conclusion:
The court found that the petitioner's claim was disputed and required detailed investigation, which is not suitable for a winding up petition. The respondent-company's defence was bona fide and substantial, and the company was commercially solvent. Therefore, the court rejected the winding up petitions and directed the parties to bear their own costs.

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