2001 (7) TMI 1207 - HC - Companies Law

Issues Involved:
1. Winding up of the respondent-company under sections 433 and 434 of the Companies Act, 1956.
2. Alleged failure of the respondent to pay the debt.
3. Claim of the petitioners being time-barred by limitation.
4. Dispute over the calculation and payment of storage charges.
5. Inclusion of interest in the claimed amount without an agreement.
6. Legitimacy of the petition as a means to recover disputed debt.
7. Availability of alternative remedies, such as civil suits and arbitration.

Detailed Analysis:

1. Winding Up of the Respondent-Company:
The petitioners sought an order for winding up the respondent-company under sections 433 and 434 of the Companies Act, 1956, alleging the respondent's failure to pay a debt of Rs. 20,57,600.66, inclusive of interest. The petitioners claimed that the respondent had no bona fide dispute and had admitted part of the debt.

2. Alleged Failure to Pay Debt:
The petitioners claimed the respondent failed to pay storage charges for three periods: September 1995 to November 1996 (Rs. 7,20,252), June 1998 to July 1998 (Rs. 1,83,020), and August 1998 (Rs. 84,002). The total debt, including interest, was Rs. 20,57,600.66. The respondent disputed the entire claim, arguing there was no legally enforceable debt and that certain modifications and implied changes in the agreement terms occurred through discussions and negotiations.

3. Claim Being Time-Barred by Limitation:
The respondent argued that the claim for the first period (September 1995 to November 1996) was time-barred since the petition was filed on August 31, 2000, beyond the statutory limitation period of three years. The petitioners countered that the debt was acknowledged in a letter dated March 14, 2000, thereby extending the limitation period.

4. Dispute Over Calculation and Payment of Storage Charges:
The respondent contended that the billing was initially based on full tank calibrated charges and later changed to actual storage charges. The petitioners billed on full calibrated capacity, while the respondent paid based on actual storage. This dispute over billing methods indicated a bona fide disagreement requiring evidence.

5. Inclusion of Interest Without Agreement:
The petitioners included interest of Rs. 10,70,396.66 in the total claimed amount, although there was no agreement to pay interest. The court noted that such controversies over interest entitlement could not be decided in summary proceedings under sections 433 and 434 of the Companies Act.

6. Legitimacy of the Petition:
The respondent argued that the petition was an attempt to recover a disputed debt through winding up proceedings, which is not a legitimate use of such proceedings. The court agreed, emphasizing that winding up petitions should not be used to enforce payment of bona fide disputed debts. The court referenced several Supreme Court judgments supporting this view, including Hind Overseas (P.) Ltd. v. Raghunathprasad Jhunjhunwalla and Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami.

7. Availability of Alternative Remedies:
The court highlighted that the petitioners had not resorted to alternative remedies such as filing a civil suit or invoking the arbitration clause in the agreement. The arbitration clause stipulated that disputes should be settled by arbitration in Bombay as per the rules of the Indian Council of Arbitration. The court found it unfair for the petitioners to seek winding up without first attempting arbitration or civil litigation.

Conclusion:
The court dismissed the petition, finding that the petitioners had abused the process of law by inflating their claim and including time-barred amounts and interest without agreement. The court emphasized that winding up is an extreme remedy to be used sparingly and only when there is no bona fide dispute. The petitioners were ordered to pay costs of Rs. 25,000 to the respondent-company.

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