2002 (10) TMI 686 - HC - Companies Law

Summary

Issues Involved:
1. Validity of the guarantee agreement dated 25th March, 1997.
2. Bona fide dispute regarding the debt owed by the respondent.
3. Whether the winding-up petition is a proper remedy to resolve the dispute.

Issue-Wise Detailed Analysis:

1. Validity of the Guarantee Agreement Dated 25th March, 1997:

The petitioner claimed that the respondent-company executed a guarantee agreement on 25th March, 1997, for the due performance of the work by VIPL. The respondent disputed the authenticity of this agreement, asserting that it was fabricated by R. Ramakrishna in collusion with the petitioner. The court noted that several documents referred to by the petitioner were not produced, and there was no reference to a third-party guarantee in key documents like the work orders dated 2nd August, 1996, and 2nd April, 1997, and the letter of intent dated 25th March, 1997. The court found that the guarantee agreement mentioned payments made on 26th and 27th March, 1997, as if they were made on 25th March, 1997, which raised suspicions about its genuineness. The court concluded that there was a genuine dispute regarding the existence and validity of the guarantee agreement.

2. Bona Fide Dispute Regarding the Debt Owed by the Respondent:

The petitioner alleged that the respondent was liable to pay Rs. 41.33 lakhs as a mobilisation advance and Rs. 62.95 lakhs for indemnity. The respondent contended that the deeds of guarantee and the agreement were fabricated and that VIPL owed the respondent for the pavers supplied. The court noted that the respondent had raised a bona fide dispute about the genuineness of the guarantee agreement and other related documents. The court emphasized that the balance sheets of the respondent-company did not indicate any guarantee for the repayment of the mobilisation advance received by VIPL. The court concluded that the respondent had a substantial defence and that the debt was in bona fide dispute.

3. Whether the Winding-Up Petition is a Proper Remedy to Resolve the Dispute:

The petitioner sought the winding-up of the respondent-company under sections 433(e) and 433(f) of the Companies Act, 1956, on the grounds of its inability to pay debts. The respondent argued that the dispute should be resolved in a civil court. The court agreed, noting that the winding-up proceedings were not appropriate for resolving the genuine disputes regarding the guarantee agreement and the debt. The court held that the petitioner should establish the validity of the agreements in a civil court. Consequently, the court dismissed the winding-up petition, concluding that the respondent had raised a bona fide and substantial defence.

Conclusion:

The court dismissed the company petition for winding up the respondent-company, holding that the petitioner had not established the debt due and payable by the respondent. The court found that the respondent had raised a bona fide dispute regarding the genuineness of the guarantee agreement and other related documents. The court concluded that the appropriate remedy for the petitioner was to approach a civil court to resolve these disputes.