2002 (11) TMI 669 - HC - Companies Law

Summary

Issues Involved:
1. Failure to reply to the statutory notice.
2. Bona fide dispute and substantial defence.
3. Pendency of a civil suit.
4. Alleged overbilling and financial crunch.

Summary:

1. Failure to Reply to the Statutory Notice:
The petitioner filed a winding-up petition u/s 433(e) and 433(1)(a) of the Companies Act, claiming Rs. 26,68,000 with 18% interest per annum. Despite several reminders and a statutory notice dated 22nd March 1999, the respondent did not reply. The court noted that failure to respond to a statutory notice can lead to a presumption of indebtedness u/s 434 of the Companies Act, but this alone does not mandate winding-up orders. The court emphasized that a bona fide defence must be considered.

2. Bona Fide Dispute and Substantial Defence:
The court referred to Pradeshiya Industrial & Investment Corpn. of Uttar Pradesh v. North India Petro-Chemical Ltd. and other cases to outline conditions for winding-up:
- If there is a bona fide dispute and substantial defence, the court will not wind-up the company.
- The court will not act on a defence that the company can pay but chooses not to.
- If the defence is in good faith, substantial, and likely to succeed in law, the petition should be rejected.
- The wishes of creditors may be considered if justified.
- Winding-up should not be used merely to realize debts.
- The court may order the respondent to deposit the disputed amount if the stance of adversaries hangs in balance.
- An admission of debt or a non-dishonest defence is necessary for proceedings to continue.

3. Pendency of a Civil Suit:
The petitioner had also filed a suit for recovery of Rs. 39,81,265. The respondent's written statement included a set-off/counter-claim, but court fees were not paid as required. The court noted that the filing of a civil suit does not oust the jurisdiction of the Company Court. The respondent's defence was seen as flippant and not bona fide, as no legal action was initiated despite alleged over-payment.

4. Alleged Overbilling and Financial Crunch:
The parties had a contract for transportation, and the petitioner claimed charges based on dimensions, not weight. The respondent alleged overbilling and financial crunch but did not provide substantial evidence. The court found the petitioner's claim more credible, supported by several unreplied letters and the quashing of an FIR against the petitioner by the Allahabad High Court.

Conclusion:
The winding-up petition was admitted. The respondent was directed to deposit Rs. 30,00,000 with the Registrar General within thirty days, failing which citations would be published, and the appointment of a Provisional Liquidator would be considered on the next hearing date, 12-2-2003.