2002 (6) TMI 557 - HC - Companies Law

Issues Involved:
1. Petition for winding up of the respondent-company.
2. Alleged debt and interest owed by the respondent to the petitioner.
3. Dispute over the authenticity of the letter and authority of the signatory.
4. Financial status and ability of the respondent to pay its debts.
5. Bona fide nature of the dispute over the debt and interest.

Issue-wise Detailed Analysis:

1. Petition for Winding Up of the Respondent-Company:
The petitioner filed a company petition for winding up of the respondent-company under sections 433(3) and (8) and 439 of the Companies Act, 1956, alleging that the respondent failed to pay a debt of Rs. 34,95,350. The petitioner argued that the respondent's financial position was precarious, evidenced by dishonored cheques and unpaid debts, and thus the company should be wound up.

2. Alleged Debt and Interest Owed by the Respondent to the Petitioner:
The petitioner claimed that the respondent had requested intercorporate deposits and agreed to pay interest and service charges. The petitioner maintained that the respondent owed Rs. 34,95,350 as of 31-7-1997, and despite reminders and statutory notices, the respondent failed to pay. The respondent countered that the sums borrowed were repaid and denied any agreement to pay further interest or service charges, asserting that the transactions were friendly accommodations and not commercial loans.

3. Dispute Over the Authenticity of the Letter and Authority of the Signatory:
The respondent disputed the authenticity of a letter dated 5-11-1993, which the petitioner relied on to claim interest. The respondent argued that the letter was signed by K. Santhanagopalan, who lacked authority and had resigned in 1996. The respondent suggested that the letter was fabricated post-resignation to support the petitioner's claim. The court noted discrepancies in the signatures and the lack of proof of the letter's dispatch and receipt.

4. Financial Status and Ability of the Respondent to Pay Its Debts:
The petitioner argued that the respondent's financial position was unsound, citing dishonored cheques and unpaid debts. However, the respondent provided a counter-statement of accounts and denied any financial distress, asserting that all principal amounts were repaid and no further payments were due.

5. Bona Fide Nature of the Dispute Over the Debt and Interest:
The court found that the respondent raised a bona fide dispute regarding the debt and interest. The petitioner failed to provide conclusive evidence of the respondent's liability to pay the claimed interest and service charges. The court emphasized that the dispute over the debt's existence and the terms of the alleged agreement required examination and cross-examination of evidence, which was beyond the scope of a winding-up petition.

Conclusion:
The court held that the petitioner's claim for interest and service charges was disputed on bona fide and substantial grounds. The proper remedy for the petitioner was to file a civil suit rather than a winding-up petition. Consequently, the company petition was dismissed, with the court emphasizing that winding-up proceedings are not a substitute for a civil suit to resolve disputed debts.

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