2002 (8) TMI 781 - HC - Companies Law

Issues Involved:
1. Admissibility of the company petition under sections 433, 434, and 439 of the Companies Act, 1956.
2. Dispute over the quality of goods supplied.
3. Confirmation and accuracy of the statement of accounts.
4. Alleged assignment of debt from Camellia Tea Group Private Limited.
5. Bona fide nature of the appellant-company's defense.

Detailed Analysis:

1. Admissibility of the Company Petition:
The respondent filed Company Petition No. 324 of 2001 under sections 433, 434, and 439 of the Companies Act, 1956, claiming an outstanding amount of Rs. 10,36,353.83. The learned Company Judge admitted the petition, prompting the appellant-company to appeal the decision.

2. Dispute Over Quality of Goods Supplied:
The appellant-company initially claimed that the goods supplied by the respondent were of inferior quality, causing significant losses. However, during the appeal, the appellant-company chose not to press this defense, indicating that this issue was not a substantial part of their argument.

3. Confirmation and Accuracy of the Statement of Accounts:
The respondent sent multiple letters (dated 21st May 1997, 18th June 1998, 7th April 1999, and 6th May 2000) to the appellant-company, seeking confirmation of outstanding balances. The appellant-company received these letters but did not dispute the balances. The appellant-company later claimed these letters were fabricated and that payments made were not reflected in the respondent's accounts. The learned Company Judge found the appellant-company's contention regarding the non-receipt of letters and the accuracy of accounts to be without substance, labeling their defense as a "mere moonshine defense."

4. Alleged Assignment of Debt from Camellia Tea Group Private Limited:
The respondent included a debt of Rs. 1,36,027.36 from Camellia Tea Group Private Limited in their claim. The appellant-company contested this, arguing that the assignment was not lawful and that they never accepted this debt. The court agreed with the appellant-company, stating that the unilateral assignment by Camellia was of no consequence as the appellant-company never accepted such liability. The court concluded that this amount could not be treated as part of the debt payable by the appellant-company to the respondent.

5. Bona Fide Nature of the Appellant-Company's Defense:
The court emphasized that the defense taken by the appellant-company in reply to the statutory notice should be the guiding factor in determining the bona fide nature of their defense. The court found that the appellant-company's primary defense (inferior quality of goods) was abandoned, and the dispute over the accuracy of accounts was not substantial. The court cited the Supreme Court's decision in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd., which held that if the exact amount of debt is disputed but the existence of debt is not, a winding-up order can be made. The court concluded that the appellant-company's defense was not bona fide and substantial, and their refusal to pay indicated an inability to pay the debt.

Conclusion:
The court modified the impugned order, admitting the company petition for a reduced amount of Rs. 8,47,326.47 instead of Rs. 10,36,353.83. The appellant-company was given one month to pay the revised amount, failing which the respondent could proceed with the advertisement for winding up. The appeal was allowed in part, with no order as to costs.

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