2002 (9) TMI 756 - HC - Companies Law

Issues Involved:
1. Business dealings and outstanding payments between the parties.
2. Dishonoured cheques and subsequent legal actions.
3. Execution and validity of the compromise agreement.
4. Statutory notice and winding-up petition under the Companies Act.
5. Allegations of coercion and unconscionable terms in the agreement.
6. Bona fide dispute regarding the claim.
7. Legal implications of the respondent's financial condition.
8. Admissibility and correctness of the affidavit supporting the company petition.
9. Interest rate and time-barred debts.

Detailed Analysis:

1. Business Dealings and Outstanding Payments:
The appellant supplied materials to the respondent, who made intermittent payments. As of 1-4-1999, the appellant claimed Rs. 1,21,93,169.48, inclusive of interest. Additionally, Rs. 6,12,648 was due from supplies by SAB Industries Limited, taken over by the appellant.

2. Dishonoured Cheques and Subsequent Legal Actions:
The respondent issued 8 cheques totaling Rs. 27,82,799, which were dishonoured. This led to a complaint under section 138 of the Negotiable Instruments Act and a winding-up notice under sections 433 and 434 of the Companies Act.

3. Execution and Validity of the Compromise Agreement:
A compromise agreement (Annexure P-XV) was executed on 21-7-1999, where the respondent acknowledged the outstanding amount and agreed to a payment plan, including interest waivers and discounts. The respondent later contested the agreement, claiming it was forced under coercion.

4. Statutory Notice and Winding-Up Petition:
When payments were not made as per the agreement, the appellant issued another statutory notice under sections 433 and 434 of the Companies Act, demanding Rs. 44,62,856.40 with interest. The respondent acknowledged the notice but requested more time to pay due to financial difficulties.

5. Allegations of Coercion and Unconscionable Terms:
The respondent argued that the agreement was entered under coercion and contained unfair terms. They claimed the agreement was heavily loaded in favor of the appellant and not binding.

6. Bona Fide Dispute Regarding the Claim:
The respondent contested the claim, citing financial difficulties and arguing that some debts were time-barred. They also questioned the interest rate as excessive and penal in nature.

7. Legal Implications of the Respondent's Financial Condition:
The respondent admitted financial difficulties but argued that their fixed assets exceeded liabilities and that they were not suffering from financial ill-health. They claimed to be making efforts to recover dues from their customers.

8. Admissibility and Correctness of the Affidavit Supporting the Company Petition:
The respondent challenged the affidavit supporting the company petition, claiming it was not in the correct form as per the Company (Court) Rules, 1959.

9. Interest Rate and Time-Barred Debts:
The respondent disputed the interest rate and argued that the claim for debts due to SAB Industries Limited was time-barred. The court found that the respondent had acknowledged the debt, thus waiving the right to claim it as time-barred.

Conclusion:
The court found no bona fide dispute regarding the principal amount and directed the respondent to pay Rs. 30 lakhs by 31-12-2002. The order included a provision that if the amount was not paid, the winding-up petition would be advertised. The court quashed the portion of the order that implied the existence of a bona fide dispute without proper adjudication and directed further proceedings to determine this issue.

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