2001 (9) TMI 1064 - HC - Companies Law

Summary

Issues:
Petition for winding up of respondent-company under Companies Act, 1956 due to alleged debt default.

Analysis:
The petitioner-company sought winding up of the respondent-company for failing to pay a debt of Rs. 12,62,641 under a hire-purchase agreement. The respondent-company disputed the claim, alleging suppression of material documents and asserting financial solvency. The petitioner claimed overdue compensation at 31% per month, while the respondent denied agreeing to such terms. Both parties had exchanged letters regarding outstanding amounts and financial difficulties faced by the respondent. The respondent alleged that the hire-purchase agreement was manipulated and certain payments were not accounted for. The petitioner, in response, denied receipt of certain amounts and admitted to taking possession of equipment due to non-payment by the respondent.

The respondent-company challenged the petition, claiming coercion and disputing the debt amount. The respondent argued that certain payments were made, which were not acknowledged by the petitioner. Additionally, the respondent highlighted ongoing arbitration proceedings initiated by the petitioner under the agreement. The respondent emphasized that the debt claimed was not admitted or crystallized and that the petitioner's actions, including seizing machinery not covered by the agreement, caused significant losses to the respondent.

The court noted the genuine disputes raised by the respondent regarding the debt claim, including allegations of unaccounted payments and discrepancies in the agreement. The court criticized the petitioner for not disclosing the arbitration proceedings in the petition, viewing it as an attempt to pressure the respondent. The court concluded that the winding-up petition was an abuse of process, as the legitimate remedy of arbitration was available to resolve disputes. The court dismissed the petition, ordering the petitioner to pay costs to the respondent.