2005 (4) TMI 296 - HC - Companies Law

Summary

Issues Involved:
1. Whether the respondent company is liable to pay the outstanding lease rentals and other charges to the petitioner.
2. Whether the petition for winding up of the respondent company is maintainable given the pending arbitration proceedings.
3. Whether the claim made by the petitioner is barred by limitation.
4. Whether the affidavit filed by the respondent's Managing Director in a different proceeding can be considered as an acknowledgment of debt.

Detailed Analysis:

1. Liability of the Respondent Company:
The petitioner, a finance company, entered into a lease agreement with the respondent company for certain equipment. The respondent was required to pay quarterly lease rentals but failed to make payments from 1-4-1999 onwards. Despite repeated requests and a statutory notice, the respondent did not pay the outstanding amount. The petitioner claimed a total of Rs. 61,19,497, including lease rentals, delayed payment charges, and other penalties. The respondent denied liability, arguing that the lease period expired on 30-8-2000 and was not renewed. They also contended that no amounts were due after the lease expired and disputed the relevance of an affidavit filed in another proceeding.

2. Maintainability of Winding Up Petition:
The respondent argued that the petitioner had initiated arbitration proceedings in Mumbai, which were still pending, and thus, the winding-up petition was a pressure tactic. The petitioner contended that the arbitration was independent of the present proceedings and relied on various legal precedents to argue that a winding-up petition is maintainable if there is an undisputed debt. However, the court noted that if the debt is disputed and requires adjudication, a winding-up petition under section 433 of the Companies Act would not lie. The court found that the matter was referred to arbitration, indicating no admitted liability by the respondent.

3. Limitation of the Claim:
The respondent claimed that the petition was barred by limitation, as the alleged liability related to a period before 2000, and the petition was filed in 2004. The court referred to the decision in Benares Cotton & Silk Mills Ltd. v. Sulbha Devi Gupta, which held that the period of limitation continues to run even after the filing of the winding-up petition and stops only when an order is passed. Applying this principle, the court found the claim to be prima facie barred by limitation. Even if the affidavit filed by the respondent's Managing Director in 2001 was considered an acknowledgment of debt, the petition was filed beyond the three-year limitation period.

4. Affidavit as Acknowledgment of Debt:
The petitioner relied on an affidavit filed by the respondent's Managing Director in a different proceeding to argue that it constituted an acknowledgment of debt. The court noted that the affidavit was not filed in a proceeding between the petitioner and the respondent and could not be taken as an acknowledgment of debt. The court also referred to the Supreme Court decision in Lakshmiratan Cotton Mills Co. Ltd. v. Aluminium Corpn. of India Ltd., which dealt with the acknowledgment of debt by an authorized person. However, even if the affidavit was considered, the claim was still barred by limitation as the petition was filed after the three-year period from the date of the affidavit.

Conclusion:
The court dismissed the company petition, finding that the claim was barred by limitation and that there was no admitted debt. The pending arbitration proceedings indicated a dispute requiring adjudication, making the winding-up petition under section 433 of the Companies Act inappropriate. The affidavit filed in another proceeding could not be considered an acknowledgment of debt to extend the limitation period.