2004 (12) TMI 384 - HC - Companies Law

Summary

Issues:
Petition for winding up under sections 433 and 434 of the Companies Act, 1956 due to unpaid loan amount of Rupees one lakh with interest at 18% per annum.

Analysis:
The petitioner filed a petition seeking winding up of Wizard Biotech Private Limited for non-payment of a loan. The respondent-company had obtained a loan of Rupees five lakhs from the petitioner, of which Rupees four lakhs were repaid. The petitioner claimed that the remaining amount of Rupees one lakh with interest was still due. A notice under sections 433 and 434 of the Act was served on the respondent-company, which replied to the notice acknowledging the due amount. The petitioner argued that the admitted debt remaining unpaid indicated the respondent-company's inability to pay its debts, warranting winding up.

Upon considering the contentions, the judge noted the correspondence between the parties. A settlement was reached between the parties on 21st July 2004, where an amount of Rs. 85,000 was agreed upon subject to the return of certain properties. The respondent-company's letter regarding this settlement was not challenged by the petitioner. The judge found that the respondent-company had raised a bona fide dispute regarding the claim made by the petitioner, as evidenced by the partial repayment of the loan and the settlement negotiations. The judge concluded that the respondent-company's actions did not demonstrate an inability to pay its debts, leading to the dismissal of the petition for winding up.

In conclusion, the court dismissed the petition for winding up the respondent-company based on the finding that a bona fide dispute existed regarding the outstanding loan amount. The judge emphasized the partial repayment made by the respondent-company and the settlement discussions as evidence of a genuine attempt to address the debt issue. As a result, the court found no grounds to order the winding up of the respondent-company.