2005 (9) TMI 320 - SC - Companies Law

Failure to pay the amount of acknowledged claim of the respondent arising out of the goods sold by the respondent to the appellant-company - Held that - Appeal dismissed. The principal claim for the goods supplied was for a sum of Rs. 31,64,699 and the same is reflected in the balance sheet of the respondent-company thus the respondent has made out sufficient cause for instituting the remedy under section 433(e) of the Companies Act.

Summary

Issues Involved:
Interpretation of Section 433 of the Companies Act, 1956 regarding failure to pay acknowledged claim arising from goods sold.

Detailed Analysis:

1. Filing of Company Petition:
The respondent filed a petition under section 433 of the Companies Act, alleging that the appellant failed to pay the acknowledged claim arising from goods sold. The appellant did not respond to the statutory notice denying liability. The Single Judge found a bona fide dispute in the liability as reflected in the company petition. The Single Judge considered the statutory notice sufficient in disclosing material facts and particulars, allowing the company petition to be admitted. The respondent was directed to advertise the proceedings in specific publications and deposit a certain amount towards the publication cost.

2. Appeal to Division Bench:
An appeal was filed before the Division Bench of the High Court against the Single Judge's order. The Division Bench noted the principal claim for goods supplied and affirmed the Single Judge's order. Upon perusing the orders, relevant documents, and hearing arguments, the Supreme Court found that the respondent had sufficient cause to seek remedy under section 433(e) of the Companies Act. The Supreme Court upheld the orders of the Single Judge and the Division Bench, concluding that no error was found in their decisions.

3. Dismissal of Appeal:
The Supreme Court dismissed the appeal, stating that no costs were to be awarded. The decision was based on the finding that the respondent had valid grounds for initiating proceedings under section 433(e) of the Companies Act, and no justification for interference was established.

In conclusion, the Supreme Court's judgment upheld the decisions of the lower courts regarding the failure to pay the acknowledged claim under section 433 of the Companies Act, 1956. The Court found that the respondent had valid reasons for pursuing the remedy, and no errors were identified in the orders of the lower courts.