2005 (11) TMI 263 - HC - Companies Law

Summary

Issues:
- Service of notice of demand under section 434(1) of the Companies Act, 1956.
- Authorization of the person filing the winding up petition by the respondent-company.
- Disputed dues related to the supplies made by the petitioner-company to the respondent-company.

Service of Notice of Demand:
The respondent-company raised a preliminary objection regarding the service of the notice of demand under section 434(1) of the Companies Act, 1956. However, the court found no substance in this objection as there was clear assertion that the notice was sent by registered post to the registered office of the company. The respondent did not deny receiving the notice. Additionally, the person filing the winding up petition was a director of the petitioner-company, and there was no objection in the counter-affidavit regarding his authorization to file the petition.

Authorization of the Petitioner:
Another issue raised was whether the person filing the winding up petition was duly authorized by the respondent-company. The court noted that the person filing the petition was a director of the petitioner-company, and there was no objection raised in the counter-affidavit regarding his authorization by the board of directors to file the petition. Therefore, this objection was not found to be valid.

Disputed Dues Related to Supplies:
The disputed dues were related to the supplies made by the petitioner-company to the respondent-company. The petitioner alleged that the respondent failed to make payments for the initial supplies, which led to the demand for payment. The respondent admitted receiving the initial supplies but claimed that they were not as per their requirements and were taken back by the petitioner when discrepancies were pointed out. The respondent also raised concerns about the timing of the demand notice and the lack of correspondence regarding the dishonored cheques. The court found it difficult to believe that the supplies were taken back by the petitioner, especially since there was no material on record to support this claim. Ultimately, the court concluded that winding up proceedings were not the appropriate forum to adjudicate disputed dues, and the petitioner was advised to seek remedies elsewhere. As a result, the company petition was dismissed.

This judgment highlights the importance of proper service of notices, authorization of petitioners in winding up proceedings, and the limitations of winding up proceedings in adjudicating disputed dues, emphasizing the need to seek alternative remedies for such disputes.