2007 (2) TMI 337 - HC - Companies Law

Summary

Issues Involved:
1. Admission of creditor's winding up petition.
2. Dispute raised by the Company regarding liability.
3. Assessment of the bona fides of the dispute or counter-claim.
4. Jurisdiction and discretion of the Company Court in winding up proceedings.

Detailed Analysis:

1. Admission of Creditor's Winding Up Petition:
The Company resisted the order of admission sought on a creditor's winding up petition based on a dispute it claimed to have raised and the propriety of the Company Court inquiring into the merits of the dispute, given that a suit founded on such dispute had been instituted by the Company. The Company argued that the mere pendency of a suit, regardless of whether it was instituted before or after the receipt of the statutory notice, was sufficient to ward off winding up proceedings.

2. Dispute Raised by the Company Regarding Liability:
The petitioner, a carrier of goods shipped by the Company, claimed that upon the cargo being discharged, one container was damaged, and others were overweight, leading to additional charges. The Company had initially accepted responsibility for these charges in a writing dated 18-11-1997. However, the Company later disputed its liability, asserting that the petitioner was responsible for delivering the goods in an undamaged condition and alleging coercion in agreeing to additional charges. The Company also claimed damages for delayed delivery and damage to the cargo.

3. Assessment of the Bona Fides of the Dispute or Counter-Claim:
The Court assessed whether the dispute raised by the Company was bona fide. The principles laid down in SRC Steel (P.) Ltd. v. Bharat Industrial Corpn. Ltd. were applied, which included determining whether the debt was indisputable and whether the Company's defence or counter-claim was genuine. The Court found that the Company's suit and counter-claim were not bona fide, describing them as "bogus." The Court emphasized that the Company's unequivocal acceptance of liability in the writing of 18-11-1997 and the subsequent failure to raise any dispute within a reasonable period indicated the lack of bona fides in the Company's later objections.

4. Jurisdiction and Discretion of the Company Court in Winding Up Proceedings:
The Court discussed its jurisdiction and discretion in winding up proceedings, referencing the principles from SRC Steel (P.) Ltd. and English cases like Re Bayoil SA and Montgomery v. Wanda Modes Ltd. The Court noted that while the Company Court could assess the merits of a counter-claim, it could also order the Company to furnish security if the claim was not bona fide. The Court concluded that the petitioner's claim was so clear that it would be harsh to require security and relegate the petitioner to a suit. The Company was given a chance to secure the petitioner's claim by furnishing a bank fixed deposit receipt, failing which the petition would be advertised.

Conclusion:
The petition was admitted for the principal claim of Rs. 7,34,526.40 with interest, and the Company was directed to furnish security within three weeks to avoid advertisement of the petition. The Court's order balanced the need to protect the petitioner's claim while allowing the Company an opportunity to secure its position. The judgment underscores the Company Court's authority to assess the bona fides of disputes and counter-claims in winding up proceedings and to exercise discretion in ordering security or proceeding with the petition.