2009 (3) TMI 562 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up - Held that - The tender of cheque of ₹ 18,87,800 after deduction of tax at source on 28-8-2006, by the respondent cannot be considered to be payment tendered by the respondent against the supply of any specific goods. From the proforma invoice dated 22-7-2006, it is evident that 50 per cent of the amount was to be paid as advance and the remaining 50 per cent within 30 days of the supply being made. Strictly speaking, this part of the agreement was not adhered to by the parties. It is also seen that the petitioner itself did not consider the failure of the respondent to make payment of 50 per cent advance as a breaking point in the relationship between the parties. The tender of the cheque for ₹ 18,87,800 therefore, in my view, cannot be considered to be an admission of liability to that extent by the respondent towards the petitioner. The present petition should be dismissed on the ground that it raises disputed questions of fact; that the respondent has raised a plausible and bona fide defence, and; that the petitioner has already instituted a civil suit for recovery of the disputed debt and that the machinery for winding up should not be allowed to be used merely as a means for realising a disputed debt from the company from the decisions relied upon by the respondent.

Issues Involved:
1. Maintainability of the winding-up petition.
2. Alleged contractual breaches by the petitioner.
3. Alleged suppression of material facts by the petitioner.
4. Bona fide dispute regarding the quality and delivery of uniforms.
5. Whether the tender of a cheque by the respondent constitutes an admission of liability.

Detailed Analysis:

1. Maintainability of the Winding-Up Petition:

The petitioner-company filed a winding-up petition under sections 433(e), (f), and 434(1)(b) of the Companies Act, 1956, seeking the winding up of the respondent-company, InterGlobe Aviation Limited, due to non-payment for uniforms supplied. The respondent raised preliminary objections, arguing that the petition is not maintainable as it seeks to enforce a disputed debt, which should be resolved through a civil suit. The court agreed, noting that winding-up proceedings should not be used as a substitute for debt recovery, especially when the debt is bona fide disputed.

2. Alleged Contractual Breaches by the Petitioner:

The respondent claimed that the petitioner breached the contract by delivering uniforms that were defective, delayed, and not according to specifications. The petitioner admitted there were issues with the initial deliveries but argued that these were resolved in a meeting on 21-8-2006. However, the court found that the petitioner failed to provide evidence of delivering the uniforms as per the newly agreed terms, particularly for Batch 2, which was supposed to be delivered by 23-8-2006. The court noted that the respondent's complaints about the quality and timeliness of the uniforms were substantiated by multiple email exchanges.

3. Alleged Suppression of Material Facts by the Petitioner:

The respondent accused the petitioner of suppressing material facts, including correspondence that highlighted the petitioner's breaches of the agreement. The court found that while not all correspondence was submitted, the petitioner had made sufficient disclosures in the petition. The court did not dismiss the petition on this ground but noted that the lack of complete disclosure did not help the petitioner's case.

4. Bona Fide Dispute Regarding the Quality and Delivery of Uniforms:

The court found that there was a bona fide dispute regarding the quality and delivery of the uniforms. The petitioner admitted that the initial uniforms were defective, and there was no clear evidence that the uniforms delivered after the 21-8-2006 meeting met the agreed specifications. The respondent's insistence on verifying the uniforms before accepting them was deemed reasonable, given the previous issues. The court concluded that these disputes required a trial and could not be resolved in a winding-up petition.

5. Whether the Tender of a Cheque by the Respondent Constitutes an Admission of Liability:

The petitioner argued that the respondent's tender of a cheque for Rs. 18,87,800 constituted an admission of liability. The court disagreed, noting that the cheque was returned by the petitioner for correction and was never reissued by the respondent. The court found that the tender of the cheque could not be considered an admission of liability, especially in light of the ongoing disputes about the quality and delivery of the uniforms.

Conclusion:

The court dismissed the winding-up petition with costs of Rs. 20,000, finding that the petition raised highly disputed questions of fact that required a trial. The court noted that the respondent had raised a plausible and bona fide defence and that the petitioner had already initiated a civil suit to recover the disputed debt. The court emphasized that winding-up proceedings should not be used as a means to realize a disputed debt. The findings in this judgment were stated to not prejudice either party in any other legal proceedings, including the civil suit filed by the petitioner.

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