2009 (4) TMI 449 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up - Held that - The debt on which the petition is filed is not due and payable on the date when the petition was presented. Even otherwise, it is pointed out that by learned counsel for the respondent that the respondent-company has reserves of ₹ 1,35,85,69,479 and cash in hand to the tune of ₹ 12,08,35,753 as on 31-3-2006. Under the circumstances, it would be difficult to find that the company circumstance deserves to be wound up. Also not examining the question of the liability of the respondent under quantum meruit for the reason that the parties are governed by express terms of contract and there is no scope for invoking any implied liability for services rendered, as contemplated under section 70 of the Contract Act. The Company petition, therefore, deserves to be dismissed

Issues:
1. Scope of the petition under sections 433, 434, and 439 of the Companies Act for winding-up a company.
2. Petitioner's claim for payment due under an Infrastructure Supply and Services Agreement.
3. Respondent's defense against the claim, including the alleged contingent liability.
4. Interpretation of the term "debt" under the Companies Act.
5. Analysis of future liability or contingent liability as a "debt" for winding-up purposes.
6. Effect of provisions in the balance sheet on determining liability.

Scope of the Petition:
The petition seeks winding-up of the respondent-company, Motorola India Pvt. Ltd., based on an alleged admitted liability of Rs. 1,12,51,871 for goods sold and services rendered under an Infrastructure Supply and Services Agreement.

Petitioner's Claim:
The petitioner asserts that the respondent failed to pay 20% of the purchase order price despite receiving the last payment from BSNL. The respondent's alleged liability was acknowledged in its audited statements and a company petition for Scheme of Amalgamation, justifying the claim as due and payable.

Respondent's Defense:
The respondent argues that the final payment is contingent upon receiving the last payment from BSNL, citing Clause 4.3-4 of the Agreement. Additionally, the respondent contests the claim as not meeting the definition of "debt" under the Companies Act and raises issues regarding tax proofs and completion of work obligations.

Interpretation of "Debt" under the Companies Act:
The central issue revolves around defining "debt" within the Act. The Act does not specify whether the debt must be currently owed or payable in the future. The Court must consider if the debt is ascertained and payable, distinguishing it from contingent or unascertained obligations.

Future Liability as "Debt" for Winding-Up:
The Court deliberates on whether future liabilities constitute a debt for winding-up purposes. Precedents highlight that contingent liabilities may not qualify as debts, emphasizing the need for a present obligation that is due and payable.

Effect of Balance Sheet Provisions:
The balance sheet provision for liability is examined, with conflicting interpretations on its impact. The Court considers the disputed liability, financial reserves, and cash on hand in determining whether the company warrants winding-up.

In conclusion, the Court dismisses the Company petition, citing the absence of a due and payable debt at the time of filing, and factors like company reserves and express contract terms.

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