2007 (11) TMI 420 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up - Held that - As a matter of fact at the time of admission of this appeal, the appellant was directed to deposit a sum of ₹ 5,00,000 permitting the respondent herein to withdraw the same. Accordingly, the said amount has been withdrawn. When the amount has been permitted to be withdrawn by the respondent, when a decree has been obtained by the respondent under the provisions of the Industrial Undertakings Act on 29-9-1993, when the appellant has failed to discharge the decree even after four years, we do not see any error committed by the learned Company Judge in ordering the winding up of the appellant-company. Appeal dismissed.

Summary

Issues:
- Appellant's failure to pay outstanding amount to respondent
- Company petition filed under section 433(e) and (f) read with section 434 of the Companies Act, 1956
- Objections not filed on time leading to rejection by Company Judge
- Appellant's contention of error in not allowing to file statement of objections
- Appellant's argument of viability and capability to pay debts
- Decree obtained from Andhra Pradesh Industry Facilitation Council
- Applicability of principles of res judicata
- Company Judge's decision in ordering winding up of the appellant-company

Analysis:

The respondent filed a company petition under section 433(e) and (f) read with section 434 of the Companies Act, 1956, against the appellant for non-payment of outstanding amounts. The respondent alleged that the appellant failed to pay Rs. 13,76,333 for fabrication work done. The Company Judge allowed the petition after the appellant did not file objections on time, leading to rejection of late objections. The appellant contended that the Company Judge erred in not allowing the filing of objections and argued the company's capability to pay debts. The appellant also mentioned obtaining a decree from the Andhra Pradesh Industry Facilitation Council under the Industrial Undertakings Act, claiming the petition was not maintainable. However, the respondent argued that the decree obtained does not prevent filing a company petition for winding up if the company is unable to pay its debts.

The Court noted that the bills raised by the respondent were not disputed, and the appellant received the statutory notice but did not respond to indicate any dispute. The appellant failed to show viability in discharging debts or raise a valid defense. The Court observed that the decree obtained from the Council related to interest, not the actual debt, and did not prevent the respondent from filing a winding-up petition. The appellant was directed to deposit a sum, which was later withdrawn by the respondent. Considering the appellant's failure to discharge the decree even after several years, the Court found no error in the Company Judge's decision to wind up the appellant-company.

In conclusion, the Court dismissed the appeal, upholding the Company Judge's decision to order the winding up of the appellant-company based on the failure to pay outstanding debts and the lack of evidence regarding the company's capability to discharge debts.