2010 (8) TMI 185 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up Held that - Winding up application is admitted on the prima facie finding that ₹ 1,25,00,000 is due and owing by the respondent-company to the petitioning creditor. The difference between ₹ 19,25,285 and ₹ 1,25,00,000 is relegated to suit upon furnishing of bank guarantee, by the respondent-company to the petitioning creditor within two weeks from the date of issuance of a copy of this order. The suit is to be filed four weeks within from such date. On failure to furnish bank guarantee the whole claim will stand admitted. Upon furnishing of bank guarantee the respondent will keep the bank guarantee renewed from time to time subject to orders of the civil court. The petitioning creditors will not encash the bank guarantee without leave of the civil court. If no suit is filed the respondent may not continue with the bank guarantee. The winding up application is admitted advertisements are to be published once in The Times of India and once in Ananda Bazar Patrika. Publication in the Official Gazette is dispensed with. Such publication is to be made within four weeks from date. List this application six weeks hence.

Issues:
1. Unpaid price of goods sold and delivered.
2. Statutory notice reply presumption of insolvency.
3. Quality dispute regarding goods supplied.
4. Verbal negotiations defense.
5. Admission of liability by respondent.
6. Admittance of winding up application.

Analysis:

Unpaid price of goods sold and delivered:
The petitioning creditor claimed that the respondent owed Rs. 1,92,52,851 for Lam Coke sold and delivered between September and December. The respondent issued five cheques, but they were dishonored, leading to the winding up application.

Statutory notice reply presumption of insolvency:
The respondent claimed to have replied to the statutory notice under certificate of posting, but the court found no evidence of such reply. The court noted that failure to reply to a statutory notice implies insolvency, and the respondent's defense regarding the reply was not substantiated.

Quality dispute regarding goods supplied:
The respondent alleged a quality dispute, stating that the goods supplied were defective and caused damage to their equipment. However, the court found no supporting evidence such as an SGS report or contemporaneous documents to validate this claim.

Verbal negotiations defense:
The respondent argued that there were verbal negotiations asking the petitioning creditor not to negotiate the cheques, but the court did not find this defense credible. The court believed there was an unconditional admission of liability by the respondent when they tendered the cheques.

Admission of liability by respondent:
The court concluded that the respondent had no defense to the claim of Rs. 1,25,00,000 representing the value of the stopped payment cheques. The respondent's defenses were found lacking in evidence and credibility, leading to the admission of the winding up application.

Admittance of winding up application:
The court admitted the winding up application, finding that a significant amount was due and owing by the respondent to the petitioning creditor. The court allowed the respondent to file a suit for the remaining claim amount upon furnishing a bank guarantee within a specified timeline.

In conclusion, the court admitted the winding up application based on the prima facie finding of the due amount, while providing the respondent with an opportunity to address the remaining claim through a suit and bank guarantee. The judgment highlighted the lack of evidence supporting the respondent's defenses and the importance of substantiating claims in legal proceedings.

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