2008 (9) TMI 573 - HC - Companies Law

Winding up petition - Held that - From the averments made by the parties in this case, it appears that there is a bona fide dispute with regard to the payment of the amount involved in the matter and under the agreement there is a clause for settlement of the dispute through arbitration. In view of the above mentioned facts and circumstances, this is not a fit case for admission.Therefore, the company petition is dismissed. However, this will not debar the petitioner to avail of any available remedy for the adjudication of the matter in accordance with law.

Summary

Issues:
- Winding up petition under sections 433, 434, and 439 of the Companies Act, 1956.
- Dispute over payment for supplied materials.
- Validity of arbitration clause in the agreement.
- Bona fide dispute regarding outstanding dues.
- Applicability of principles governing winding up petitions.

Analysis:
1. The petitioner filed a winding up petition against the respondent company, seeking payment for supplied materials worth Rs. 59,25,001. An amount of Rs. 4,76,508 remained unpaid despite the expiry of the warranty period, leading to the dispute.

2. The respondent argued that the deliveries were delayed, and liquidated damages were rightfully deducted from the final payment made to the petitioner. The respondent contended that no notice disputing the final payment or claiming arbitration for the deducted amount had been received.

3. The agreement between the parties included an arbitration clause for dispute resolution. The respondent emphasized that the petitioner's attempts to claim the deducted amount through the winding up petition were not legally sustainable, as no arbitration notice had been served.

4. Citing legal precedents, the court highlighted the principles governing winding up petitions. If a debt is bona fide disputed with substantial defense, the court may not wind up the company. In cases where the debt is undisputed, but the exact amount is in question, a winding up order may be made without precise quantification.

5. The court concluded that a bona fide dispute existed regarding the payment, and the agreement's arbitration clause should be adhered to for resolving the matter. As such, the court dismissed the winding up petition, emphasizing that the dispute should be settled through arbitration as per the contractual terms.

6. The judgment clarified that the dismissal of the petition did not prevent the petitioner from seeking other legal remedies for the resolution of the dispute in accordance with the law. The court's decision was based on the presence of a genuine dispute and the existence of a valid arbitration mechanism in the agreement.