2014 (2) TMI 1174 - HC - Companies Law

Refusal of Winding up petition - Non payment of balance price of goods - Winding up, a last resort and the Court should sparingly use it as a discretionary relief - Held that - We have considered the rival contentions. The facts appearing from the records as discussed above, do not convincingly show, the appellant had a claim against the company that would have no plausible defence from the company. In a winding-up proceeding the principal test is to find out, whether the petitioning creditor has a claim duly raised through a statutory notice of demand and the company failed or neglected to pay or compound the same meaning thereby, once the claim is raised, it is the duty of the company to rebut by way of justification as to non-payment. If they are successful on that score, the winding-up petition cannot be admitted. In the present case, the company did not give any reply that would definitely raise a presumption against them. However, once the winding-up petition came up for admission after affidavits, the Court is to examine the records that would appear from the pleadings including affidavits filed by the company. The facts so discussed above, would not suggest, the petitioning creditor was successful in raising the admitted claim. In our view, the disputes so raised by the company could not be said to be sham that would deserve an order of rejection. We do not know, whether the petitioning creditor would be able to justify their claim or the company would be able to resist the same, at the final trial. It would be too early to comment on merits. We would only observe, the facts so discussed above, would not create a situation to support an order of admission. In the case of East India Wires Limited 2003 (4) TMI 463 - HIGH COURT OF CALCUTTA a winding-up petition was filed on the just and equitable ground. In that context, the Court observed, it was a last resort and the Court should sparingly use it as a discretionary relief . The Division Bench of the Madras High Court in the case Sical-Cwt Distriparks Ltd.v 2009 (8) TMI 707 - HIGH COURT OF MADRAS once again reiterated, when the respondent who was sought to be wound-up was able to show that there was a bona fide dispute with regard to the liability in question, the winding-up proceeding is not the proper remedy to resolve the dispute . This is a well-settled proposition of law that has been rendered in the general context.The learned Judge, in our view, rightly declined to admit the winding-up petition that would deserve no interference. We have examined the balance-sheet of the company. It is a cash rich company. The fact that the company never faced any winding-up petition, is not disputed by the petitioner. The bulk coal is generally supplied by the government coal companies. The company asserted, they had a linkage with South Indian Coalfields Company, a Government Undertaking. These facts would prevent us from directing any security to be furnished. We, however, observe, since the appellant was pursuing its claim bona fide before this Court, they should get the benefit of Section 14 of the Limitation Act. We would permit the appellant to file a suit in relation to the self-same claim before the appropriate forum within a period of six weeks from date meaning thereby, they would get the benefit of the period from the date of initiation of the winding-up proceeding the suit is filed within the stipulated period. - Decided against the appellant.

Summary

Issues:
- Refusal to admit two winding up petitions arising from balance price of goods sold and delivered.

Detailed Analysis:

1. Claim of the Appellant:
The appellant alleged supplying coal to the respondent, who denied the same, claiming linkage with a government coal company. The petitions raised a claim of about Rs. 1.5 crore, with different petitioners from the same group. The Single Judge declined to admit the petitions, leading to the appeals.

2. Arguments of the Appellant:
Mr. Jayanta Mitra argued that the respondent's failure to reply to a statutory demand notice raised a presumption of insolvency, making the winding-up petition maintainable. He pointed out discrepancies in the respondent's defense, including denial of signed documents and the existence of confirmation of accounts.

3. Arguments of the Respondent:
Mr. Surajit Nath Mitra contended that the company had no transaction with the appellant, raising suspicion over the alleged supply of coal. He emphasized the company's denial of the confirmation of accounts and raised doubts about the authenticity of the documents provided by the appellant.

4. Court's Analysis:
The Court considered whether the petitioning creditor had a claim with no plausible defense from the company. The principal test in a winding-up proceeding is whether the company failed to pay a raised claim, justifying the petition. The Court found the disputes raised by the company were not sham and did not support an order of admission, emphasizing that it was too early to comment on merits.

5. Legal Precedents:
The Court referred to legal precedents to support its decision, highlighting the importance of just claims in winding-up proceedings and the need for a genuine dispute to avoid winding-up.

6. Decision and Alternative Submission:
The Court upheld the refusal to admit the winding-up petitions, stating that the appellant could file a suit within six weeks to pursue the claim further. No costs were awarded, considering the circumstances of the case.

In conclusion, the High Court of Calcutta dismissed the appeals, maintaining the refusal to admit the winding-up petitions based on the lack of convincing evidence supporting the claims made by the appellant against the respondent. The Court emphasized the need for a genuine claim and a plausible defense in such proceedings, allowing the appellant to pursue the claim through a separate suit within a specified period.