2012 (10) TMI 1018 - HC - Companies Law

Winding up - Invoking Sections 433 and 434 of the Companies Act, 1956 - Held that - The payment on the basis of concept of back to back basis, if accepted, then, it is only after that receipt of the payment by the Respondent/company from HAL, the Company is liable to make the payment, after receipt of the certified bills from the Petitioner or subject to the documentation as required. The interpretation of words subject to material cost and reconciliation itself is a matter which cannot be read in isolation without reading the other provisions of the contract. Therefore, in all, if there is serious question of even interpretation of the contract between the parties and unless that is adjudicated, not inclined to accept the case of the Petitioner to grant the prayers so made in the Petition, specifically when there is nothing on record to show that the Respondent/company, pursuance to this agreement/contract, has received the payment and they are deliberately avoiding to make the payment inspite of the undertaking and the bond so given. The Petitioner failed to satisfy that the Respondent company deliberately and intentionally neglecting to pay the agreed and due amount. As the amount so claimed, as the same itself cannot be the basis for granting relief so prayed at this stage of the proceeding. Let the amount be received by the company and be payable after settling the account in accordance with the terms and conditions.

Summary

Issues involved:
1. Invocation of Sections 433 and 434 of the Companies Act, 1956 due to non-payment by the respondent company despite a statutory demand notice.
2. Dispute regarding the supply of materials by the petitioner to the respondent company for delivery to Hindustan Aeronautics Ltd. (HAL).
3. Interpretation of clauses in the contract for supply of materials and the undertaking dated 29.07.2009.
4. Consideration of reconciliation of material costs and payments due as per the agreement.
5. Examination of the liability of the respondent company to make payments subject to conditions mentioned in the contract.
6. Application of legal principles regarding winding up orders in cases of disputed debts and neglect to pay under the Companies Act, 1956.

Analysis:
1. The petitioner invoked Sections 433 and 434 of the Companies Act, 1956 due to the respondent company's failure to make a payment of Rs. 99,74,784 despite a statutory demand notice. The contract involved the supply of materials by the petitioner to the respondent company for delivery to HAL.
2. The dispute centered around the interpretation of clauses in the contract, particularly Clause 5.2, which outlined the payment terms between the parties. The respondent company denied liability based on an undertaking dated 29.07.2009, claiming a payment of Rs. 25 lakhs as full and final settlement.
3. The court considered the undertaking dated 29.07.2009, which acknowledged an outstanding amount due to the petitioner subject to material cost reconciliation. The petitioner contended that invoices and demands were raised only after reconciliation, while the respondent denied any such reconciliation meeting.
4. Legal principles regarding winding up orders were applied, emphasizing that a debt must be clear and outstanding on the date of demand. The court noted that even if an amount is due, it may be subject to contingencies and conditions, which could impact its immediate payment status.
5. The court found that the petitioner's claim was premature as the amount due was subject to reconciliation and payment from HAL. It was observed that the respondent's defense, though inconsistent, raised valid points regarding the reconciliation process and the conditions for payment as per the contract.
6. Ultimately, the court disposed of the Company Petition, emphasizing that the amount should be received and payable after settling the account in accordance with the terms and conditions. The judgment highlighted the importance of considering all aspects of the contract and reconciliation process before granting relief in such cases.