2015 (2) TMI 1157 - HC - Companies Law

Winding up petition - Held that - The case of an afterthought is quite different. To my mind, an afterthought is an explanation, or a defence, that has occurred to someone later on; i.e., after the opportunity to give his explanation had already been given to him; and he chose to offer some other explanation at that time, but not the one he is seeking to put forward now; even though all the relevant facts had already been brought home to him beforehand. This is not the factual situation here. Here the opportunity given in the form of a notice of demand discloses no material particulars at all. It follows therefore that the stand taken by the respondent in its reply to the petition for winding up filed in the Court, which is in response to further material particulars disclosed for the first time by the petitioner in the petition, cannot be said to an afterthought. In the case at hand, no attempt has been made to press any facts demonstrating the admission of any amount that could have become due and payable to the petitioner by the respondent. All that the respondent has been saying is that the petitioner should render complete and material particulars of all transactions, invoices etc. between the parties; and to come forward for a proper reconciliation of accounts. Keeping in view the unique and peculiar circumstances of this case, especially the type of notice for winding up that was issued by the petitioner to the respondent, do not think that the respondent has taken any unreasonable position. All this, coupled with the nature of the threat held out by the petitioner in the concluding paragraph of the notice of demand, makes it obvious that the petitioner has sought to abuse the jurisdiction of this Court with a view to coercing and pressurising the respondent to pay its demands, including interest demanded by it, without standing the test of evidence and cross-examination or even paying the court fee to recover its dues from the petitioner at civil law.

Summary

Issues Involved:
1. Non-payment of dues.
2. Validity of the winding-up notice.
3. Admission of liability by the respondent.
4. Adequacy of particulars in the winding-up notice.
5. Respondent's defence and reconciliation of accounts.
6. Alleged abuse of court process by the petitioner.

Issue-wise Analysis:

1. Non-payment of dues:
The petitioner sought the winding up of the respondent company on the grounds of non-payment of Rs. 26,45,064.75, which includes Rs. 26,17,363.75 for materials supplied and Rs. 27,701 as bank charges, with interest at 16% per annum. The petitioner claimed that the respondent had only paid Rs. 1,60,73,297 out of the Rs. 1,86,90,660.75 worth of materials supplied, leaving the aforementioned amount unpaid.

2. Validity of the winding-up notice:
The petitioner's notice of winding up dated 01.05.2013 was scrutinized for its adequacy in providing material particulars. The court found that the notice only contained a one-line statement about the amount due without detailing how the debt or liability arose. The petitioner argued that a one-line demand was sufficient under the law, citing Mayar Traders Ltd. v. Akhil Services Ltd., but the court disagreed, emphasizing the need for sufficient particulars to enable the respondent to respond appropriately.

3. Admission of liability by the respondent:
The petitioner contended that the respondent had admitted its liability in its reply to the statutory legal notice. However, the respondent, in its reply, denied the claim and stated that it had already made all due payments. The court noted that the respondent's reply invited the petitioner for reconciliation of accounts and denied any outstanding amount.

4. Adequacy of particulars in the winding-up notice:
The court highlighted that the petitioner's notice lacked material particulars such as invoice numbers and amounts due. The petitioner failed to provide these details even in the rejoinder to the respondent's reply. The court emphasized that a specific denial requires a specific assertion of facts with all material particulars, which was missing in the petitioner's notice.

5. Respondent's defence and reconciliation of accounts:
The respondent's defence included a denial of the petitioner's claim for lack of material particulars and an invitation for reconciliation of accounts. The court found this defence reasonable, especially since the petitioner had not provided sufficient details in the notice. The court also noted that the respondent disputed some invoices as false and fabricated, which was a valid defence raised after examining the petition.

6. Alleged abuse of court process by the petitioner:
The court observed that the petitioner's approach, including the threat to defame the respondent company, was an abuse of the court's jurisdiction. The petitioner sought to coerce the respondent into paying the demanded amount without providing material particulars or standing the test of evidence and cross-examination. The court concluded that the petition was an attempt to pressurize the respondent and dismissed it with costs assessed at Rs. 50,000 to be paid within one week.

Conclusion:
The petition was dismissed with costs, and the accompanying applications were rendered infructuous. The court emphasized the need for sufficient particulars in a winding-up notice and found the petitioner's approach to be an abuse of the court's process.