2009 (4) TMI 991 - HC - Indian Laws

Summary

Issues Involved:
1. Winding up of the respondent company u/s 433 of the Companies Act, 1956.
2. Retention and release of security deposit as per contract clauses.
3. Alleged defects and deficiencies in the work executed by the petitioner.
4. Maintainability of the winding up petition in light of a pending recovery suit.
5. Respondent's ability to pay the debt.

Summary:

1. Winding up of the respondent company u/s 433 of the Companies Act, 1956:
The petitioner sought the winding up of the respondent company u/s 433 of the Companies Act, 1956, on the grounds that the respondent was unable to pay its admitted debts.

2. Retention and release of security deposit as per contract clauses:
The petitioner was awarded two contracts by the respondent, with specific clauses (Clauses 7 and 8) governing the retention and release of security deposits. The petitioner completed the work and claimed that the retention amount of Rs. 13,63,435/- became due after the defect liability period expired. Despite part payments, Rs. 10,40,326/- remained unpaid.

3. Alleged defects and deficiencies in the work executed by the petitioner:
The respondent contended that the petitioner delayed the work and pointed out defects via letters dated 25th June 2007 and 6th August 2007. However, the court found these allegations vague and unsupported by any contemporaneous complaints or communications within the contract period. The court noted that no deficiencies were pointed out during the defect liability period, and the respondent's subsequent payments contradicted their claims of defective work.

4. Maintainability of the winding up petition in light of a pending recovery suit:
The respondent argued that the pending recovery suit filed by the petitioner precluded the winding up petition. The court held that the remedies for recovery of money and winding up of a company are distinct and independent. The filing of a recovery suit does not bar the creditor from filing a winding up petition.

5. Respondent's ability to pay the debt:
The court found no substantial defence from the respondent regarding their ability to pay the debt. The respondent admitted to receiving the statutory notice and making part payments but failed to provide any credible explanation for withholding the balance amount. The court concluded that the dispute raised by the respondent was bogus and sham.

Conclusion:
The petition was admitted, and the court directed the respondent to pay the due amount with interest at 8% per annum within one month. If the respondent failed to comply, the petitioner would be entitled to publish the citation and apply for the appointment of a provisional liquidator. The case was listed for further directions on 20th May 2009. Petition allowed.