2005 (7) TMI 690 - HC - Indian Laws

Issues Involved:
1. Original petition for winding up due to unpaid debt.
2. Substitution of petitioner after settlement with original petitioner.
3. Alleged outstanding debt claimed by substituted petitioner.
4. Respondent's denial of liability and counterclaims.
5. Acknowledgment of debt by respondent through correspondence.
6. Dispute over defective material and its impact on the debt.
7. Calculation of interest on delayed payments.
8. Adjudication of the winding-up petition.

Detailed Analysis:

1. Original Petition for Winding Up Due to Unpaid Debt:
The original petition was filed by M/s. Shivalik Rasain Ltd. seeking the winding up of the respondent company on the grounds of an unpaid debt amounting to Rs. 6,21,740/-. The petition was admitted on 5th October 1998, and citations were ordered to be published in various newspapers.

2. Substitution of Petitioner After Settlement with Original Petitioner:
After the publication of citations, M/s. Gharda Chemicals Limited, another creditor, filed an application to be substituted as the petitioner. This application was allowed on 30th April 2003. The original petitioner settled its claim with the respondent, and M/s. Gharda Chemicals became the new petitioner, filing an amended petition.

3. Alleged Outstanding Debt Claimed by Substituted Petitioner:
M/s. Gharda Chemicals claimed that the respondent owed Rs. 9,95,41,358.59. The petitioner detailed various supplies made to the respondent and the corresponding invoices, alleging that the respondent failed to make timely payments, thereby accruing interest on delayed payments.

4. Respondent's Denial of Liability and Counterclaims:
The respondent denied liability, stating that it had already paid Rs. 8,38,36,568.00 against the total material worth Rs. 8,91,96,276.00 supplied by the petitioner. The respondent argued that the remaining amount was disputed due to the supply of sub-standard and defective material by the petitioner.

5. Acknowledgment of Debt by Respondent Through Correspondence:
The petitioner presented various communications from the respondent acknowledging the debt. In letters dated 15th September 1997 and 6th November 1997, the respondent proposed payment schedules and acknowledged the outstanding dues. Further correspondence indicated repeated assurances by the respondent to clear the dues, although these commitments were not honored.

6. Dispute Over Defective Material and Its Impact on the Debt:
The respondent claimed that the remaining unpaid amount was due to defective material supplied by the petitioner. However, the court noted that there was no mention of defective material in the correspondence exchanged between the parties. The court found this defense to be an afterthought and not credible.

7. Calculation of Interest on Delayed Payments:
The petitioner claimed interest at 24% per annum on delayed payments. The court acknowledged that while the petitioner had been charging this rate, even a reasonable interest rate would result in a significant amount due. The court calculated that, even at a 12% interest rate over six years, the total amount payable would exceed Rs. 90 lacs.

8. Adjudication of the Winding-Up Petition:
The court concluded that the respondent was indebted to the petitioner and had failed to pay the amount despite statutory notice, indicating an inability to pay. The petition was admitted, and citations were ordered to be published. The Official Liquidator (OL) was appointed as the Provisional Liquidator, with the order to be stayed for eight weeks to allow the respondent to deposit Rs. 90 lacs with the Registrar. If the amount was not deposited, the petitioner could proceed with citations, and the OL could take charge of the company's assets and records.

Conclusion:
The court found that the respondent company was indebted to the petitioner, M/s. Gharda Chemicals, for an amount exceeding Rs. 90 lacs, including interest. The petition for winding up was admitted, and provisional liquidation measures were ordered, pending the respondent's compliance with the deposit requirement. The case was listed for further proceedings on 30th September 2005.

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