2012 (3) TMI 252 - HC - Companies Law

Petition is filed under Section 433(e) of the Companies Act, 1956 seeking to wind up the Respondent Company - petitioner carried out work of interior decoration for the respondent company - the respondent is unable to pay the debts of the petitioner, despite the fact that the director Sri S.M. Arshad is further the proprietor of M.S. Enterprises thus the respondent Company may be wound up - the respondent contented that there is no legal obligation created on the part of the respondent Company to honour the liability of the petitioner, which is in respect of a firm - Held that - there is no contractual obligations between the respondent Company and the petitioner and therefore, no liability arises - the petitioner has failed to prove the case under Section 433 of the Companies Act - the petition is dismissed.

Summary

Issues:
Petition filed under Section 433(e) of the Companies Act, 1956 seeking to wind up the respondent-Company due to unpaid dues for interior decorations.

Analysis:
The petitioner filed a petition under Section 433(e) of the Companies Act, 1956, seeking to wind up the respondent-Company, M/s. Mohtisham Complex Private Limited, for outstanding dues of Rs. 5,77,735 for interior decorations carried out by the petitioner. The petitioner claimed that despite multiple attempts to recover the amount, the respondent failed to pay or make any effort to settle the dues. The petitioner argued that the respondent, represented by its Managing Director, had placed orders for the decorations, creating a legal obligation to pay. The petitioner also highlighted that the respondent's director was also the proprietor of another enterprise, implying the ability to pay the debt.

The respondent's counsel contended that no contractual relationship existed between the petitioner and the respondent Company, therefore, no legal obligation was created for the respondent to honor the debt. The respondent argued that the petition was not maintainable as there was no contractual basis for the claim. After examining the documents submitted by both parties, the court found that there was indeed no contractual obligation between the petitioner and the respondent Company. The court concluded that as there was no contractual relationship establishing liability on the respondent, the petitioner failed to prove the case under Section 433 of the Companies Act. Consequently, the court dismissed the petition seeking to wind up the respondent-Company due to unpaid dues for interior decorations.