2012 (6) TMI 199 - HC - Companies Law

Winding up supply of goods to respondent dishonor of cheque due to insufficient funds - complaints filed under the Negotiable Instruments Act, 1881, are pending disposal Jurisdiction of court - respondent submits that as per the terms and conditions indicated in the invoice, the dispute, if any, is subject to Mumbai jurisdiction and therefore, this court has no jurisdiction to entertain the petition seeking an order of winding up of the respondent-company Held that - For the purposes of jurisdiction to wind up companies, the expression registered office means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up. registered office of the respondent-company is situated at Vijayawada, which is within the territorial jurisdiction of this High Court. Therefore, this court has territorial jurisdiction to entertain the petition seeking an order of winding up Authorized person to file the company petition for winding up Held that - power to file suits and/or proceedings for the recovery of the amounts due or becoming due cannot be held to embrace the power to institute proceedings for winding up under the Companies Act, 1956. Proceedings for winding up under section 433 of the Companies Act can by no stretch of imagination be equated to suits or for that matter suits for recovery of money. constituted attorney, B. Gopala Krishna is authorised to sign and verify plaints, written statements, petitions, vakalats, claims and objections and memorandum of all kinds and to present them in any court in India and offices and to file appeals, revisions and/or reviews for and on behalf of the company before any court in India and to appoint advocates and sign vakalats and to accept service on behalf of the company in connection with such proceedings. Since B. Gopala Krishna, who verified the contents of the petition has no authority to initiate winding up proceedings against the respondent-company, the company petition dismissed.

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Competency of the Petitioner's Representative
3. Bona Fide Dispute of Debt
4. Alternative Remedies
5. Commercial Insolvency

Detailed Analysis:

1. Territorial Jurisdiction:
The court addressed whether it had jurisdiction to entertain the winding-up petition. According to Section 10 of the Companies Act, 1956, the High Court having jurisdiction is where the registered office of the company is situated. The registered office of the respondent-company is at Vijayawada, falling within the jurisdiction of the Andhra Pradesh High Court. Hence, the court confirmed it had territorial jurisdiction to entertain the petition.

2. Competency of the Petitioner's Representative:
The petition was filed by B. Gopala Krishna, an authorised signatory of the petitioner-company. The court examined whether he had the authority to file the winding-up petition. The power of attorney granted to him did not explicitly authorize him to initiate winding-up proceedings. The court emphasized that powers of attorney must be strictly construed, and the powers granted to B. Gopala Krishna were limited to filing suits for recovery and other related actions, not for initiating winding-up proceedings. Consequently, the court found that B. Gopala Krishna lacked the authority to file the petition, leading to its dismissal.

3. Bona Fide Dispute of Debt:
The petitioner claimed that the respondent-company owed a debt of Rs. 9,59,640 for supplied pesticides, evidenced by dishonoured cheques and subsequent acknowledgments of debt by the respondent. The respondent contended that the amount was disputed due to non-deduction of promised discounts and commissions. The court referred to the Supreme Court's ruling in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd., which held that a bona fide dispute of debt, if substantial, could prevent the winding-up of a company. However, the court did not delve deeper into this issue due to the dismissal on the competency ground.

4. Alternative Remedies:
The respondent argued that since the petitioner had already initiated cheque bouncing cases under Section 138 of the Negotiable Instruments Act, 1881, it was impermissible to seek a winding-up order. The court acknowledged this argument but did not provide a detailed ruling on it due to the primary dismissal reason.

5. Commercial Insolvency:
The petitioner claimed the respondent-company was commercially insolvent, unable to pay its debts, and heavily indebted. The respondent countered by presenting its financial health, including its paid-up capital, turnover, and ongoing business operations. The court did not make a conclusive determination on the commercial insolvency claim due to the dismissal based on the lack of authority of the petitioner's representative.

Conclusion:
The petition was dismissed primarily because B. Gopala Krishna, who filed the petition on behalf of the petitioner-company, lacked the authority to initiate winding-up proceedings. The court did not provide a detailed analysis on other issues like the bona fide dispute of debt, alternative remedies, and commercial insolvency due to the primary ground of dismissal. No order as to costs was made.