2011 (8) TMI 961 - HC - Companies Law

Winding up petition respondent availed the transport service of the petitioner on credit - amount due was not paid in spite of repeated requests - respondent, having admitted its liability, did not pay the amount due Held that - respondent-company took the plea that Mr. Ravi Shankar earlier worked as regional manager in the petitioner firm and he had no authorisation on behalf of the respondent-company to admit the liability on its behalf towards the petitioner firm. petitioner has not delivered the material to the consignee. consignment which is required to be delivered to M/s. Paramount Communications met with a fire accident in transit. When once the goods are entrusted to the petitioner for transportation, he is bound to take reasonable care till delivery is affected to the consignee. According to the respondent, the worth of consignment entrusted to the petitioner for being delivered to paramount communications is Rs. 6 lakhs. There is a serious dispute as to whether the consignment entrusted to the petitioner is involved in the fire accident while on transit. Invocation of winding up proceedings, in the given facts and circumstances, is misconceived. company petition is dismissed

Issues Involved:
1. Petitioner's claim for winding up the respondent company due to unpaid debts.
2. Respondent's denial of liability and counterclaims.
3. Admissibility and validity of the debt confirmation letter.
4. Legal principles governing winding up petitions based on disputed claims.

Detailed Analysis:

1. Petitioner's Claim for Winding Up the Respondent Company Due to Unpaid Debts:
The petitioner, a partnership firm engaged in transportation services, sought an order of winding up against the respondent company under sections 433(c), 434(1)(a), and 439(1)(b) of the Companies Act, 1956. The petitioner claimed that the respondent owed Rs. 7,12,269 towards freight charges and an additional Rs. 2,99,152 as interest at 21% per annum. Despite repeated requests and legal notices, the respondent failed to pay the dues, leading the petitioner to assert that the respondent was commercially insolvent and warranted winding up.

2. Respondent's Denial of Liability and Counterclaims:
The respondent denied the petitioner's claims, asserting that an amount of Rs. 1,50,000 paid by the petitioner was not credited, and the statement of account was false. The respondent also contested the 21% interest rate on delayed payments. Additionally, the respondent claimed that the petitioner failed to deliver consigned goods, resulting in a counterclaim of Rs. 14,19,404 for undelivered materials. The respondent argued that the petitioner could not link the liability of one company within the Surana group to another, as each company is a separate legal entity.

3. Admissibility and Validity of the Debt Confirmation Letter:
The petitioner relied heavily on a debt confirmation letter (Exhibit P7) from Surana Strips Ltd., admitting the liability of Rs. 7,12,269. The respondent disputed the authority of the signatory, Mr. Ravi Shankar, claiming he was not authorized to admit liability on behalf of the respondent company. The court examined the letter and the circumstances under which it was issued, noting that the respondent's managing director admitted the failure to pay freight charges but contested the quantum of the amount.

4. Legal Principles Governing Winding Up Petitions Based on Disputed Claims:
The court referred to section 433 of the Companies Act, which outlines the conditions under which a company may be wound up, including the inability to pay its debts. The Supreme Court's principles in Madhusudan Gordhandas v. Madhu Woollen Industries (P.) Ltd. were cited, emphasizing that a winding up petition should not be used merely as a means for debt recovery. The court must determine if the debt is bona fide disputed and if the defense is substantial.

The court noted that the respondent admitted to some liability but raised substantial disputes regarding the quantum and circumstances of the debt. The petitioner's claim of a fire accident destroying goods in transit was introduced late and lacked documentation in the initial petition, further complicating the matter.

Conclusion:
The court concluded that the respondent raised a bona fide and substantial defense, making the dispute inappropriate for resolution through winding up proceedings. The proper forum for adjudicating the claims and counterclaims was determined to be the civil court. Consequently, the petition for winding up was dismissed.

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