2011 (7) TMI 1009 - HC - Companies Law

Winding up creditors company unable to pay its debt non-payment of sums the petitioning creditor terminated the agreement between the parties - security deposit was also forfeited - a confirmed payment schedule was sent to the petitioning creditor by the Company - Held that - sum of US 82,467.90 is due and payable to the petitioning creditor by the Company and accordingly the Company is directed to pay the said sum of US 82,467.90 within 6 weeks from the date of receipt of this order along with interest at the rate of 12 per cent per annum Forfeiture of Security - Held that - As a bona fide dispute has been raised in respect of forfeiture of the Security deposit the said cannot be decided in this application and the parties will be entitled to take steps in accordance with law

Summary

Issues:
1. Application filed for winding up under sections 433, 434, and 439 of the Companies Act, 1956.

Analysis:
1. The petitioning Creditor sought winding up of the Company due to default in payment of rent for Satellite services provided. The termination of the agreement was justified under clause 6.2, allowing forfeiture of the security deposit. The Company's contention of subpar service quality was not raised in response to the notice under section 434, and no counterclaim against the forfeiture was made. The court relied on precedents like Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. to support the petitioning Creditor's claim.

2. The Company argued against the winding up application, citing lack of admission in the reply to the statutory notice and the agreement's arbitration clause. The Company contended that disputes should be resolved as per the laws of Singapore and through arbitration, as per clauses 13 and 14 of the agreement, thus challenging the jurisdiction of the winding up Court.

3. The petitioning creditor clarified that the dispute was primarily about the security deposit's forfeiture and outstanding rental payments. Despite proposals for payment, the Company failed to remit the dues, triggering the forfeiture clause. Precedents like Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. were cited to support the petitioning creditor's claim.

4. The court noted the agreement between the parties, the termination of the agreement by the petitioning creditor, and the subsequent dispute over the security deposit and outstanding payments. The Company was directed to pay the outstanding sum of US$ 82,467.90 within a specified timeline, along with interest. Advertisements for default were also ordered, and the dispute over the security deposit was deemed not suitable for resolution in the winding up application, allowing parties to pursue legal remedies.

This comprehensive analysis covers the key issues raised in the legal judgment, highlighting the arguments presented by both parties and the court's decision based on the relevant legal provisions and precedents cited.