2012 (9) TMI 384 - HC - Companies Law

Winding up petition - outstanding payment - agreement for providing regular freight forwarding services - respondent requested the Appellant to raise invoices on Shark Logistics for expediency who in turn failed to make payment - Held that - There is a debt due and payable by the Respondent to the Appellant in the amount of U.S. 206,403.67 as the defence clearly runs in the teeth of a clear admission of liability contained in the Respondent s e-mail dated 26 October 2007 - as decided in IBA Health (I) (P.) Ltd. v. Info-Drive Systems Sdn. Bhd. 2010 (9) TMI 229 - SUPREME COURT OF INDIA a dispute is substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived thus defence of Respondent that there was no privity of contract with the Appellant was thoroughly lacking. The fact that there was no denial of liability when the Appellant addressed a communication to the Respondent on 21 April 2008 specifically stating that the invoices which were initially raised on Shark Logistics were on the instructions of the Respondent it would be appropriate to furnish an opportunity to the Respondent to deposit an amount equivalent to U.S. 206,403.67 to the credit of the Summary Suit which has been instituted in this Court by the Appellant, to establish its bona fides.

Summary

Issues:
- Dismissal of a Petition for winding up under Section 433(e) of the Companies' Act, 1956 based on the absence of privity of contract between the parties.

Detailed Analysis:

1. The appeal arose from an order dismissing a Petition for winding up under Section 433(e) of the Companies' Act, 1956 due to a dispute regarding the existence of a contract between the parties. The Respondent had entered into an agreement with a Company in Uganda for the supply of machinery and equipment, with the Appellant providing freight forwarding services. The Appellant raised invoices on Shark Logistics at the Respondent's request, leading to a dispute over outstanding payments. The Respondent argued the lack of privity of contract with the Appellant, which was accepted by the Company Judge as a ground for dismissing the Petition.

2. The Appellant contended that there was a clear acknowledgment of liability by the Respondent in an email, admitting to a specific amount due and payable. The Respondent's defense of no privity of contract was challenged based on the email communication and the Respondent's failure to raise a defense earlier. The Appellant sought an order for deposit of the admitted amount to the credit of a pending Summary Suit to establish the Respondent's bona fides.

3. The Respondent maintained that there was no privity of contract with the Appellant and that the dispute was genuine, emphasizing the involvement of Shark Logistics in the transactions. The defense was based on the absence of a direct contract between the Appellant and the Respondent, highlighting the role of Shark Logistics in the invoicing and payment process.

4. The High Court analyzed the facts and submissions, emphasizing the settled principles governing the admission of Company Petitions for winding up. The Court considered the email evidence, acknowledgments of liability, and the lack of denial or defense by the Respondent in response to the Appellant's communications. The Court found the Respondent's defense lacking in bona fides and ordered the admission of the Petition for winding up, subject to the Respondent depositing the admitted amount to the credit of the pending Summary Suit.

5. The Court allowed the appeal, setting aside the earlier order of dismissal and directing the Respondent to deposit the admitted amount within a specified timeframe. Failure to comply would result in the admission of the Company Petition for winding up. The decision aimed to balance the interests of justice and ensure the resolution of the dispute regarding the outstanding payments between the parties.