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2012 (10) TMI 383 - HC - Companies LawWinding up of the Company - Petitioners contended that order of winding up against the respondent company be passed because the respondent company has, according to the petitioner, lost capacity to discharge its financial obligations and it is unable to pay its debt. The amounts in dispute were deposited by the petitioner companies towards security deposit in pursuance of identical agreements entered into between the petitioner companies and the respondent co. the petitioners have terminated the agreement in accordance with the terms thereof and that therefore the respondent company is under obligation to return the amount deposited towards security deposit. However, despite repeated reminders and requests and even after due and proper service of statutory notice at the Registered Office of the respondent company, the payment has not been made. The petitioners, therefore, have filed present petition. Held that - in case of the three petitioners the respondent has not refunded a total sum of Rs.16 lacs (between the three petitioners) and upon service of statutory notice, in its reply through advocate it has for the first time made reference of its right to forfeit the security deposit of the two petitioners. - it prima facie appears that the dispute or defence sought to be raised by the respondent in case of all three petitioners are in nature of afterthought and they are not genuine and bona fide but are, as described by the Apex Court, ingenious mask invented by the respondent to defeat the petition and seem to have been raised only with a view to shielding or hiding its neglect as well as inability to refund the security deposit and delay or frustrate the obligation to refund the deposits. - it becomes relevant and necessary to examine as to whether there is any bona fides in the dispute sought to be raised by the respondent or not. The respondent is directed to deposit in the Registry of this Court, within 30 days from receipt of the certified copy of present order, 30% of the deposited amount by each of the three petitioners, i.e. Rs.4.80 lakhs (Rupees Four Lakh Eighty Thousand only) in the interest of justice and the Registry shall list the three petitions being Company Petition Nos.179 of 2010, 181 of 2010 and 182 of 2010 on 16th July, 2012 for further orders.
Issues Involved:
1. Petition for winding up against the respondent company. 2. Alleged inability of the respondent to pay its debts. 3. Disputed questions of fact raised by the respondent. 4. Arbitration clause in the agreements. 5. Examination of the bona fides of the respondent's defense. Detailed Analysis: 1. Petition for Winding Up Against the Respondent Company: The petitioner in Company Petition No.179 of 2010, along with two other petitioners in Company Petition Nos. 181 and 182 of 2010, sought an order of winding up against the respondent company and the appointment of a liquidator. The petitions were based on similar contracts executed with the respondent, differing only in the amounts of security deposits and specific dates. 2. Alleged Inability of the Respondent to Pay Its Debts: The petitioners claimed that the respondent company was indebted to them for Rs.2 lakhs, Rs.5 lakhs, and Rs.9 lakhs respectively, which were deposited as security. Despite terminating the agreements and issuing statutory notices, the respondent failed to refund these amounts. The petitioners argued that this demonstrated the respondent's inability to pay its debts. 3. Disputed Questions of Fact Raised by the Respondent: The respondent resisted the petitions, arguing that several disputed questions of fact were involved. It claimed a substantive and bona fide defense, asserting that the agreements contained an arbitration clause, and thus, the petitioners should seek arbitration. The respondent also contended that the alleged debt was disputed and that the petitions were filed merely to recover this disputed debt. 4. Arbitration Clause in the Agreements: The respondent argued that the presence of an arbitration clause in the agreements necessitated arbitration rather than a winding-up petition. However, it was noted that the remedy under Sections 433 and 434 of the Companies Act is a special statutory remedy for winding up, which is not an alternative to arbitration. The court held that the relief of winding up would not be available in arbitration proceedings, and thus, the arbitration clause did not preclude the court from entertaining the petitions. 5. Examination of the Bona Fides of the Respondent's Defense: The court examined whether the disputes raised by the respondent were bona fide and substantial or merely spurious and afterthoughts. The court noted that the respondent had not raised any claims or disputes against the petitioners until the statutory notices were issued. The respondent's defense, based on clauses allowing retention or forfeiture of the security deposit, was scrutinized. The court found that the respondent had not demonstrated any overt action to retain or forfeit the deposits, nor had it communicated such actions to the petitioners. The court also considered the decisions cited by both parties, emphasizing that the company court must determine whether the defense is genuine or merely a tactic to avoid payment. The court found that the respondent's defense lacked bona fides and appeared to be an afterthought. Conclusion: The court directed the respondent to deposit 30% of the security deposit amounts (Rs.4.80 lakhs) in the court registry within 30 days. The petitions were scheduled for further orders on 16th July 2012. The court's decision underscored the importance of examining the bona fides of the respondent's defense in winding-up petitions and clarified the limited applicability of arbitration clauses in such statutory remedies.
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