2012 (11) TMI 303 - HC - Companies Law

Stay of Winding up proceedings additional excavation done by the respondent - Respondent claimed that the company took benefit of excavation work hence, they were obliged to make payment for the additional quantity in accordance with the provisions of Section 73 of the Indian Contract Act. Claim in the arbitration would relate to the identical amount being value of the final bill that was sought to be passed by the appellant company. It is admitted position arbitration is still pending and awaiting its disposal. Held that - In the instant case, the subject matter of the claim was itself pending and awaiting decision of the arbitrator. Pursuant to our order the appellant already secured the entire claim through bank guarantee. Respondent is permitted to withdraw the amount through encashment of bank guarantee by giving counter guarantee for the same. The Registrar would hold the same till disposal of the arbitration proceeding and would get it renewed from time to time - This is not a fit and proper case to wind up the appellant company - Order of admission of the winding up proceeding is set aside.

Issues:
1. Dispute over payment for excavation of copper ore in Madhya Pradesh
2. Writ petition dismissed by Single Judge, appeal filed, Division Bench granted liberty to submit representation
3. Review petition dismissed, winding up petition filed, company disputed claim, winding up order passed
4. Appeal against winding up order dismissed, second appeal filed
5. Bank guarantee furnished, winding up order stayed, appeals heard
6. Appellant's counsel argued company's solvency, arbitration proceedings ongoing
7. Respondent sought encashment of bank guarantee, criticized appellant's conduct
8. Arbitration related to additional claims, pending decision, relevance of Haryana Telecom Ltd. case
9. Court held not a fit case for winding up, referred to guidelines in Kiranmayee Devi case
10. Order of admission of winding up proceeding set aside
11. Final winding up order set aside
12. Appeals allowed and disposed of without costs

Analysis:
1. The case involved a dispute between Hindustan Copper Limited and a respondent over payment for excavation of copper ore in Madhya Pradesh. The respondent filed a winding up petition after the final bill was passed for payment, leading to a series of legal proceedings including a dismissed writ petition, appeals, and a winding up order passed by the learned Judge.
2. The Single Judge initially dismissed the writ petition, citing issues with the documents provided by the petitioner. The Division Bench granted liberty to submit a representation, and subsequent review petitions were dismissed. The winding up petition was filed after the final bill was settled, and the company's resistance to the claim led to the winding up order.
3. The company's appeal against the winding up order was dismissed, prompting a second appeal. The appellant's counsel argued the company's solvency and highlighted ongoing arbitration proceedings related to the dispute. The Court granted a stay on the winding up order and heard the appeals promptly.
4. The respondent sought encashment of the bank guarantee and criticized the appellant's conduct, alleging a lack of seriousness in the legal proceedings. The Court considered the company's financial standing and the pending arbitration as crucial factors in the case.
5. The Court analyzed the arbitration proceedings, noting that the claims in arbitration were related to the amount in dispute in the winding up petition. The Court referenced a previous case to support its decision that the case was not suitable for winding up, emphasizing the need to protect the appellant's interests.
6. Ultimately, the Court set aside the order of admission of the winding up proceeding and the final winding up order, allowing the appeals and disposing of the case without costs. Both judges agreed on the decision, bringing an end to the legal battle between the parties.

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