2013 (4) TMI 565 - HC - Companies Law

Windng up Circumstances in which company may wound up - Held that After interpretating the clauses as mentioned in the STSA and based on the judgment passed by Hon ble Supreme Court in IBA Health (India) (P.) Ltd. v. Info-Drive Systems Sdn. BHD 2009 (10) TMI 533 - HIGH COURT OF KARNATAKA held that a company petition cannot be pursued in respect of a contingent debt unless the contingency has happened and it has become actually due. The judgment of the Hon ble Supreme Court is directly applicable to the case on hand. In the present case also, the contingencies of arriving at the figure after setting off the accumulated losses and after arriving at the future profits, etc is yet to ascertained. Hence, on this ground also petition is liable to be dismissed.

Summary

Issues Involved:
1. Alleged failure to pay Rs. 3.23 crores by the respondent.
2. Contingent nature of the debt.
3. Dispute over the interpretation of the Share Transfer and Subscription Agreement (STASA).
4. Maintainability of the winding-up petition.
5. Bona fide dispute over the debt.
6. Delay in filing the petition.

Detailed Analysis:

1. Alleged Failure to Pay Rs. 3.23 Crores by the Respondent:
The petitioners contended that under Clause III(A) of the STASA, they were to receive Rs. 15.82 crores for their shares in ABDL, with Rs. 3.23 crores withheld by the respondent. The respondent argued that the amount was contingent upon ABDL turning profitable and utilizing future business profits to set off accumulated losses.

2. Contingent Nature of the Debt:
The court noted that the payment of Rs. 3.23 crores was contingent on ABDL's future profits. Clause III(A)(ii) of the STASA specified that the amount would be repaid only if ABDL made profits and these profits were used to set off accumulated losses. Since ABDL did not generate profits, the contingency did not occur, and thus, the debt was not due.

3. Dispute Over the Interpretation of the STASA:
The petitioners argued that the respondent was liable to pay the withheld amount as per the STASA. However, the respondent maintained that the payment was subject to ABDL making profits. The court found that the interpretation of the clause required detailed examination, which was beyond the jurisdiction of the Company Court. The court concluded that the liability was not absolute or undisputed, requiring a more detailed legal proceeding to resolve.

4. Maintainability of the Winding-Up Petition:
The respondent argued that the petition was not maintainable as the petitioners were not creditors, and the amount claimed was disputed. The court agreed, stating that the petitioners had failed to establish an admitted debt. The court referenced the Supreme Court judgment in IBA Health (India) (P.) Ltd. v. Info-Drive Systems Sdn. BHD, which held that a winding-up petition cannot be pursued for a contingent debt unless the contingency has occurred.

5. Bona Fide Dispute Over the Debt:
The court found that the dispute over the payment was bona fide and substantial. The respondent consistently disputed the debt from the beginning, and the court held that the defense was in good faith and likely to succeed in law. The court emphasized that a bona fide dispute on substantial grounds is sufficient to dismiss a winding-up petition.

6. Delay in Filing the Petition:
The respondent pointed out that there was a significant delay in filing the petition, as the demand for payment was made in September 2008, and the petition was filed in October 2011. The court noted this delay but did not delve deeply into it, as the primary issue was the failure to establish an admitted debt.

Conclusion:
The court dismissed the petition, concluding that the petitioners failed to establish an admitted debt and that the dispute over the payment was bona fide and substantial. The court emphasized that the winding-up procedure could not be used to enforce a contingent debt, and detailed legal proceedings were necessary to resolve the dispute over the STASA.