2013 (10) TMI 997 - HC - Companies Law

Winding up petition - Inability to pay debts - Held that - dispute, sought to be raised by the company, is sham and bogus and is only with an intent to avoid the company to be liable for being wound up and, therefore, this Court finds that the company has not made out any bona fide defence warranting the court to relegate the parties to regular civil proceedings - This Court, therefore, finds that the company has unreasonably and illegally withheld the legitimate dues of the petitioning creditor and has unable to pay its debt - Decided against petitioner.

Summary

Issues involved:
1. Unpaid seller's petition for winding up against the company for non-payment of goods supplied.

Analysis:
The petitioning creditor, an unpaid seller, filed a winding up petition against the company for non-payment of goods supplied. The purchase order was issued for the supply of materials, and the goods were delivered, but the company failed to pay for the full quantity supplied. The company did not dispute the receipt of goods or the invoice raised at the agreed rates. Despite a statutory notice and lack of response from the company, the company raised objections in its affidavit-in-opposition, claiming the supply was late, of inferior quality, and in short quantity.

2. Company's objections regarding the supply of goods.

Analysis:
The company raised three objections in its affidavit-in-opposition. Firstly, it claimed the supply was late, but the company accepted the goods without protest. Secondly, the company alleged the goods were of inferior quality, a claim made for the first time without supporting evidence. Thirdly, the company contended there was a short supply of materials, which it accepted without objection. The company failed to provide documentary evidence supporting its claims of losses or damages due to the alleged short supply.

3. Evaluation of company's objections and defense.

Analysis:
The court found the company's objections to be without merit and raised in an attempt to avoid payment and evade winding up proceedings. The court considered the objections regarding late delivery, inferior quality, and short supply of goods to be unsubstantiated and lacking in bona fide defense. The court concluded that the company unreasonably withheld payment to the petitioning creditor and was unable to pay its debt, leading to the admission of the winding up petition.

4. Court's decision and directions.

Analysis:
The court admitted the winding up petition and directed the company to pay the principal sum owed to the petitioning creditor along with interest and costs within two months. Failure to make the payment would result in the publication of the winding up petition in specified newspapers. If the payment was made within the stipulated time, the winding up petition would be permanently stayed. The court dispensed with the publication in the Official Gazette and set out specific instructions for the advertisement process.