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2013 (11) TMI 241 - HC - Companies LawWinding up - Inability to pay debts - recovery of dues - Held that - that petitioners have made a feeble attempt to recover the said amount of Rs. 2.5 crores paid by them to M/s. Tilak Nagar Industries contending it to be a distinct transaction which has been held herein above as otherwise - if the defence raised by the respondent company being substantial one and not a mere moonshine and all the contentious issues are required to be finally adjudicated on merits by the Civil court, this Court would not be inclined to exercise the discretionary jurisdiction vested in it for winding up of the respondent company. The debt being disputed by the respondent for the reasons attributable to the petitioners namely, on account of the terms of the contract dated 29.08.2010 not having been adhered to by them - defence set up by the respondent company is a bona fide dispute and as such petitioner would not be entitled to seek winding up of the respondent company under section 433(e) and read with section 439 of the Companies Act - Following decision of IBA Health (India) (P.) Ltd. v. Info Drive Systems SDN. BHD 2010 (9) TMI 229 - SUPREME COURT OF INDIA - Decided against petitioner.
Issues Involved:
1. Whether the petitioner has made out a case for winding up of the respondent-company under Section 433(e) and (f) read with Section 439 of the Companies Act, 1956? 2. Whether the defense set up by the respondent company is genuine and a bona fide dispute, to reject the company petition by refusing to grant the prayer sought for by the petitioner? Issue-Wise Detailed Analysis: 1. Case for Winding Up under Section 433(e) and (f) read with Section 439 of the Companies Act, 1956: The petitioner sought the winding up of the respondent company, invoking Section 433(e) and (f) read with Section 439 of the Companies Act, 1956, on the grounds of failure to pay an admitted debt and commercial insolvency. The petitioner claimed that an agreement dated 29.08.2010 was entered into for the purchase of the respondent company's entire paid-up capital of Rs. 50,00,000 equity shares. A sum of Rs. 8.50 crores was paid pursuant to this agreement. The petitioner also paid Rs. 2.50 crores to M/s. Tilak Nagar Industries Limited on behalf of the respondent to settle a debt, which the respondent failed to repay. Consequently, the petitioner terminated the agreement and sought the winding up of the respondent company. 2. Defense Set Up by the Respondent Company: The respondent admitted the agreement dated 29.08.2010 but contended that the total consideration was Rs. 11 crores, not Rs. 8.5 crores. The respondent argued that the petitioner took out a paper publication without their consent, leading to the filing of Company Petition No.223/2011 by M/s. Tilak Nagar Industries Limited. The respondent acknowledged the payment of Rs. 2.50 crores to M/s. Tilak Nagar Industries Limited but claimed it was part of the sale consideration under the agreement. The respondent denied any failure to discharge debts and argued that the payment was not an independent transaction but part of the agreement. Factual Matrix: The court examined the agreement dated 29.08.2010, which involved the purchase of the respondent company's entire paid-up capital. The petitioner had paid Rs. 8.5 crores and an additional Rs. 2.50 crores to M/s. Tilak Nagar Industries Limited. The respondent argued that the payment was adjusted towards the sale consideration. The court noted that the petitioner had already filed a suit for recovery of Rs. 8.50 crores and had sought leave to sue for the Rs. 2.50 crores in a separate suit. Legal Analysis: The court referred to the Supreme Court's judgment in IBA Health (India) (P.) Ltd. v. Info Drive Systems SDN. BHD, which held that if a debt is bona fide disputed, there cannot be 'neglect to pay' under Section 434(1)(a) of the Act. The court emphasized that a company court must look into the interest of creditors and the public at large. The court also referred to Divya Export Enterprises v. Producin (P.) Ltd, which stated that a respondent company must show that its defense is in good faith and substantial. Conclusion: The court concluded that the payment of Rs. 2.50 crores was related to the agreement dated 29.08.2010 and not a separate transaction. The court found that the defense set up by the respondent was bona fide and substantial. The court held that the petitioner's claim should be adjudicated in the civil suit already filed. Therefore, the court dismissed the company petition for winding up the respondent company. Order: 1. The company petition is dismissed. 2. The dismissal does not preclude the petitioners from initiating appropriate proceedings for recovery of the amount in question in an appropriate forum. 3. Parties to bear their respective costs.
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