2015 (3) TMI 585 - HC - Companies Law

Application for Winding up - Grounds for winding up - Held that - Adverting attention to the contention of Mr. Bose now, which has been referred to earlier, it cannot be gainsaid that His Lordship did not have the benefit of looking into the contents of the letter dated April 2, 2010, for, neither was the same disclosed in the company petition nor had the affidavit in- opposition of the company surfaced when His Lordship was in seisin of the company petition at the pre-advertisement stage. If at all the said letter did not reflect the actual state of affairs, nothing prevented the petitioning creditor from challenging its contents by sending an adequate response. The orders of admission and winding up had been obtained by the petitioning creditor keeping His Lordship in the dark about the existence of such a letter which, in the further opinion of this bench, clinches the issue for the company and against the petitioning creditor insofar as the merits of the company petition are concerned. The decisions cited by Ms. Bhutoria, learned advocate for the company reported in 2009 (11) TMI 508 - HIGH COURT OF BOMBAY E-City Media P. Ltd. , 2001 (3) TMI 922 - HIGH COURT OF KARNATAKA Greenhills Exports (P) Ltd. are authorities for the proposition that a case based on a claim for unascertained damages cannot be equated with debt and that a petition for winding up of a company is not maintainable where the amount claimed is not a debt but damages. In the circumstances, the proper course is to relegate the petitioning creditor to a suit. Having regard to disclosure of the letter dated April 2, 2010, it is held that the company has not created an illusion of a defence but a bona fide dispute requiring detailed investigation into the facts; a dispute, which cannot be adjudicated in a summary proceeding of the present nature.In the result, the company petition is permanently stayed.

Issues:
1. Petition for winding up under Companies Act, 1956.
2. Order for winding up passed by the court.
3. Application for recall of winding up orders.
4. Compliance with the order for depositing the amount.
5. Dispute regarding payment and occupation of premises.
6. Non-disclosure of crucial letter by the petitioning creditor.
7. Legal arguments regarding claim for damages versus debt.
8. Decision on the company petition.

Analysis:

1. The petitioning creditor filed a company petition seeking winding up of the company under Sections 433, 434, and 439 of the Companies Act, 1956, due to non-payment of a substantial amount. The claim included unpaid license fees, penalties, and interest, totaling to Rs. 35,66,203.00.

2. Initially, the court admitted the company petition as the company failed to represent itself and pay the outstanding amount. Subsequently, the court ordered winding up of the company when it remained unrepresented, directing the Official Liquidator to take possession of the company's assets and records.

3. The company later applied for a recall of the winding-up orders, claiming non-service. The court granted a conditional stay on the winding-up order, subject to the company depositing the entire amount. Upon compliance, the court permanently stayed the winding-up order.

4. The court highlighted a dispute between the parties regarding the occupation of premises beyond the agreed period, leading to conflicting claims. The company asserted oral agreements for extended occupation, supported by a letter, while the petitioning creditor argued for penalties as per the original agreements.

5. The non-disclosure of a crucial letter by the petitioning creditor, which supported the company's version, was deemed fatal to its claim. The court found the letter to be significant evidence that was not presented earlier, impacting the credibility of the petitioning creditor's claim.

6. Legal arguments were presented on whether the claim constituted damages or a debt, citing relevant case laws. The court considered the nature of the claim and the need for detailed investigation, concluding that the matter required a more thorough examination than a summary proceeding.

7. Ultimately, the court permanently stayed the company petition, acknowledging the existence of a genuine dispute requiring further investigation. The court directed the amount deposited to be returned to the company and allowed the petitioning creditor to pursue other legal remedies.

8. The judgment emphasized the need for a detailed examination of the dispute and clarified that the order did not prevent the petitioning creditor from seeking recourse through appropriate legal channels.

This comprehensive analysis covers the key issues and details of the judgment, providing a thorough understanding of the legal proceedings and decisions made by the court.

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