2015 (3) TMI 685 - HC - Companies Law

Petition for winding up under Section 433(e) and 434 of the Companies Act - Amount not paid but reflected on income tax website under 26AS - Petition filed after a gap of 2 years - Held that - In my view, the respondent company has raised factual disputes that would require examination and there is no clear admission on the part of the respondent company of the amount claimed by the petitioner. The mere fact that income tax was deposited with the tax authorities for a payment that was proposed to be made to the petitioner prior to the discovery of the alleged manipulation done by the petitioner would not amount to a clear admission of debt on part of the respondent. It is the settled position of law that where a bonafide defence is raised in the winding up petition that merits an examination, a Company Court has to direct the petitioner to prove its claim in a civil suit. The entry with respect to the said tax to the credit of the petitioner in the form 26-AS would have been reflected by the Income Tax Authorities in the year 2010 itself. No plausible explanation is averred in the petition as to how the petitioner missed this type of entry for a period of over two years. - Winding up petition dismissed.

Summary

Issues:
Recovery of unpaid dues under Companies Act
Dispute over payment of performance bonus
Validity of resignation and non-payment of dues
Claim of unpaid amount and legal notice
Acknowledgement of liability through form 26-AS
Opposition to winding up proceedings for debt recovery
Disputes over billing and alleged manipulation of figures
Counter claim by respondent alleging fabrication of figures
Validity of winding up petition during pending civil suit
Plausible defense and disputed questions of fact
Timing of filing petition after resignation and civil suit

Analysis:

The petitioner filed a petition under Sections 433(e) and 434 of the Companies Act, claiming unpaid dues from the respondent company. The petitioner was offered a lucrative position and bonuses, but alleged non-payment of the second installment of the joining bonus. The petitioner's resignation was prompted by disputes with a director, leading to non-payment of dues amounting to over 82 lakhs. The petitioner discovered discrepancies in the tax statement, leading to a legal notice and ultimately the filing of the present petition.

The petitioner contended that the respondent's submission of form 26-AS acknowledged the liability to pay the outstanding amount. However, the respondent opposed the petition, arguing against using winding up proceedings for debt recovery unless the company is unable to pay its debts. The respondent raised disputes regarding over billing, bad debts, and alleged manipulation of figures by the petitioner to inflate performance results.

The court considered the legal precedents cited by both parties but emphasized that the present case involved factual disputes requiring detailed examination. The respondent's defense of fabricated figures and losses suffered due to over billing raised genuine concerns that needed to be addressed in a civil suit rather than winding up proceedings. The court noted the timing of the petition, filed after a significant gap following the civil suit, without a satisfactory explanation for the delay.

Ultimately, the court dismissed the petition, citing the respondent's plausible defense and the need for a thorough examination of disputed facts in a civil suit. The dismissal was without prejudice to either party in ongoing legal proceedings. No costs were awarded in the judgment.