2018 (3) TMI 1642 - HC - Companies Law

Winding up petition - bonafide debt - no document of admitted liability - Held that - There is no document of admitting the liability on record. Though the petitioner is placing reliance upon the alleged ledger account for the period 1.4.2014 to 31.3.2015 and 1.4.2015 to 23.2.2016 (Annexure P/1) but the said ledger account is not signed by any of the parties and is a disputed document, therefore, petitioner is required to lead evidence and establish the debt. In the present case the debt has been bonafidely disputed by the respondent. That apart the respondent is a running hospital and there is no sufficient and cogent material on record to hold that the substratum of the respondent-Company has eroded. The petitioner has also raised a plea in respect of discrepancy in the TDS amount and the payment made but such disputed discrepancy alone is not sufficient to infer the debt or the inability to pay debt. In absence of any document of admitted liability or any undisputed document reflecting the debt due, this Court is of the opinion that it would not be proper in the facts of the present case to invoke the provisions of Section 433 of the Companies Act for winding up of the respondent-company.

Summary

Issues:
Winding up petition under Sections 433(e) and (f) of the Companies Act - Unpaid professional fees and operational charges - Dispute over liability and debt payment - Just and equitable grounds for winding up - Bonafide dispute between parties - Interpretation of "unable to pay its debts" under Section 433(e) - Legal position on winding up petitions - Requirement of evidence to establish debt - Disputed documents and liability denial by respondent - Substratum of the company not eroded - Discrepancy in TDS amount and debt payment - Application of legal principles from previous judgments.

Analysis:
The petitioner filed a company petition seeking winding up of the respondent-company under Sections 433(e) and (f) of the Companies Act, alleging unpaid professional fees, operational charges, and adverse effects on the hospital's business due to internal disputes. The respondent denied the allegations and liability to pay the amounts claimed by the petitioner, stating that the charges were settled. The petitioner, in response, highlighted discrepancies in TDS deductions and payments, supporting the claim of non-payment. The legal issue revolved around whether the debt was bonafide disputed by the respondent.

The Court referred to legal precedents, emphasizing that a winding-up petition should not be used to pressurize a company to pay a substantially disputed debt. It was noted that the mere existence of trading losses does not warrant winding up unless there is no prospect of future profits. The Court analyzed the evidence presented, including a disputed ledger account, and concluded that the debt claimed by the petitioner was bonafide disputed by the respondent. Additionally, the Court found insufficient evidence to establish the company's inability to pay its debts, as required under Section 433 of the Act.

Based on the lack of admitted liability or undisputed documents reflecting the debt due, the Court held that invoking Section 433 for winding up was not justified in this case. The judgment highlighted the importance of establishing debt through evidence and the need to prove the inability to pay debts. Ultimately, the Court dismissed the company petition, as the necessary ingredients for winding up under Section 433(e) and (f) were not met, considering the bonafide dispute and absence of conclusive evidence of debt.

In conclusion, the judgment focused on the legal principles governing winding up petitions, emphasizing the requirement for substantiated claims, bonafide disputes, and the commercial interpretation of debt payment inability. The decision underscored the significance of evidence in establishing liabilities and the cautious approach required in determining the grounds for winding up a company under the Companies Act.