2005 (2) TMI 898 - HC - Companies Law

Maintainability of petition - time-barred claim - limitation or service of statutory notice - Seeking winding up of the company - Company when deemed unable to pay its debts - HELD THAT - In the present case, it would be seen that the admission of liability in the list of creditors maintained by the respondent company or in the balance sheet is without any conditions or any strings attached. Thus it is only when there is a bona fide dispute by the respondent company regarding the entries in its account books, on which reliance is placed by the petitioner creditor, such an acknowledgement may not be of much assistance. According to judgment of this Court in the case of Rishi Pal Gupta 1993 (11) TMI 198 - HIGH COURT OF DELHI is to be read only when the petition is based on running account implicate without any confirmation by the respondent company or without any acknowledgement of debt by the respondent company. No doubt in that case the learned Judge while taking note of the facts found that the respondent company had acknowledged the liability towards the petitioner while replying to the Registrar of Companies. However, it appears that while discussing the case, the learned Judge only went by the fact that the petition was based on running account and did not at all deal with the question as to what would be the effect of acknowledging the liability in reply to the Registrar of Companies. Therefore, this case cannot be treated as laying down the proposition that even if the liability is acknowledged by the respondent company in respect of a debt which the respondent company owes to the petitioner, still such a petition would not be maintainable. It is not a case where balance sheet is not passed by the shareholders or there is any note by the Directors questioning the entry in the balance sheet on any plea, like time-barred, etc. Had the respondent company produced the list of creditors, one would have known the exact liability which is admitted by the respondent company qua the petitioner. For not producing this document in spite of Court orders, adverse inference can be drawn. Be as it may, once there is an admission of liability, the petition can be admitted. Therefore, prima facie opinion that the respondent company is indebted to the petitioner which debt is acknowledged. Once that is found, the defense of the respondent company that it is a solvent company would also not hold any water. This petition is accordingly admitted to hearing. The question of appointment of provisional Liquidator shall be considered after the citation is published. However, liberty is grated to the respondent company to deposit balance amount of ₹ 1,52,471/- (₹ 2,00,000/- already deposited pursuant to the Division Bench order) along with interest calculated at the rate of 6 per cent per annum on ₹ 3,52,471/- from 1st August, 1998 (keeping in view that registered notice was sent on 31st July, 1998) with the Registrar General of this Court within six weeks from the date of this order. The petitioner shall not get the citations published for a period of six weeks. In case the aforesaid amount is not deposited, the petitioner shall proceed with the publication of citations,

Issues Involved:
1. Whether the respondent company is indebted to the petitioner and unable to pay its debt.
2. Whether the statutory notice was served upon the respondent company.
3. Whether the petitioner's claim is barred by limitation.
4. Whether the petitioner firm is registered and capable of filing the present proceedings.
5. Whether the respondent company is commercially solvent.
6. Whether a petition based on a running account is maintainable.

Detailed Analysis:

1. Indebtedness and Inability to Pay Debt:
The petitioner sought the winding up of the respondent company under Sections 433(e), 434, and 439 of the Companies Act, 1956, on the ground that the respondent company was indebted to the petitioner for Rs. 3,52,471/- and unable to pay the debt. The petitioner supplied furnishing fabrics to the respondent company from June 3, 1992, to August 1, 1995, for a total value of Rs. 5,49,221/-. Out of this amount, the respondent company paid only Rs. 1,96,750/-, leaving a balance of Rs. 3,52,471/-. The petitioner also claimed interest on the overdue payment at 18% per annum, amounting to Rs. 3,20,683/-, making a total of Rs. 6,73,154/-. The respondent company contested the petition, claiming it was commercially solvent and able to pay its debts.

2. Service of Statutory Notice:
The petitioner sent a statutory notice dated July 28, 1998, which was allegedly received by the respondent company on August 3, 1998. The petitioner provided a postal receipt and an acknowledgment card signed on behalf of the respondent company. The respondent company denied receiving the statutory notice. However, the court noted that the petitioner enclosed the postal receipt and AD card with the correct address of the respondent company, and the respondent did not press this plea during arguments.

3. Limitation:
The respondent company argued that the petitioner's claim was time-barred. However, the court observed that the last payment was made on September 15, 1995, and the petition was filed on September 9, 1998, within three years of the last payment. Thus, the claim was not time-barred.

4. Registration of Petitioner Firm:
The respondent company contended that the petitioner firm was not registered and thus barred under Section 69 of the Partnership Act. The petitioner, however, provided evidence of its registration, which was not challenged by the respondent company. Therefore, the court found that the petitioner firm was registered and capable of filing the proceedings.

5. Commercial Solvency:
The respondent company claimed to be commercially solvent and able to pay its debts as and when established. The court, however, noted that the respondent company admitted the petitioner's liability in its books of accounts and balance sheet, which constituted an acknowledgment of debt. The court held that once the debt was acknowledged, the defense of commercial solvency did not hold water.

6. Petition Based on Running Account:
The respondent company argued that the petition was not maintainable as it was based on a running account. The court referred to the judgment in Rishi Pal Gupta v. S.J. Knitting and Finishing Mills (P) Ltd., which held that a winding-up petition based on a running account was not maintainable. However, the court distinguished the present case, noting that apart from the running account, there was a clear acknowledgment of debt by the respondent company in its books of accounts and balance sheet. The court concluded that the petition was maintainable as it was based on the acknowledgment of debt, not merely on a running account.

Conclusion:
The court admitted the petition for hearing, directed the publication of citations in newspapers, and allowed the respondent company to deposit the balance amount of Rs. 1,52,471/- along with interest at 6% per annum within six weeks. If the amount was not deposited, the petitioner could proceed with the publication of citations. The case was listed for further orders on July 12, 2005.

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