2017 (1) TMI 685 - HC - Companies Law

Winding-up petition - non-payment of the Professional Fees - maintainability of petition - Held that - The agreement between the parties about the providing of Professional Services cannot be said to have a smooth sailing at that point of time also and no final admitted liability crystallized in favour of the petitioner - Firm towards the said amount. The jurisdiction of winding-up of a Company cannot be exercised against a solvent Company, if the liability of the Respondent - Company is disputed bona fide by it. The winding-up petition cannot partake the character of a money recovery suit and unless the liability is clearly admitted by the Respondent - Company and is not paid-off, despite service of statutory notice, this jurisdiction is not available to be exercised for exerting any kind of pressure on the Respondent - Company. This Court is satisfied that in the present case, the present winding-up petition does not merit admission and therefore, with liberty to the petitioner - Firm to avail alternative remedy by way of a Civil Suit, the present winding- up petition is liable to be dismissed. The same is accordingly dismissed.

Summary

Issues Involved:
Claim of non-payment of professional fees by the petitioner against the respondent company for architectural design services provided for a construction project.

Analysis:
The petitioner, a firm, entered into a contract with the respondent company to provide Architectural Design services for a Residential Apartment building project. The petitioner filed a Winding-up petition against the respondent company for alleged non-payment of professional fees amounting to ?1.80 Crores. Despite serving a legal notice under Section 434 of the Companies Act, the respondent company denied liability for the claimed sum and contended that the petitioner did not complete services for Phase-II of the project, for which fees were not required to be paid. The respondent argued that as Phase-I was completed, the balance amount was not due. The respondent further stated that the project was incomplete, and services were not fully rendered by the petitioner for Phase-II.

The respondent's Statement of Objections emphasized that there was no admitted liability to pay the claimed amount and that the winding-up petition should be dismissed. The respondent asserted that it was a going concern, regularly paid taxes, and was not commercially insolvent. The respondent argued that the liability was disputed, making the petition not maintainable. The court noted a bona fide dispute regarding the liability of the respondent towards the professional fees claimed by the petitioner. While Phase-I of the project was completed under the petitioner's services, there was a dispute regarding Phase-II, as evidenced by communication and non-payment issues.

The court highlighted that the agreement for professional services between the parties was not smooth, and no final admitted liability in favor of the petitioner crystallized. It emphasized that the jurisdiction of winding-up could not be exercised against a solvent company with a bona fide disputed liability. The court concluded that the winding-up petition did not merit admission and should be dismissed. The petitioner was granted liberty to pursue an alternative remedy through a Civil Suit. The judgment clarified that the winding-up jurisdiction was not for exerting pressure on the respondent company in the absence of a clearly admitted liability.