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2017 (2) TMI 2 - HC - Companies LawWinding up petition - outstanding dues - Held that - On facts, it is clear from the material placed on record that there is an admission by the APIIC at the highest level, viz., the Managing Director, that a substantial amount of money is due and payable to the company petitioner after adjustment of the amount already paid. The company petitioners dues stand at ₹ 8,18,36,584/-. No action having ever been initiated by the APIIC to raise a dispute as to its liability to pay the amount aforestated or as to delayed discharge of contractual obligations by the company petitioner, it is too late in the day for it to now raise the ruse of a bonafide dispute to ward off the summary proceedings initiated under the Act of 1956 for its winding up. As pointed out by the Supreme Court in IBA HEALTH (INDIA) PRIVATE LIMITED 2010 (9) TMI 229 - SUPREME COURT OF INDIA , mere commercial solvency of the APIIC is of no avail in the present situation as the same would only be a useful aid in deciding whether the refusal to pay the debt is a result of a bonafide dispute as to the liability or whether it reflects an inability to pay. The Supreme Court further observed that if there is no dispute as to the companys liability, the solvency of the company might not constitute a stand alone ground for setting aside a notice under Section 434(1)(a), meaning thereby, if a debt is undisputedly owing, then it has to be paid and if the company refuses to pay without genuine and substantial grounds, it should not be able to avoid the statutory demand. We therefore find no grounds to interfere with the order of admission of the company petition. However, we are of the opinion that another opportunity should be afforded to the APIIC to make good the payment due to the company petitioner in terms of the order under appeal, as the real fault in this regard lies, not with it, but elsewhere. We therefore grant two months time from today to the APIIC to deposit the sum of ₹ 8,18,36,584/- to the credit of Company Petition before the Registrar (Judicial) of this Court. In the event the APIIC does so, the company petition itself would stand dismissed as ordained by the learned Company Judge. The company petitioner would be entitled to withdraw the amount so deposited by approaching the Registrar (Judicial).
Issues Involved:
1. Admissibility of the winding-up petition. 2. Disputed debt and liability of APIIC. 3. Applicability of arbitration clause. 4. APIIC’s defense and counter-claims. 5. Public accountability and governance. Issue-wise Detailed Analysis: 1. Admissibility of the winding-up petition: The appeal under Clause 15 of the Letters Patent was directed against the order admitting the winding-up petition filed by the respondent. The learned Company Judge observed that for winding up a company due to inability to pay its debts, it must be indebted in excess of ?500/- and must have failed to pay the same for more than three weeks after service of notice. The Judge found that the debt due to the respondent was genuine and admitted, and thus, the denial by APIIC was mere moonshine. The appeal was admitted with an interim stay, but no settlement materialized, leading to the final disposal of the appeal. 2. Disputed debt and liability of APIIC: The respondent, a joint venture, claimed that APIIC failed to pay the balance amount of ?8,18,36,584/- for the work executed under a contract. The APIIC denied liability, asserting that there were seriously disputed questions of fact and relied on the arbitration clause. The learned Company Judge found the correspondence between the parties clearly showed that the debt was genuine and admitted. Despite APIIC’s reliance on Clauses 60 and 61 of the agreement, no action was taken against the respondent, indicating that the stoppage of work was due to APIIC’s inability to pay. 3. Applicability of arbitration clause: APIIC argued that the arbitration clause should be invoked for dispute resolution. However, the learned Company Judge rejected this plea, stating that there was no dispute regarding the payment of admitted bills, and the special jurisdiction of the Company Court under Sections 433 and 434 of the Companies Act, 1956, could not be barred by an arbitration clause. 4. APIIC’s defense and counter-claims: APIIC contended that the respondent abandoned the work and failed to meet contractual obligations, which could give rise to a counter-claim. The learned Advocate General argued that the case should not be entertained under Sections 433 and 434 of the Act of 1956 and that disputes should be resolved through arbitration or civil court. However, the learned Company Judge found no bonafide dispute and noted that APIIC had not initiated any action under Clauses 60 and 61 of the contract. 5. Public accountability and governance: The court expressed concern over the wasteful expenditure of public funds due to political decisions. The APIIC, having undertaken the project based on the Government’s assurance of funding, was left in a crisis when the project was sidelined by the succeeding political leadership. The court emphasized the need for political accountability and responsible governance, highlighting that public money should not be squandered on subjective whims of the political executive. Conclusion: The court found no grounds to interfere with the order of admission of the company petition. However, it granted APIIC two months to deposit the sum of ?8,18,36,584/- to the credit of the company petition. If APIIC fails to comply, the respondent is given liberty to advertise the admission of the company petition in specified newspapers, and the petition will be posted before the learned Company Judge for further proceedings. The appeal was dismissed, with no order as to costs.
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