2018 (4) TMI 731 - HC - Companies Law

Winding up petition - existence of eligible outstanding debt - Held that - A clear case is made out in this case that the respondents are despite having admitted the dues of ₹ 13,23,057/- refusing to pay. Respondent company is hence unable to pay its debt. Keeping in view the above, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers Statesman (English) and Veer Arjun (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing.

Summary

Issues Involved:
Winding up petition under Companies Act, 1956 based on outstanding dues; Disputed debt defense raised by respondent; Admission of debt by respondent in financial statement; Suit filed for recovery of amount pending before District Court; Effect of subsequent suit on winding up petition; Appointment of Official Liquidator as Provisional Liquidator.

Issue 1: Winding up petition based on outstanding dues
The petitioner filed a winding up petition under section 433(e), 434, and 439 of the Companies Act, 1956, seeking to wind up the respondent company due to unpaid outstanding dues amounting to ?25,05,676. The petitioner had supplied steel products to the respondent as per orders, and despite issuing legal notices demanding payment, the respondent failed to clear the dues, leading to the filing of the winding up petition.

Issue 2: Disputed debt defense
The respondent contended that the debt was disputed, arguing that the respondent company, a profitable concern with a healthy balance sheet, had genuine concerns regarding the invoices raised by the petitioner. Specifically, the respondent claimed discrepancies in the weight and density of the steel supplied, leading to alleged overstatement of rates in several bills. The respondent asserted that the present winding up petition was not maintainable due to the disputed nature of the debt.

Issue 3: Admission of debt in financial statement
During the proceedings, the petitioner highlighted the respondent's financial statement for the Assessment Year 2012-13, where an amount of ?13,23,057 was shown as outstanding and payable to the petitioner. The petitioner argued that this financial disclosure by the respondent constituted an admission of the debt owed to them, strengthening the petitioner's claim for winding up.

Issue 4: Effect of pending recovery suit
The respondent argued that the petitioner had already initiated a recovery suit for the outstanding amount, which was pending before the District Court. However, the court noted that the winding up petition was filed prior to the recovery suit, and the petitioner's action was justified to avoid the claim becoming time-barred. The court emphasized the importance of timely filing to prevent the claim from being barred by limitation.

Issue 5: Appointment of Official Liquidator
Considering the facts presented, including the admission of debt by the respondent and the failure to respond adequately to legal notices, the court admitted the winding up petition. The court appointed the Official Liquidator as the Provisional Liquidator, directing the takeover of assets, books of accounts, and records of the respondent company. Additionally, the court ordered the publication of citations and authorized necessary actions to protect the assets of the respondent company.

Conclusion
The court held the winding up petition admissible due to the respondent's admission of debt and lack of substantial defense against the outstanding dues. The appointment of the Official Liquidator as the Provisional Liquidator was made to oversee the winding up process, with provisions for asset valuation and protection. The court granted a 30-day window for the respondent to settle the admitted debt, failing which the winding up process would proceed. The order was held in abeyance pending the payment of the admitted sum, emphasizing the continuation of the suit for any remaining balance.