2018 (5) TMI 621 - HC - Companies Law

Winding up petition - outstanding eligible debt - Held that - The settled legal position is that the debts claimed should be payable by the respondent company. It is only where the respondent company raises a bona fide dispute then no winding up petition would lie. As noted the respondent company has failed to show any bona fide dispute. Accordingly, admit the present petition 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:
1. Winding up petition filed under Sections 433(e), 434, and 439 of the Companies Act, 1956 seeking winding up of the respondent company.
2. Validity of the acknowledgment letter dated 01.09.2014 signed by a non-director.
3. Dispute regarding the quality of products supplied by the petitioner.
4. Ability of the respondent company to pay its dues.

Analysis:

Issue 1: Winding up petition
The petitioner filed a winding up petition seeking dues from the respondent company. The petitioner alleged non-payment of dues despite multiple attempts, leading to the filing of the petition. The court heard arguments from both parties and proceeded to decide the petition due to the respondent's inability to provide instructions, ultimately admitting the petition.

Issue 2: Validity of acknowledgment letter
The respondent disputed the validity of the acknowledgment letter dated 01.09.2014, contending that it was signed by a non-director. However, the court analyzed the shareholdings of the respondent company and its sister concern, establishing a common economic entity operated by individuals holding significant shares in both entities. Consequently, the court upheld the acknowledgment's validity, as the signatory had the authority to represent the respondent company.

Issue 3: Quality dispute
The respondent raised concerns about the quality of products supplied by the petitioner, citing emails regarding product quality issues. However, the court noted that the complaints pertained to a different entity, not the respondent company. Therefore, the court ruled that the respondent could not rely on quality complaints related to a separate entity to dispute the dues owed to the petitioner.

Issue 4: Ability to pay dues
In light of the evidence presented and legal precedents, the court found the respondent's defense unsubstantiated. Citing a Supreme Court decision, the court emphasized that the respondent must show a bona fide dispute to avoid a winding up petition. As the respondent failed to demonstrate any genuine dispute, the court admitted the petition and appointed the Official Liquidator as the Provisional Liquidator to take over the respondent's assets and records.

In conclusion, the court admitted the winding up petition due to the respondent's failure to pay the outstanding dues, upheld the validity of the acknowledgment letter, dismissed the quality dispute raised by the respondent, and appointed the Official Liquidator to oversee the winding up process.