2018 (7) TMI 1231 - HC - Companies Law

Winding up petition - Held that - It is quite clear from the perusal of the so called acknowledgement that respondent was acknowledging the amount of ₹ 66,24,136/- stating that the said pending amount would be adjusted only against future purchases. To the same effects are some of the emails which were sent later in time which show the stand of the respondent company that they would adjust the payment against future orders that may be received. In fact, as pointed out to the learned counsel for the petitioner that the respondent would be obliged to take back unsold books and refund the prices only in case there is a specific provision in the agreement between the parties. Petitioner has failed to show any provision in the vendor agreement dated 29.10.2011 which obliges the respondent to take back the surplus stocks lying with the petitioner and refund the consideration paid. The petitioner however states that this condition was mutually agreed between the parties and the respondent is bound by the terms and conditions of the said agreement that was agreed upon between the parties. Under section 19 of Sales of Goods Act, 1930, the property in the goods is transferred to the buyers at such time as the parties to the contract intended it to be transferred. In the present facts, there is nothing to show that when the goods were purchased by the petitioner, the title to the goods did not pass to the petitioner. Hence, it cannot be said that the respondent company is liable for the stated dues. It is settled legal position that it is not the function of the company court to enter into an adjudication of disputed facts which should have been the subject matter of the Civil Suit. The respondent has raised disputes that are bonafide. Clearly, the contentions which are now being raised by the petitioner are the issues which ought to have raised before the Civil Court. There is no merit in the present petition. Needless to add that any observations made herein will not in any manner prejudice the rights of the parties.

Summary

Issues:
Winding up petition under sections 433(e), 434, and 439 of the Companies Act, 1956 based on non-movement of purchased books and unsold inventory.

Analysis:
The petitioner sought winding up of the respondent company due to unsold books resulting in a huge inventory and financial claims. The respondent disputed the petitioner's claim, stating that they never agreed to take back unsold books for a refund but only to adjust the amount in future consignments. The petitioner relied on an acknowledgment by the respondent of a payable amount, but the court noted that the acknowledgment specified adjustment against future purchases only, not refund. The absence of a specific provision in the vendor agreement obliging the respondent to take back unsold stock and refund payment was highlighted.

Under the Sales of Goods Act, 1930, the transfer of property in goods occurs as intended by the parties. The court emphasized that there was no evidence to suggest that title to the goods did not pass to the petitioner upon purchase, absolving the respondent of liability for the claimed dues. It was reiterated that company courts should not adjudicate disputed facts that belong in civil suits, citing a Supreme Court judgment emphasizing the need for genuine disputes in winding-up petitions.

The court referenced the Supreme Court's stance on substantial and genuine disputes in winding-up applications, emphasizing that disputes must be bona fide and not mere tactics to coerce payment. The respondent's raised disputes were deemed genuine and substantial, indicating that the issues should have been addressed in a civil court rather than a winding-up petition. Consequently, the court dismissed the petition, affirming that the observations made would not prejudice the parties' rights.