2019 (1) TMI 981 - HC - Companies Law

Winding up proceedings - failure to pay dues - non completion of work by petitioner - Held that - The petitioner s work orders dated 22.10.2007 and 11.06.2007 have both been duly issued by the respondents. They contain details of the work which was to be done. The work done by the respondents are duly spelt out in Annexure A attached to the work orders dated 22.10.2007 and the details are also attached to the final bill. The respondents are needlessly trying to create confusion by mixing up two work orders. Reference may also be had to some of the communications which have been filed by the respondent alongwith counter-affidavit. Copy of email dated 7.11.2007 has been filed which states that cove lights are not to be installed with LED lights instead the items which was approved in the tender be used. It also talks about 60 points (60Amps) teleport room (IV floor) for TV head end is required. Similarly, the communication dated 6.11.2007 lists out the urgent requirement and works which are to be done. A third communication dated 28.12.2007 where some complaint is made about work of first floor. In response, on the very same date the petitioner has stated that the first floor is virtually ready. It is clear that these are minor glitches that may have arisen while execution of the work. In fact these glitches appear to pertain to first contract dated 11.06.2007. That apart, there is nothing on record to show that the petitioner did not finally complete the work or that the respondent had to get the defective work corrected from some third contractor. It is clear that the defence raised by the respondent is not bona fide. The facts show that the defence raised by the respondents lacks bona fide and cannot be accepted. Accordingly, admit the present petition. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator.

Summary

Issues:
1. Dispute over payment for additional work completed by the petitioner for the respondent.
2. Allegations of non-payment despite approval and certification of work by the Architect.
3. Denial of payment due to alleged defects in earlier work order.
4. Authenticity of work certificate issued by the Architect in question.
5. Legal basis for winding-up petition due to non-payment.

Analysis:
The petitioner filed a petition under relevant sections of the Companies Act, 1956, seeking payment for additional work done for the respondent. The petitioner claimed completion of work to the respondent's satisfaction, with invoices raised and certified by the Architect. Despite this, the respondent denied all claims and raised issues regarding an earlier work order, alleging incomplete work and no payment due. The court noted the issuance of an additional work order in 2007 and the subsequent certification of work done, reducing the claimed amount but acknowledging a sum towards the petitioner's dues.

The court directed the Architect's personal appearance to verify the work certificate, which was confirmed in court. The Architect's certification indicated satisfaction with the work done by the petitioner, contradicting the respondent's denial. The respondent's argument regarding an earlier work order was deemed misplaced, as details of both work orders were provided, clarifying the scope of work completed by the petitioner. Minor glitches mentioned in communications were attributed to the first contract, with no evidence of incomplete work or third-party corrections required.

Referring to a Supreme Court judgment, the court emphasized the need for genuine disputes in liability claims for winding-up petitions. The court found the respondent's defense lacking bona fide and accepted the petitioner's claims. Consequently, the court admitted the petition, appointed the Official Liquidator as the Provisional Liquidator, and directed the seizure of respondent's assets and bank accounts. However, the order appointing the Official Liquidator was suspended for four weeks to allow the respondent to pay the outstanding dues, failing which the liquidation process would proceed.

Overall, the court's decision was based on the authenticity of work certification, the clarity of work orders, and the lack of substantial grounds for the respondent's dispute, leading to the acceptance of the winding-up petition due to non-payment issues.