2019 (5) TMI 921 - HC - Companies Law

Winding up of the respondent Company - debt remains due and payable by the respondent and is not paid inspite of issuing notices to respondent - whether the goods supplied by the petitioner remained defective? - HELD THAT - One thing strikes out immediately. If the goods supplied by the petitioner remained defective the respondent ought to have returned the goods back to the petitioner. It cannot continue to retain the goods without making the full the payment thereof. In the present case one cannot help but notice that substantial payments have already been made by the respondent to the petitioner. What is left is a small amount as compared to the original purchase orders. That apart the communication dated 11.11.2012 clearly shows that the respondent had accepted its liability to pay to the petitioner - also there was no response to the legal notice dated 26.05.2014 sent by the petitioner. The defence set up by respondent is not a bonafide defence. The application is admitted - 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 - Petitioner shall deposit a sum of 75, 000/- towards cost of the publication with the Official Liquidator within 2 weeks subject to any further amounts that may be called for by the liquidator for this purpose if required. List on 05.08.2019.

Summary

Issues:
- Winding up petition under Sections 433, 434, and 439 of the Companies Act
- Dispute over defective goods supplied by the petitioner
- Validity of arbitration clause in the agreement

Analysis:
1. Winding up petition: The petitioner filed a petition seeking winding up of the respondent company under Sections 433, 434, and 439 of the Companies Act. The petitioner claimed that despite multiple communications and a promise to release payment, a significant outstanding balance of ?21,76,399 remained unpaid by the respondent company. The court noted that substantial payments had already been made by the respondent, and the remaining amount was comparatively small. The court found the respondent liable to pay the outstanding sum to the petitioner.

2. Dispute over defective goods: The respondent contended that the goods supplied by the petitioner were defective and did not meet the specified material requirements. The respondent claimed that the petitioner failed to supply material as per the specification, and there were issues with the quality of the supplied goods. However, the court observed that despite the alleged defects, the respondent did not return the goods or make the full payment. The court emphasized that the respondent's acceptance of liability through communications and partial payments indicated an obligation to pay the remaining amount.

3. Validity of arbitration clause: The respondent argued that since the purchase orders had an arbitration clause, any dispute should be resolved through arbitration instead of a winding-up petition. The court disagreed with this argument, citing the Supreme Court's ruling that petitions for winding up are non-arbitral in nature. The court highlighted that the existence of an arbitration clause does not preclude parties from approaching the court under Sections 433, 434, and 439 of the Companies Act. The court emphasized that a genuine dispute must be bona fide and not spurious to warrant dismissal of a winding-up petition.

4. Judicial Order: The court admitted the petition and appointed the Official Liquidator as the Provisional Liquidator. The Official Liquidator was directed to take over all assets, books of accounts, and records of the respondent company. Additionally, the court ordered the publication of citations in newspapers and the Delhi Gazette. The petitioner was instructed to deposit a sum towards publication costs. The court suspended the order for four weeks to allow the respondent to make the necessary payment, with the provision to revoke the appointment of the Official Liquidator upon payment.

5. Future Proceedings: The case was listed for the next hearing on a specified date, allowing time for compliance with the court's orders. The Official Liquidator was empowered to take necessary steps to protect the assets of the respondent company, including seizing bank accounts if required, to facilitate the winding-up process effectively.