2013 (8) TMI 1190 - HC - Companies Law

Issues Involved:

1. Whether the respondent company should be wound up under Sections 433 and 434 of the Companies Act, 1956 due to its inability to pay debts.
2. Whether the respondent company's defense against the petitioner's claim is bona fide and genuine.
3. Whether the petitioner's claim is barred by limitation.
4. Whether the petitioner's claim is crystallized and undisputed.

Detailed Analysis:

1. Winding Up of the Respondent Company:

The petitioner sought the winding up of the respondent company, Ajanta India Limited, under Sections 433 and 434 of the Companies Act, 1956, on the grounds that the respondent failed and neglected to make payment for goods supplied. The petitioner claimed that the respondent owed Rs. 37,58,194.87 with interest at 21% per annum. Despite statutory notices, the respondent did not reply or make any payment, which the petitioner argued amounted to "neglect to pay" under Section 434 of the Act. The court considered whether the respondent company had lost its capacity to pay and was unable to discharge its financial obligations, which would justify winding up. The petitioner argued that the respondent's failure to pay, even after admitting liability to some extent, demonstrated its inability to discharge debts.

2. Bona Fide and Genuine Defense:

The respondent opposed the petition, claiming that the alleged dues were exaggerated and involved disputed facts. The respondent contended that it was a going concern and that the petitioner's claim was not justified. The defense included disputes over the quality and quantity of goods, agreed rates, and freight charges. The court examined whether the defense was bona fide and genuine, or merely a ruse to defeat the petition. It was noted that the respondent had admitted liability to some extent but failed to make payments as per its own admission. The court emphasized that a defense must be in good faith and substantial to avoid a winding-up order, as per the principles established by the Hon'ble Apex Court.

3. Limitation of the Petitioner's Claim:

The respondent argued that the petitioner's claim was barred by limitation. However, the court found that the respondent had acknowledged its liability in communications dated 4.10.2009 and 8.2.2012, which included an offer to pay Rs. 15,00,000 in installments. Such acknowledgments and offers to pay indicated that the claim was not time-barred, as the respondent had recognized its debt within the limitation period.

4. Crystallization of the Petitioner's Claim:

The respondent contended that the petitioner's claim was not crystallized. The petitioner argued that the principal amount of Rs. 37,58,194.87 and the interest rate of 21% were fixed, and thus, the claim was crystallized. The court observed that the respondent had admitted liability to the extent of Rs. 26,92,937.00 and had not disputed this amount in its communications. The court noted that the respondent's failure to pay even the admitted amount, despite acknowledging the debt, indicated a lack of genuine dispute over the crystallization of the claim.

Conclusion:

The court concluded that the respondent's defense was not bona fide or genuine, as the alleged disputes were not supported by contemporaneous evidence. The respondent's failure to return the goods or raise timely disputes about quality or quantity further weakened its defense. The court ordered the respondent to deposit Rs. 30,00,000 with the court registry by 3.9.2013 to demonstrate its bona fides. Failure to deposit the amount would lead to the admission of the petition and appointment of a Provisional Liquidator. The matter was adjourned to 4.9.2013 for further proceedings.

← Previous Next →