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Issues Involved:
1. Whether the winding-up petition presented by the respondent is an abuse of the process of the court. 2. Whether there is a bona fide dispute regarding the debt claimed by the respondent. 3. Validity of the statutory notice under section 434 of the Companies Act, 1956. Issue 1: Abuse of the Process of the Court The company contended that the winding-up petition presented by the respondent is an abuse of the process of the court and is not maintainable as there is no debt due and payable by the company to the respondent. The company argued that the claim made by the respondent is seriously in dispute and there is a bona fide dispute with regard to the claim of the respondent. The company further asserted that the winding-up petition was presented mala fide with the intention of humiliating the company, which is a rival of the respondent in its trade. The company also pointed to an arbitration clause in the contract and argued that the respondent should not be permitted to proceed with its winding-up petition in breach of the arbitration agreement between the parties. Issue 2: Bona Fide Dispute Regarding the Debt The court examined whether there was a bona fide dispute regarding the debt claimed by the respondent. It is well settled that if there is a bona fide dispute with regard to the debt which forms the subject-matter of the winding-up proceeding, the court will not entertain any winding-up petition on the basis of the said disputed debt and will leave the parties to resolve the disputes in appropriate proceedings. The court noted that disputes raised or sought to be raised may not be bona fide and will not necessarily make the debt a disputed one. The court has to consider and determine whether the disputes are bona fide or manufactured for the purpose of resisting the winding-up petition. In this case, the court found that the nature of the contracts and the works done indicated that there was sufficient scope for honest differences of opinion and genuine disputes regarding the claim made. The court also took into account the correspondence between the parties, which suggested that there was no admission of an exact amount being due and payable by the company to the respondent. The court concluded that the disputes raised by the company could not be said to be false, frivolous, or mala fide. Issue 3: Validity of the Statutory Notice The court addressed the contention regarding the validity of the statutory notice under section 434 of the Companies Act, 1956. The company argued that the statutory notice was invalid as it did not state the exact sum due and payable. The court observed that the notice under section 434 is a serious matter and must be strictly construed. However, the court held that the notice will not be rendered invalid if the amount mentioned in the notice includes the debt due and exceeds the sum of Rs. 500. The court reasoned that if the amount stated in the notice is found to be not exactly the correct amount payable by the company, but is in respect of a debt existing and presently payable exceeding the sum of Rs. 500, there will be sufficient compliance with the provisions of the statute. The court emphasized that the statutory notice must be in respect of an existing and presently payable debt which exceeds the sum of Rs. 500. Conclusion: The court concluded that the debt claimed is disputed bona fide by the company, and therefore, the winding-up proceeding cannot be allowed to proceed. The application succeeded, and the court ordered a permanent stay of the winding-up petition. The respondent was given liberty to take appropriate steps to establish its claim against the company within three months. The court also issued an injunction against the company from dealing with, disposing of, transferring, or encumbering its assets except in the usual course of business for a period of three months.
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