2015 (7) TMI 541 - HC - Companies Law

Application for winding up - Non-payment of debt - Bona fide dispute or not - No reply to statutory notice - Charges of coercion in counter affidavit filed - Held that - Any prudent company, which is not liable to pay the debt, is not expected to remain silent to a statutory notice. With respect to admission of debt under two letters dated December 29, 2009 and December 30, 2009, the counter-affidavit has raised vague pleas by stating that the said admission was made subject to reconciliation. However, in the additional counter-affidavit, the respondent has come out for the first time with the plea that the said two letters were issued under coercion. Also the respondent has come out with a vague plea that it used to issue undated cheques as security. There is no specific plea that the petitioner has misused one such cheque by presenting the same in bank for a sum of ₹ 2,18,64,235 putting July 20, 2011, as the date on which the cheque was issued. Admittedly, a criminal case under section 138 of the N. I. Act following the dishonour of the said cheque is filed and the same is pending before a criminal court. The plea of the respondent raised for the first time in the additional counter-affidavit that it has made over payment of ₹ 25,59,240 was not supported by any correspondence exchanged between the parties. For the first time, the respondent has disputed the two invoices dated July 12, 2008, for ₹ 2.47 crores and August 14, 2008, for ₹ 1.36 crores in the additional counter-affidavit only on the ground that they were not reflected in the VAT audit conducted by the State Government. It has not come out with any specific plea that those invoices were either fabricated or concocted. This court is of the opinion that the denial of debt by the respondent is not bona fide and that the same is a cloak or moonshine to evade payment of an admitted debt. Having admitted in categorical terms that it is liable to pay ₹ 1.50 crores subject, however, to reconciliation, the respondent cannot resile from the said admission and seek to deny the debt. The law is well-settled that where the debt is liable to be paid, a petition for winding up is maintainable even in the absence of precise quantification (see Madhusudan Gordhandas and Co. v. Madhu Woollen Industries (P.) Ltd. 1971 (10) TMI 49 - SUPREME COURT OF INDIA and Tweeds Garages Ltd. 1961 (11) TMI 37 - IN THE CHANCERY DIVISION . Though the respondent claims to be in good financial health, as it has failed to pay the admitted debt to the petitioner. - Application for winding up admitted.

Summary

Issues:
Petition for winding up due to non-payment of debt. Admission of debt by respondent subject to reconciliation. Allegations of coercion in issuing admission letters. Disputed overpayment and quality of goods supplied. Denial of debt by respondent leading to legal action.

Analysis:
The petitioner, engaged in computer sales, filed a winding-up petition against the respondent, a public limited company, for non-payment of a substantial debt. The petitioner alleged that the respondent, formerly known as M/s. SARK Systems India Ltd., failed to honor multiple cheques totaling &8377; 1,30,70,000. Despite assurances and acknowledgments of liability, the respondent's checks bounced, leading to legal action under the Negotiable Instruments Act. The respondent counter-affirmed purchases but claimed overpayment by the petitioner, alleging coercion in admitting the debt and issuing bounced checks. The respondent further disputed the quality of goods supplied, ceasing purchases in 2008.

The court noted the respondent's evolving defense, failure to reply to statutory notices, and vague coercion claims regarding debt admission. The respondent's assertion of overpayment lacked supporting evidence, and its challenge to specific invoices lacked substance. Despite financial stability claims, the respondent's failure to pay the admitted debt undermined its credibility. The court emphasized that a petition for winding up is maintainable even without precise debt quantification if liability is acknowledged. Therefore, the court found the respondent's debt denial insincere and admitted the company petition.

The judgment highlighted the legal principles governing winding-up petitions under the Companies Act, emphasizing a creditor's right to seek winding up if the debtor fails to pay a non-disputed debt. The court's decision to admit the petition aimed to compel the respondent to address the admitted debt promptly. The court deferred advertisement publication to allow the respondent an opportunity to settle the debt before further action.