2016 (4) TMI 783 - HC - Companies Law

Winding-up petition - Held that - From the exchange of notices between both parties, it is clear that there is no dispute regarding the amounts demanded by the respondent-Company and the amounts due to the respondent-Company had been clearly proved. Hence, the argument of the learned counsel for the appellant-Companies that the demand is neither admitted nor proved, is not at all sustainable. The appellant-Companies have not paid the amounts as per the notices within the stipulated time as per the provisions of the Companies Act. It is pertinent to note that the Company Petitions were presented by the respondent- Company before the Company Court on 05.10.2010 for winding-up of the appellant-Companies, after complying with the provisions of the Companies Act, i.e. after expiry of time for payment allowed as per the provisions of the Companies Act. Hence, the Company Petitions filed before the Company Court are maintainable as per the provisions of the Companies Act. It is admitted by both parties that the Official Liquidator of this Court, appointed by the learned single Judge, has taken charge and further proceedings are initiated by him in respect of the winding-up of the appellant- Companies and the same are pending progress. Thus, from the above facts and circumstances of the case and on a perusal of the above provisions of law, it is clear that inspite of issuance of such notices, the appellant-Companies failed to pay the amounts due to the respondent-Company within the stipulated time as per the provisions of the Companies Act. Thus, it has to be held that the appellant-Companies have been wilfully evading the payments due to the respondent-Company. Therefore, as per the above provisions of the Companies Act, the respondent-Company has every right to file the Company Petitions seeking for winding-up of the appellant-Companies before the Company Court.

Issues Involved:
1. Legitimacy of the winding-up petitions filed by the respondent-Company.
2. Adherence to due process of law by the learned single Judge.
3. Existence and acknowledgment of debt by the appellant-Companies.
4. Applicability of legal precedents cited by the appellant-Companies.

Issue-wise Detailed Analysis:

1. Legitimacy of the Winding-Up Petitions Filed by the Respondent-Company:
The respondent-Company filed Company Petitions for the winding-up of the appellant-Companies, citing unpaid debts for services rendered. The learned single Judge admitted the petitions, issued notices to the appellants and other relevant parties, and appointed the Official Liquidator to take charge of the assets of the appellant-Companies. The petitions were filed under the provisions of Sections 433, 434, and 439 of the Companies Act, which outline the circumstances under which a company may be wound up by the Tribunal, particularly if the company is unable to pay its debts.

2. Adherence to Due Process of Law by the Learned Single Judge:
The appellant-Companies contended that the learned single Judge did not properly appreciate the merits of the case and failed to consider the serious consequences of winding up. However, the learned single Judge followed the due process by issuing notices, appointing the Official Liquidator, and directing the publication of the Company Petition in newspapers and the Tamil Nadu Government Gazette. The Court ensured that all procedural requirements were met before proceeding with the winding-up orders.

3. Existence and Acknowledgment of Debt by the Appellant-Companies:
The respondent-Company provided security services to the appellant-Companies, who allegedly failed to pay the amounts due under various bills. The respondent-Company issued multiple notices demanding payment, which the appellant-Companies acknowledged but did not settle. The appellant-Companies' replies to the notices indicated that they were awaiting further information before processing the payments, but no substantial dispute regarding the debt was raised. The Court found that the amounts due were clearly specified and not disputed by the appellant-Companies, thus justifying the winding-up petitions.

4. Applicability of Legal Precedents Cited by the Appellant-Companies:
The appellant-Companies cited several Supreme Court decisions to argue that the Company Court should not be used as a debt collection agency and that winding-up petitions should be dismissed if the debt is bona fide disputed. However, the Court found these precedents inapplicable to the present case, as the debts were clearly specified and not substantially disputed by the appellant-Companies. The Court held that the appellant-Companies were wilfully evading payment, thus validating the respondent-Company's right to file for winding-up.

Conclusion:
The Court concluded that the learned single Judge's orders were legally sound and that the appellant-Companies had failed to pay the amounts due within the stipulated time. The appeals were dismissed, affirming the legitimacy of the winding-up petitions and the appointment of the Official Liquidator. The Court emphasized that the appellant-Companies' failure to dispute the debt on substantial grounds warranted the continuation of the winding-up proceedings.

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