2017 (12) TMI 976 - HC - Companies Law

Winding up petition - proof of eligible debt - Held that - Other than a mere bald denial, there is no attempt to explain as to how and when the petitioner completed the work. On completion of the work in all contracts normally a completion certificate or other document is issued by the architect or the engineer in charge indicating that the work has been completed. No such document or any other like document is available on record to support the contention of the petitioner that the work was completed to the satisfaction of the concerned architect/official of the respondent. In the absence of any such document on record, keeping in view the nature of the present proceedings, it is appropriate that the petitioner be left to take steps under the civil proceedings, as per law. It cannot be said that there exists any debt which the respondent is unable to pay. There is no merit in the preset petition and same is dismissed.

Summary

Issues:
Petition filed under Sections 433 (e) read with section 434 (1)(a) of the Companies Act, 1956 seeking winding up of the respondent company.

Analysis:
1. The petitioner entered into an agreement with the respondent for a project. A revised contract was signed in 2009, including a retention amount of ?15 lakhs to be paid after project commissioning. The petitioner claims the project was completed in 2014, and the retention amount remains unpaid.

2. The respondent contends that the petitioner failed to complete the work, leading to engagement of another company for the project. They argue that the retention amount is not payable due to the petitioner's breach of contract, supported by communications highlighting incomplete work.

3. Legal provisions under Sections 433 and 434 of the Companies Act, 1956 are examined. The court refers to the discretionary nature of winding up orders and the requirement for a determined debt. The judgment cites a Supreme Court case emphasizing the commercial sense of "unable to pay its dues" and the need for a definite sum payable by the company.

4. The court notes that while the project was commissioned, the respondent disputes completion due to alleged breaches by the petitioner. The lack of documentation proving satisfactory completion of work leads the court to dismiss the petition, stating no debt exists that the respondent is unable to pay.

5. The judgment concludes that without evidence of completed work to the satisfaction of the respondent, the petitioner should pursue civil proceedings for any outstanding dues. The petition is dismissed, and all pending applications are also rejected.