2018 (5) TMI 575 - HC - Companies Law

Winding up proceeding - Outstanding eligible debts - Held that - The admission that the goods were supplied, the tendering of the post dated cheques and the balance confirmation persuade me to come to a conclusion that the defence sought to be raised by the respondent is a sham and moonshine. The respondent are unable to pay their debts. The settled legal position is that the debts claimed should be payable by the respondent company. It is only where the respondent company raises a bona fide dispute then no winding up petition would lie. Thus in the facts of the above case the respondent company has failed to show any bona fide dispute. Accordingly admit the present petition. The Official Liquidator attached to this court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers Statesman (English) and Veer Arjun (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing

Summary

Issues:
Petition seeking winding up of respondent Company under Sections 433, 434, and 439 of the Companies Act, 1956 due to unpaid balance. Dispute over quality of Ready Mix Concrete supplied by petitioner. Allegation of sub-standard material and refusal to pay by respondent. Authenticity of balance confirmation letters and post-dated cheques in question.

Analysis:
The petitioner filed a petition seeking to wind up the respondent Company due to an alleged unpaid balance for supplied Ready Mix Concrete. The petitioner claimed a balance of ?9,26,252 as of a certain date, supported by balance confirmation letters executed by the respondent. The respondent, in their reply, denied any balance due, alleging that the material supplied was sub-standard and did not meet quality standards. They argued that the post-dated cheques were given as security pending quality tests, which the material failed. The respondent contended that they were not liable to pay due to the poor quality of the material.

During the hearing, the respondent's defense was challenged by the court. It was noted that the goods were received by the respondent, and questions were raised regarding why the material was not returned if it did not meet quality standards. The absence of a purchase order specifying material quality was highlighted. The court found discrepancies in the respondent's claims, noting that the defense appeared to be an afterthought to justify non-payment. The court emphasized the importance of evidence to support claims of sub-standard material.

Further, the court analyzed the balance confirmation letters and post-dated cheques. Despite the respondent's denial of signatures on the documents, the court found the evidence presented by the petitioner, including the confirmation letters with authorized signatories, to be more convincing. The court concluded that the respondent's defense was unsubstantiated and lacked merit, leading to the admission of the winding-up petition.

Citing legal precedent, the court emphasized that a winding-up petition should not be entertained if there is a substantial and genuine dispute over the debt claimed. In this case, the court found that the respondent failed to demonstrate a bona fide dispute, leading to the admission of the petition. The court appointed the Official Liquidator as the Provisional Liquidator and outlined steps for the winding-up process, including asset takeover and publication of citations. A one-month grace period was granted for the respondent to pay the outstanding amount, failing which the winding-up process would proceed.