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2020 (2) TMI 295 - HC - Companies LawWinding up of company - inability to pay the admitted debts - HELD THAT - The law regarding scope and ambit of the Company Court whhile exercising jurisdiction under Section 433(e)(f), 434 and 439 of the Companies Act has been summed up by the Hon ble Supreme Court of India in the case of IBA HEALTH (I) (P.) LTD. VERSUS INFO-DRIVE SYSTEMS SDN. BHD. 2010 (9) TMI 229 - SUPREME COURT , wherein it has been held that where there is a substantial dispute as to the liability and obligation, petition for winding up should not be entertained. It was observed that, a dispute to be substantial and genuine, has to be bona fide and not spurious. The issue raised in this petition pertains to the liability of the respondent company and not the inter se liability of the two groups over their right on the shares of the respondent company. The respondent company is a legal entity and an existing company within the meaning of Companies Act, 1956. The claim in this petition is against the respondent company and not the DCBL group or the BW group, as the case could be - the respondent company cannot deny its liability to pay the dues of the petitioner firm by seeking refuge under clause 14.15.1 of the agreement dated 16/01/2012. Having regard to the peculiar facts and circumstances of the case, more particularly the fact that there is an ongoing dispute between the DCBL and the BW Group pertaining to the implementation of share holders agreement, the respondent company is granted 60 (sixty) days time, with effect from the date of this order, to discharge its admitted debt by paying the amount of ₹ 1,77,03,540.68 to the writ petitioner - It is made clear that in the event of failure on the part of the respondent company to make full and final payment of ₹ 1,77,03,540.68 to the writ petitioner within the time frame provided by this Court, necessary order as per law shall be issued for advertising the petition. Let this petition be listed again, after 60(sixty) days, for necessary orders.
Issues Involved:
1. Petition for winding up of the respondent company under Sections 433, 434, and 439 of the Companies Act, 1956. 2. Liability of the respondent company for the outstanding dues claimed by the petitioner. 3. Validity of the claim for interest on the outstanding dues. 4. Dispute regarding the liability due to change in management from BW Group to DCBL Group. 5. Allegation of fraud in procuring acknowledgment of debt. Detailed Analysis: 1. Petition for Winding Up: The petitioner, a partnership firm, filed a petition under Sections 433, 434, and 439 of the Companies Act, 1956, seeking an order for winding up the respondent company due to its inability to pay admitted debts. The petitioner had executed civil construction, fabrication, and erection works for the respondent company under two agreements and corresponding work orders. Despite partial payments, a balance of ?1,77,03,540.68 remained unpaid. 2. Liability of the Respondent Company: The petitioner raised a claim for the outstanding dues of ?1,77,03,540.68, supported by various communications and an acknowledgment of debt by the respondent's Manager (Finance). The respondent company, now managed by DCBL Group, contended that the liability pertained to the period when BW Group controlled the company and argued that the liability was to be indemnified by BW Group as per the shareholders' agreement. However, the court noted that the respondent company, as a legal entity, could not deny its liability based on internal arrangements between BW Group and DCBL Group. 3. Validity of the Claim for Interest: The petitioner also claimed interest of ?1,69,19,853.54 at 24% per annum on the outstanding dues. The court found no clause in the contract agreement permitting such interest and held that the claim for interest, being a contentious issue, could not be adjudicated in the company petition. The petitioner was allowed to pursue the interest claim in an appropriate proceeding. 4. Dispute Due to Change in Management: The respondent argued that the change in management absolved it of liability for debts incurred under BW Group's control. The court rejected this argument, emphasizing that the respondent company, as a legal entity, remained liable for its debts regardless of management changes. The court also noted that the amended shareholders' agreement acknowledged the debt to the petitioner. 5. Allegation of Fraud: The respondent alleged that the acknowledgment of debt was procured fraudulently, as the employee who issued the letter resigned shortly thereafter. The court dismissed this claim, stating that mere assertions without substantiation could not negate the established debt. The court found the communications and records consistent and credible, affirming the debt's validity. Conclusion: The court admitted the company petition, granting the respondent company 60 days to discharge the admitted debt of ?1,77,03,540.68. The claim for interest was left open for the petitioner to pursue in a separate proceeding. The court emphasized that failure to pay within the stipulated time would lead to further legal action, including advertising the petition.
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