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TMI Blog1990 (9) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... r supply of 50 machines. The petitioner also extended the delivery time for supply of these machines up to September 30, 1984. The petitioner also paid to the company further advance of Rs. 2,00,000 on July 19, 1984, and another advance of Rs. 2,50,000 on July 30, 1984. The company was asked to give bank guarantees for these amounts as well. However, the company failed to furnish the bank guarantee. The company consistently kept on promising the petitioner that supplies of the machines will be made. However, the machines were not supplied at all. It was a condition of the order placed by the petitioner on the company that the goods will be supplied within three months from the date of receipt of the order. A further condition was that the company will pay interest on the amounts advanced at the rate of 18 per cent, per annum in case of delay in the delivery of the goods. The company has neither supplied the machines nor has it returned the advance amount received by it from the petitioner. The company is indebted to the petitioner in the sum of Rs. 5,75,000 plus interest at the rate of 18 per cent. per annum. The notices of demand dated September 4, 1985, October 7, 1985, February ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h letter being letter dated July 22, 1984, written by the company to the petitioner stating that it approached its bankers and they have in principle recommended the guarantee required by the petitioner, and that the bankers are asking for margin for the same and the company has requested the bankers to reduce the margin and was hopeful of giving to the petitioner the guarantee soon. The receipt of Rs. 5,75,000 by the company is not disputed. However, according to the stand of the company, no amount is due from it to the petitioner. The facts and circumstances due to which it is claimed that no amount is due to the petitioner, in the words of the company itself, are as under : ( i )The respondent-company was supplying small parts to the petitioner-company. During 1983, the petitioner-company discontinued its arrangement with BPL (India) Ltd. for supply of coated paper copiers manufactured from parts imported from Develop Germany. The petitioner-company wanted to engage the respondent company to replace BPL and hence agreed to finance the project and also to arrange to obtain supplies from Develop. The respondent-company agreed to obtain the industrial licence, import licence, k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of enquiries that the petitioner's selling staff had a preference for plain paper copiers and was against the decision of getting coated paper copiers. ( vi )After several months of three exercises, the respondent was instructed not to proceed any further in this project. The respondent-company protested as this cancellation resulted in tremendous business and financial loss to the company. As a consequence of the protests of the respondent-company, the chairman of the petitioner-company agreed to meet the expenses and losses incurred by the respondent-company on account of local materials but did not agree to reimburse losses incurred as a result of default in the decision regarding the project. The respondent-company submitted a complete account but no action was taken by the petitioner-company. ( vii )As a consequence of a number of meetings, the respondent-company agreed to enter into an agreement whereby it would give up its claim for losses without prejudice in the event that the petitioner-company issued a letter of indemnification to the respondent-company against any claim by Develop and allowing repayment by instalments. The said terms were agreed to by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he turnover of the respondent-company is Rs. 45,08,108.83. Their net current assets are Rs. 38,07,252.89 as on March 31, 1986. Hence, the company is completely solvent and is able to meet any debts due from the company. The petition under reply hence merits dismissal forthwith. On the basis of the aforesaid facts and circumstances, the company says that the amount is not due and pleads that, in any case, these facts show the existence of a bona fide dispute in regard to the amount claimed by the petitioner. In a supplementary affidavit, the facts as reproduced above have been further elaborated by the company and reference has been made to the correspondence exchanged between the parties. The company has also placed on record an unsigned document entitled "Note on Coated Paper Copier", and relying on it, learned counsel for the company contended that the petitioner was required to open letters of credit for the purposes of the company effecting the import of the components of the machines. The case of the company is that, prior to placing an order on the company, it was taking supply of coated paper copiers in an arrangement with B.P.L. (India) Ltd. The said arrangement was disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect. On the contrary, it appears that the company had agreed to furnish a bank guarantee for the amounts advanced to it but it did not furnish the same for amounts other than Rs. 1,25,000. Even otherwise, prima facie, reliance on the unsigned note and the correspondence prior to the order dated March 23, 1984, is not of much consequence on the facts and circumstances of this case. There is no requirement in the order that the petitioner is required to open letters of credit. There is also no reference to the opening of letters of credit in any of the letters sent by the petitioner to the company. Counsel for the petitioner, however, placed reliance on letter dated February 28, 1985, sent by the company to the petitioner, inter alia , stating that the petitioner had agreed to give the guarantees to the bankers of the company for opening of letters of credit in favour of the German firm. According to the petitioner, the aforesaid letters and a few more are only fabrication and were not received by the company. Prima facie this letter does not fit in the sequence of events and no reliance can be placed on it. Counsel for the petitioner also contended that specifications for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Learned counsel for the respondent, relying on Newfinds India v. Vorion Chemicals and Distilleries Ltd. [1976] 46 Comp. Cas.87 (Mad), submitted that even if only a part of the debt is disputed on substantial grounds, the winding up petition is to be dismissed. Reliance has been placed on the following observations of the learned single judge, "Bona fide dispute means that the dispute is based on a substantial ground and if such dispute is raised, the court should refuse to make an order of winding up, even if only a part of the debt is disputed on a substantial ground". This decision is not applicable as, in the present case, in my view, the company has not been able to raise a bona fide dispute even in regard to a part of the debt. It is well-settled that the court will not wind up a company if the debt is bona fide disputed and the defence is a substantial one which will depend upon the facts and circumstances of each case. In the present case, the aforesaid discussion shows that, even according to the company, it owed a certain amount to the petitioner. In Madhusudan Gordhandas and Co. v. Madhu Woollen Industries P. Ltd. [1972] 42 Comp. Cas.125 (SC), the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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