9911796707
TMI Blog1998 (9) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... lled for and accepted as item rate contract. Besides the work at Ghatkesar, where the construction of fabrication shed and ancillary building was required to be completed, the respondent-company had also entrusted the work at Nacharam project and Somajiguda project described as Integrated Engineers and Rajwant Hotels. 14 running bills were submitted and were duly certified by the project architect and/or owner's representative so far as the work at Ghatkesar site was concerned. The petitioner has also submitted running bills for Nacharam project from May 25, 1995, to December 16, 1995, as also running bills for Somajiguda site from November 15, 1994, to April 4, 1996, duly certified by the authorised persons. The petitioner was entitled to claim Rs. 1,33,67,428 against the work done as per the contract and in addition to that it was entitled to other amounts withheld by the respondent-company against excise, provident fund contributions and value of the materials purchased but not utilised. The petitioner is thus entitled to an additional amount of Rs. 1,07,60,772, totalling Rs. 2,41,28,200. This amount has not been paid by the respondent-company in spite of demands. The amounts de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-company shall take action for the recovery of Rs. 1,05,48,876. The claim of Rs. 1,33,67,428 has been denied. Similarly, the claim of Rs. 1,07,60,772 has also been denied. The annual account for the year ending March 31, 1996, shows that the respondent-company is a profit-making company and is proposing a dividend of 15 per cent. to its shareholders. The notice dated July 14, 1996, has been suitably replied on August 14, 1996. No oral evidence can be let in because the written agreement was executed showing the cost of work at Rs. 2.50 crores. The application is liable to be dismissed. I have heard learned counsel of both sides on admission. It is too well settled that a winding up petition is not a legitimate means of seeking recovery of debt which is bona fide disputed by the company. If the debt is bona fide disputed, there cannot be neglect to pay within the meaning of section 434(1)( a ) of the Act. If there is no neglect, the deeming provisior does not come into play and the ground for winding up, namely that the company is unable to pay its debt, is not substantiated. The principles on which the court acts are, firstly that the defence of the company is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly. The petitioner-firm had submitted its final bill for the civil work done at Nacharam site with its covering letter dated December 16, 1995. In this bill, the payments made by the respondent-company against the work done at Nacharam site have been mentioned. On February 3, 1996, the Deputy Manager (Projects) of the respondent company had certified this final bill for construction of shed and allied works at Nacharam. Similarly, on May 21, 1996, the petitioner-firm had submitted final bill for the work done at Rajwant Hotels at Somajiguda. In this bill, the payments made by the respondent-company against the running bills have been shown. On May 21, 1996, the Deputy Manager (Projects) of the respondent-company had certified this bill for construction of the Hotel at Somajiguda. On May 22, 1996, the petitioner-firm had written a letter to the respondent-company informing it about the civil works done, payments made by the respondent-company and the deductions of TDS. On June 4, 1996, the Deputy Manager (Projects) of the respondent-company had signed the certified abstract of the bill. The above correspondence indicates that the works at Nacharam and Somajiguda sites wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2.50 crores against the quotation of Rs. 3,25,30,212. Thus, there appears to be a deduction of Rs. 75,30,212. It has also been mentioned in this letter that, the award of the contract shall be in accordance with the terms and conditions of the tender as stated in volumes I and II of the documents submitted to the petitioner-firm and the subsequent amendments/changes discussed thereafter. The petitioner-firm, vide its letter dated July 25, 1994, had written to the respondent-company that as per the oral discussions held, only the rates of five items as mentioned in para. 2 of this letter were revised. Then, on September 28, 1994, the architect of the respondent-company had informed the petitioner-firm that the respondent-company had confirmed the award of the contract to it for the work defined in the schedule enclosed thereto for the approximate contract value and had mentioned the figure of Rs. 2.50 crores against the construction of fabrication shed with foundation and superstructure including finishing, cladding, roofing, etc. It has also been mentioned specifically at page 2, clause 1, that this shall be an item rate contract and the petitioner-firm shall be paid on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -claim of the respondent-company of Rs. 1,05,48,876 is based on the report of the auditor. The auditor had granted a rebate of 20.976 per cent. on the ground that the tender amount of Rs. 3,25,30,212 was reduced to Rs. 2,50,00,000, therefore, the bill for the work done by the petitioner-firm amounting to Rs. 7,32,18,000 should also be reduced. This reasoning, on the face of it, appears to be incorrect. The reason is that, at no point of time, the parties had agreed that for the work to be done in addition to the work done for the amount of Rs. 2.50 crores, the petitioner-firm shall give rebate at the rate of 20.976 per cent. This appears to be a wrong" allowance given to the respondent-company even if it is held to be so entitled, because, the amount of Rs. 7,32,18,000 is inclusive of the price of material supplied by the respondent-company to the petitioner-firm for utilising the same in the construction work. The value of this material, etc., comes to Rs.3,84,45,882. Therefore, even if the contention of the auditor is to be accepted, for the sake of arguments, the respondent-company would be entitled to rebate at the rate of 20.976 per cent. on Rs. 3,47,72,118 (Rs.7,32,18,000 - R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 36,83,902.50. When this amount has been carried forward to page 104, the certified amount has been shown as Rs. 31,35,368.40 which appears to be a mistake by inadvertence. If the correct figure is shown against the certified amount at page 104, after deducting the total deductions of Rs. 16,40,474, the certified amount comes to Rs. 20,42,027.30 as correctly shown in the page 106. Thus, it is apparent that the bill is not a fabricated document, but due to a mistake by inadvertence in carrying forward the correct figure from pages 103 to 104. This mistake had occurred which has been corrected by the architect when brought to its notice by the petitioner-firm. The second objection is that only six bills have been certified by the contractor amounting to Rs. 1,16,41,359.51 and the remaining bills remained uncertified by him. This objection has also no force. The reason is that, as per the terms of the contract, as referred to above, the bills were either to be certified by the architect or the owner's representative and the representative of the owner has certified the remaining eight bills. Had it not been so, the auditor would not have shown the total bill value at Rs. 7,91,73,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineers, respectively. For the foregoing reasons, the respondent-company appears to be indebted to the petitioner-firm at least to the extent of Rs. 57,38,332 even on the basis of the report of the auditor as corrected and shown in the preceding paragraphs. Thus, the dispute raised by the respondent-company neither appears to be a bona fide dispute nor a probable defence. The upshot of the aforementioned discussion is that the respondent-company has failed to establish that it has got a valid defence to make on the facts and in law in the civil court. It is an admitted fact that notice under section 434(1)( a ) of the Act was not served on the respondent-company on its registered address. Therefore, the presumption of inability to pay the debts may not be drawn against it under this section. Under clause ( b ) ibid, the company shall be deemed to be unable to pay its debts when a decree remains unsatisfied while under clause ( c ), if it is proved to the satisfaction of the court that the company is unable to pay its debts. And in determining whether the company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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