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TMI Blog2000 (7) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... equest of the respondent by the revised minutes NEPC-025, dated 16-6-1997 and letter No. NEPC-026, dated 17-6-1997 and NEPC-027 dated 17-6-1997, respondent confirmed that a sum of DKK 3,000,000 (Danish Kroner three million only) is due and payable by the respondent to the appellant, which it agreed to pay gradually over a period of 6 to 12 months. It is the further case of the appellant that it sent notice dated 22-12-1998 as contemplated under section 434 calling upon the respondent to pay the said sum to the petitioner within a period of three weeks from the date of notice and that though respondent acknowledged the receipt of notice, did not make payment but only sent an interim reply dated 14-1-1999 simply denying even the admitted claim. The appellant would plead that the respondent-company is heavily indebted and is unable to pay its debts and under those circumstances, the company should be wound up in order to protect the interest of all concerned and that it is just and necessary that the order of winding-up is to be passed. 3. The respondent herein resisted the said petition, inter alia, contending that the petition is liable to be dismissed since the claim made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its existence. The respondent for the above and various other reasons as set out in the counter, prayed that the company petition may be dismissed. 4. The learned Single Judge, after elaborately considering various material documents, relied on by both the parties, came to the conclusion that there are disputes between the parties as to the authenticity of some of the documents placed before the court and as to whether the petitioner is right or respondent is right, can be ascertained only when both the parties depose in the court and subject themselves for cross-examination and when documents are examined by the handwriting experts. The learned Single Judge further pointed out that the provisions of the Act only permit an unpaid creditor to seek for winding up of the company, which is unable to pay its debts and that, therefore, it must be established at the threshold that the appellant is the creditor and a creditor, who is unpaid. According to the learned Single Judge, when that very status is being questioned and for establishing which oral evidence is required, it is not within the province of the company court to entertain the petition and hold a trial for determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet its liabilities as and when they accrue due. The mere fact that the company s assets are less than its liabilities is by itself no ground for sending the company to winding-up. The test laid down is that the company should be commercially solvent which means that the company should be in a position to meet its liabilities as and when they arise. 10. In this context, the following passage occurring in the ruling in Pradeshiya Industrial Investment Corpn. of UP v. North India Petrochemicals Ltd. [1994] 3 SCC 348 can be usefully quoted. "26. A debt under this section must be a determined or a definite sum of money payable immediately or at a future date. 27. What then is inability when the section says unable to pay its dues ? That should be taken in the commercial sense. In that, it is unable to meet current demands. As stated by William James, V.C. it is plainly and commercially insolvent - that is to say, that its assets are such, and its existing liabilities are such, as to make it reasonably certain - as to make the court feel satisfied - that the existing and probable assets would be in sufficient to meet the existing liabilities - European Life Assurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial Investment Corpn. of UP ( supra ), the Supreme Court affirmed the above ruling. 16. If the debt is bona fide disputed and the defense is a substantial one, the court will not wind up the company. In determining whether a debt is disputed bona fide or mala fide, the conduct of the parties, the character of the pleas and the circumstances which will be peculiar to each case will be the contributing factors. The test is whether the dispute is raised only to avoid payment of the debt and not based on any substantial ground. 17. Coming to the facts of this case, admittedly there have been business transactions between the parties for several years prior to the filing of this company petition. The appellant-petitioner would contend that it would be sufficient if four documents viz., ( a ) NEPC-024, dated 16-6-1997; ( b ) NEPC-025, dated 16-6-1997; ( c ) NEPC-026, dated 17-6-1997 and ( d ) NRPC-027, dated 17-6-1997 are considered, which according to him, would clinchingly prove that the respondent is liable to pay the sum claimed by it and which he has not, in spite of the statutory notice, been unable to pay and consequently winding up order must be passed. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for pleasant meeting yesterday at the Connemara Hotel in Chennai, where it was agreed that the total balance between the two companies amounting to DKK 3.0 million in the favour of Micon A/S, must be settled gradually by NEPC India Ltd. over the coming 6 to 12 months. The settlement may take place in India to Micon A/S fully owned subsidiary, AWT (Asian Wind Turbines (Pvt.) Ltd.)." In this document also we find an endorsement made in pencil and duly initialled by the person who signed the document, representing the appellant. The endorsement reads, thus, Replaced by new (on fax) . In paragraph 4 of the company petition, the appellant has referred to the said document. The learned counsel for appellant would contend that this document should be read along with the next document, viz., NEPC-027, dated 17-6-1997. Respondent would state that NEPC-026, dated 17-6-1997 was replaced by another document wherein it (respondent) imposed certain conditions and that document is not forthcoming and the signature found in the document NEPC-027, dated 17-6-1997 is not the signature of its representatives. 21. Or in other words, while the appellant would say that NEPC-027, dated 17-6-1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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