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TMI Blog2001 (10) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied the corrugated boxes in all aggregating to the value of Rs. 42,544. The boxes were supplied as per the orders placed by the respondent-company. As per the invoices, the respondent has to pay interest at 24 per cent for the belated payment. The respondent-company is liable to pay Rs. 42,544 being the value of boxes supplied and Rs. 7,658 being the interest for the belated payment for the period 1-1-2000 to 30-9-2000, totalling to Rs. 50,202. According to the petitioner, the respondent had failed and neglected to pay the said sum. The petitioner made a demand on 10-5-2000, and 2-6-2000, which demands were acknowledged by the respondent. The petitioner caused a legal notice on 23-6-2000. But the acknowledgement card has not been returned. The petitioner addressed the Superintendent of Post Office who after verification certified that the registered notice had been delivered on the respondent-company on 24-6-2000. Even for the said statutory notice, no reply had been received, nor payments been made by the respondent. Thereafter, the present company petition was filed on 1-11-2000, and taken on file on 13-11-2000. 4. This court ordered notice regarding admission on 17-11-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent for loss caused by the substandard corrugated boxes and the poor quality. 6. The respondent released the payment of the admitted sum and in fact a payment of Rs. 29,222 was released on 7-2-2000 based upon the supply made by the petitioner that he would replace the rejected materials. It is contended that instead of filing a civil suit only as a leverage to coerce the respondent to settle their unjustified claims, the petitioner has come forward with this winding up petition, which is not maintainable as the liability is in dispute. There is no bona fides or merit in the winding up petition. There is no neglect to pay the debt and the petition is not maintainable and deserves to be dismissed with costs. Since the liability is disputed the company petition for winding up deserves to be dismissed and the petitioner should be directed to file a civil suit. The respondent prays for the dismissal of the company petition. 7. Heard Mr. L. Rajasekar, the learned counsel for the petitioner and Narendran for S. Venkatesan, the learned counsel for the respondent. 8. The following points arise for consideration in this petition: A. Whether the company petition is not maintainable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis supplied] 10. Thereafter through the counsel for the petitioner, a notice was caused to the respondent-company and its managing director, besides sending copies to the seven of the directors of the respondent-company. The said notice dated 23-6-1999, had been addressed to the respondent-company and its managing director at No. 42, Dr. Radhakrishnan Road, Mylapore, Chennai-4. The counsel for the petitioner did not receive the postal acknowledgment and, therefore, he made a representation to the Chennai Customer Care Centre, India Post, Chennai-6. The Assistant Superintendent of the Department had sent a reply to the effect that the registered letter sent by the counsel for petitioner No. 798, dated 26-3-2000, through the High Court Post Office was delivered to Dev Fasteners Ltd., No. 42, Dr. Radhakrishnan Salai, Mylapore, who is the addressee on 24-6-2000. Thus it is clear that a statutory notice has been served on the respondent-company by the petitioner through its advocate. 11. A perusal of the documents produced by the petitioner would establish the supply of corrugated boxes to the petitioner, its value which were delivered on the respondent and non-payment by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide dispute. 13. Presumably facing such a situation, the learned counsel for the respondent-company, contended that notice caused by the petitioner through its advocate had not been served on the registered office of the respondent-company, but it had been sent to the administrative office, therefore the notice is defective. Hence, the company petition is, therefore, not maintainable and it is liable to be dismissed. The learned counsel for the respondent mainly contended that in so far as the statutory notice had not been served on the respondent-company at its registered office, no petition for winding up is maintainable. The learned counsel relied upon the decision of the Bombay High Court in N.L. Mehta Cinema Enterprises (P.) Ltd. v. Pravinchandra P. Mehta [1991] 70 Comp. Cas. 31 ; Vysya Bank v. Randhir Steel & Alloys (P.) Ltd. [1993] 76 Comp. Cas. 244 and a decision of the Madras High Court in B. Viswanathan v. Seshasayee Paper & Boards Ltd. [1992] 73 Comp. Cas. 136 , in support of his contention that when notice is not served on the company at its registered office and there being no valid notice in terms of section 434(1)(a), which is mandatory, there could be no presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice should have been served at its registered office and for want of service of notice on the registered office of the company, the company application is not maintainable, is the only and substantial contention advanced. The petitioner being a creditor is required to make a demand for payment. It is not in dispute that the statutory notice had been served on the respondent-company at its administrative office, but it has not been served at its registered office. The learned counsel for the respondent-company relied upon the decision of the Bombay High Court in N. L. Mehta Cinema Enterprises (P.) Ltd.'s case (supra) in support of its contention that the demand notice under section 434(1)(a) must be served only on the registered office of the company and that service on the administrative office is invalid. However the Karnataka High Court has taken a different view in Manganese Ore India Ltd. v. Sander Manganese [1999] 98 Comp. Cas. 755. In this pronouncement, the Karnataka High Court held that a notice served not on the registered office of the company, but on its administrative office, a company petition is maintainable. The learned counsel for the respondent relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, reads thus : "6. The petitioner states that the petitioner concern had supplied as per the order placed by the respondent-company, vide delivery challans. The petitioner states that the invoice stipulates payment of interest at the rate of 24 per cent per annum for the delayed payments. The outstanding amount on the respondent's account was a sum of Rs. 42,544 (rupees forty-two thousand five hundred and forty-four only) towards the invoice value and a sum of Rs. 7,658 (rupees seven thousand six hundred and fifty-eight only) towards the interest from 1-1-2000, to 30-9-2000 totalling to Rs. 50,202 (rupees fifty thousand two hundred and two only). The respondent failed and neglected to pay the above-said amount in spite of repeated demands made by the petitioner. 7. The petitioner states that he had forwarded letters dated 10-5-2000, and 2-6-2000, demanding payments and the same were acknowledged by the respondent. The petitioner was constrained to forward a legal notice dated 23-6-2000, and the acknowledegment cards were not returned. So, the petitioner had lodged a complaint to the Superintendent, Customer Care Centre, Thousandlights Post Office, Chennai-6 on 18-7-2000, asking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay or neglect to pay for various other reasons and not on the ground of any commercial insolvency, but on other grounds. Assuming that there is no bona fide dispute between the respondent and the petitioner with respect to the quality of boxes supplied and further assuming that the respondent had neglected to pay, that does not mean that the respondent-company is unable to pay the amount due to the petitioner. There has been some misunderstanding between the petitioner and the respondent-company. 20. In this respect in the letter dated 2-6-2000, extracted above, the petitioner had pointed out that the respondent-company shall not insist on protocol with its victims would show that there has been some amount of business estrangement or commercial misunderstanding. The petitioner has represented that it does not want to observe any protocol neither to meet the respondent nor its managing director regarding payment. Therefore, it is clear that it is personality conflict or ego. We are not concerned as to who is at fault, but all that this court concerned is to find out whether the respondent is unable to pay its debts. 21. In the absence of any averment specifically set out even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the respondent has purchased the corrugated boxes, the claim of the petitioner is substantiated and the respondent owes the money to the petitioner, it cannot be stated that the respondent is unable to pay its debts. For want of the minimum plea that the respondent is unable to pay its debts, mere refusal to pay or whatever may be reason for such refusal cannot be a ground to wind up the company which is financially sound, employs 300 workmen and is continuing its business normally. There is nothing to show that the respondent-company is financially unsound or commercially insolvent or ceased to carry on its business activities or substratum of the respondent-company has been lost. 25. In the result, on the first point, this court holds that there is a valid notice though it has been served on the respondent-company's administrative office. On the second point, this court for the reasons set out above, declines to order publication of the company petition as it is not a case of inability to pay, but it is a case of refusal to pay on certain misunderstandings. 26. In the circumstances, the company petition fails for want of minimum particulars in that, there is not even a plea ..... 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