TMI Blog2004 (9) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... e thereof. The respondent has also utilised the said goods in the normal and usual course of its business of texturising and processing of yarn. 2. It is also the case of the petitioner that the respondent has failed and/or neglected to pay the said amount to the petitioner. It is also the case of the petitioner that as per the agreed terms of the contract, the respondent is liable to pay to the petitioner interest at the rate of 21 per cent per annum for delay in payment beyond 7 days from the date of invoices. The respondent has delayed the payment and hence, the petitioner has raised debit notes on the respondent for Rs. 18,54,352 towards interest payable till 30-6-2000 which have been duly accepted by the respondent. It is also the case of the petitioner that as on 30-6-2000 accounts were finalised and after giving credit of Rs. 1,22,385 against the invoices/debit notes for payments received or adjusted, the respondent has confirmed the liability of Rs. 1,67,55,128. The respondent had issued two cheques dated 5th July, 2000 for the aggregate amount of Rs. 1,67,55,128 for the discharge of its liability. However, both these cheques when presented for payment have been dishono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also contended that as per the balance sheet of the company as on March 2000 a sum of Rs. 3,20,53,625 was due to the company from its debtors. Lastly it was contended that the company petition is not an instrument for recovering money and it cannot be entertained and the company cannot be wound up if it is going through a phase of temporary difficulties. The admission of a petition and the resultant advertisements have numerous adverse implications for the company, its employees, its debtors and all those concerned in general and in view of the well-settled position that a company petition cannot be used for recovering of dues. 5. An affidavit in rejoinder was filed by the petitioner-company on 12-11-2001 wherein facts stated and averments made by the respondent-company in its affidavit in reply were disputed. It is submitted by the respondent-company in the said affidavit in rejoinder that the payment of Rs. 5 lakhs was made by the respondent-company after filing of the petition which was too meagre amount as compared to total liability of Rs. 2 crores. It was also contended that the amount was outstanding since 1999 and sufficient time has already been granted to the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public exchequer such as excise duty, sales-tax, octroi etc. in the last five years; ( vi )The Company claims to have debtors to the tune of Rs. 3 crores. Nothing is stated as to whether any attempts, or what attempts, have been made for making those recoveries and whether those debts are owed by any sister concerns or business-debtors." The Court has, however, not thought it fit to pass any order at that stage, but considering the fact that the respondent-company is a going concern, the Court gave a further opportunity to the respondent. 8. Despite the fact that the above assurance was given and affidavit was filed before the Court, the respondent-company has not made the payment and hence, the petition was admitted by this Court on 30-7-2002. The Court thereafter passed an injunction order on 1-12-2003 restraining the respondent-company from transferring its plant, machinery, lands and buildings without obtaining prior permission of this Court. 9. Since the payment was not made as per the assurance given, this Court has passed an order on 2-7-2004 directing the respondent-company to ask its authorised representative to remain present for the purpose of making a firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2003. It further agreed to increase the amount of monthly instalment of Rs. 3,50,000 for 18 instalments beginning from July, 2003 to December, 2004 and so on to complete the total outstanding by December, 2005. She has further submitted that in spite of signing these consent terms, the company has not made a single payment to honour the same. After putting up the said consent terms, and having filed the undertaking to honour the same, the company has, till date, made the total payment of Rs. 8,00,000 only as against an amount of Rs. 60,15,776 towards the instalments due and payable. Even this amount was paid as per the directions of this Court and not in accordance with the consent terms. Mrs. Soparkar has, therefore, submitted that the respondent-company has neither the intention to pay the outstanding amount of the petitioner nor the ability to pay the amount and the proposals made and the consent terms filed are only an eyewash and the tactics adopted were only to delay the legal consequences. 11. Mrs. Soparkar has further submitted that the present winding up petition is admitted before a long time, i.e., vide order dated 30-4-2002 and this Court has deferred the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, the issuance of notice is not a matter of course. If from the material disclosed in the petition and reply to the notice, a prima facie case of existence of a bona fide and reasonable dispute is spelt out, the court would be justified in dismissing the petition in limine at the threshold. The word may used in sections 433 and 443 is indicative of the fact that even if one or more of the grounds mentioned in section 433 is made out, and the company is unable to pay its debt, it is still not mandatory, but rests in the discretion of the court whether to make an order of winding up. The court must in each case exercise its discretion in deciding whether in the circumstances of the case, it would be in the interest of justice to wind up the company." (p. 541) The Court in the said decision has further observed as under: "As against the creditor s right to get an order of winding up ex debito justitiae, where, from the materials it appears that the company is commercially solvent and the present state of affairs is the result of a temporary setback in business, or where the court is satisfied that the petitioner holds security for his debt and that security is suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. v. Micro Forge (India) 41 (2) GLR 1594 wherein the Court has articulated certain important chronicles and contours to be kept in the mental radar before reaching to the conclusion in a winding-up petition. Mr. Marshal, the learned advocate appearing for the petitioner has submitted that some of the points are very relevant for deciding the present petition, which are as under: ( 1 )If the company is ongoing concern having regular business and employment of employees, the Court cannot remain oblivious to this aspect. The effect of winding-up would be of putting an end of the business or an industry or an entrepreneurship, and in turn, resulting into loss of employment to the several employees and loss of production and effect on the larger interest of the society. ( 2 )Winding-up of a company, as such, is nothing but a commercial death or insolvency and, therefore, the Company Court is obliged to take into consideration not only the temporary inability, or disability to make the payment of debts, but the entire status and position of the company in the market. ( 3 )Though ordinarily an unpaid creditor may aspire for an order of winding-up, then ex debito justitiae ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould throw out of employment numerous persons and result in gross hardship to the members of families of the employees; ( c )loss of revenue to the State by way of collection of taxes which otherwise should have been collected, on account of customs, excise duties, sales tax, income-tax etc.; ( d )security of goods and diminishing of employment opportunities. 14. In light of the observations of the Division Bench, Mr. Marshal has urged that the winding up of the company is not at all desirable and the present petition, therefore, should be dismissed at the threshold. 15. After having heard learned advocates appearing for the respective parties and after having gone through the various submissions made and the issues raised before the Court, and after having given serious thoughts to the authorities cited before the Court, the Court is of the view that the petition is now required to be advertised forthwith. While arriving at this conclusion, the Court has taken into consideration the two binding decisions of this Court in the case of American Express Bank Ltd. ( supra ) and Tata Iron Steel Co. Ltd. ( supra ). This Court is, however, of the view that the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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