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TMI Blog2007 (5) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... , accounting and other services and to act as consultant for recruitment services and to provide recruitment solutions and various other services. 3. According to the petitioner, respondent company was incorporated at Delhi and is having its registered office at Bombay House 4/47, Safdarjung Enclave, New Delhi. According to the petitioner, respondent company is indebted to the petitioner company for a sum of Rs. 3,66,416 together with interest at the rate of 16 per cent per annum from 31-3-2005 till the date of filing of the petition. 4. It is contended by the petitioner company that some time in November 2004, the petitioner company made arrangements and conducted a series of interviews and selected required candidates for recruitment in the respondent company on specific requests made by Mr. Radhakrishnan, Managing Director (Europe) and Mr. Ravi Grewal. According to the petitioner, the fee structure for its services was communicated to the respondent company and as it was not protested or refuted, is deemed to have been admitted. The petitioner carried out the recruitment process and short listed three candidates, Mr. Anand Joshi, Mr. Rami Reddy and Mr. Harsh Bhatnagar fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected to on the ground that there is no ascertained debt payable by the respondent company. The amount claimed by the petitioner is in dispute and the petition is based only on invoices which were not accepted and which cannot be the basis for a winding up petition. Refuting the allegation made in the petition, it is contended that the winding up petition cannot be an alternative for recovery of money for which a civil suit is ordinarily the remedy and the Company Court cannot be used as a forum by the creditor to establish its rights either regarding the debt or regarding the interest. 8. The respondent company refuted the claim of the petitioner for respondent s winding up on the ground that the respondent does not owe a definite and ascertained amount and the petitioner is not entitled for any interest at any rate. Even in the e-mail sent to the respondent, varied rate of interest had been claimed either at the rate of 8 per cent or 18 per cent and no rate of interest, in any case, was agreed between the parties for the alleged payment due from the respondent to the petitioner. The respondent refuted the allegations that any specific request was made by Mr. Radhakrishnan, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up of respondent company. 9. An affidavit of Col. T.S. Bakshi (Retd.) has been filed in support of respondent company giving the names and addresses of the Directors of the respondent company and the places where the statutory records including the books of account of the respondent company are kept. The respondent also filed the copies of the audited balance sheet for the year 2005-06. 10. The petitioner filed a rejoinder refuting the averments and pleas raised by the respondent company. The petitioner rather raised a new plea in the rejoinder that there was an oral contract between the parties and since the rates were quoted by the petitioner and the respondent went ahead and availed the services, therefore, there was a deemed acceptance of such rates. Reliance was placed on various correspondences alleging that the respondent has admitted in those correspondences that he is liable to make payments and made false assurances. Relying on section 8 of the Contract Act, it was contended that an offer is made subject to a condition that the offeree cannot accept the benefit without accepting the condition and, in the circumstances, it was contended that there is a deemed liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany is insolvent or will be unable to pay its debt to the petitioner company. Though the balance sheet was filed by the respondent company pursuant to the direction of the Court, no reply to the audited balance sheet has been filed nor there is any averment by the petitioner company that from the balance sheet it can be shown that the respondent company is insolvent company or in such a financial state that it will be unable to pay the alleged debt of the petitioner. 14. The petitioner has also taken divergent stands. In the petition, it is contended that since the invoices were sent which were not refuted and were accepted, the amount of invoices is deemed to have been accepted where as in the rejoinder, the stand taken by the petitioner is that there was an oral contract between the parties and since the rates were quoted for providing services and respondent had availed all such services, therefore, there was a deemed acceptance of such rates. Perusal of the communication referred to by the petitioner especially the e-mail which is at page 43 of the paper book as Annexure P3 , it is apparent that a proposal was given for person to be recruited who were to be located in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inite sum of money payable immediately or at a future date and that the inability referred to in the expression unable to pay its debts in section 433( e ) of the Companies Act should be taken in the commercial sense and that the machinery for winding up will not be allowed to be utilized merely as a means for realizing debts due from a company. At the stage of admission of the petition, the Court is concerned to see whether the respondent-company has been unable to pay its debts. The amount claimed must be one which is legally due and recoverable debt. The debt must be payable prima facie. The onus to a great extent is placed upon the petitioner to satisfy the Court prima facie. In this regard, to my mind the petitioner has not been able to discharge its primary onus to show that the above debt is rightly due to the petitioner much less that it was an admitted liability. The Court would refuse to admit a petition where there is a bona fide dispute raised by the respondent-company. Once the stand of the respondent-company prima facie is bona fide and is of substance then it would be difficult for the Court to direct admission of such a petition. The Bombay High Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition for winding up of the company. 19. The rules as regards the disposal of winding-up petition based on disputed claims are thus stated by the Apex Court in Madhusudan Gordhandas Co. v. Madhu Woollen Industries (P.) Ltd. [1971] 3 SCC 632. The Supreme Court has held that if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The principles on which the court acts are : ( i )that the defence of the company is in good faith and one of substance; ( ii )the defence is likely to succeed in point of law; and ( iii )the company adduces prima facie proof of the facts on which the defence depends. 20. Generally speaking, an admission of debt should be available and/or the defence that has been adopted should appear to the Court not to be dishonest and/or a moonshine, for proceedings to continue. If there is insufficient material in favour of the petitioner, such disputes can be properly adjudicated in a regular civil suit. It is extremely helpful to draw upon the analogy of a summary suit under Order XXXVII of the Code of Civil Procedure. If the Company Court reaches the conclusion that, had it been exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain that the assets would be insufficient to meet the existing liabilities. Perusal of the balance sheet of the respondent company for the year 2005 and 2006 negate this contention of the petitioner. Rather the petitioner had not even adverted to the financial position of the respondent company on the basis of the balance-sheet for the year 2005-06. 22. In Vivek Hire Purchase Leasing Ltd. s case ( supra ) relied on by the petitioner, a suit was filed by the company for the limited relief, however, the fact shows that the respondent was unable to pay its debt and rather in one of the communications, the respondent had admitted its inability to pay its debt and in view of that matter it was held that the suit was not a bar to proceeding against the respondent company for winding up. It was held in that case that the defence of the respondent company was not in a good faith and one of substance and was not likely to succeed and no prime facie proof of the facts on which the defence depended was made. In contradistinction, the defence of the respondent that there was no consensus ad idem between the parties seems to plausible. Though the petitioner has tried to impute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of defence was not disclosed initially but was taken for the first time in the affidavit of opposition and it was held that where a defence is disclosed by a company in reply to the notice, then all the points should be disclosed. It was held where the defence is not taken in reply to statutory notice but is taken alternatively in the affidavit, it cannot be accepted that the company s refusal to pay is based on bona fide defence. The case of the respondent is clearly distinguishable inas- much as this is the case of the respondent company that the notice was not served on the office of the respondent company at Chandigarh where the invoices were raised. Though an AD card has been produced about the service of notice at Delhi address, however, it does not bear any seal of the company and is initialled by someone and no reply to notice was given, not raising all the disputes raised in the reply to the petition. The case of the respondent is different as no reply was filed whereas in the case relied on by the petitioner reply was given but all the defence was not taken in the reply at the first instance and new defences were taken in the reply to the petition filed before the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mails mainly, the terns and conditions in respect of which there could be consensus ad idem between the parties cannot be inferred. In Elmeh India s case ( supra ), a Single Judge had held that it is not the legislative intent that the Company Court should convert itself into a ordinary civil court and proceed to held a trial at the instance of every petitioner claiming to be a creditor of the company nor can proceed to pass a decree and thereafter order the winding up of the company on the ground that it is unable to satisfy the decree. Similarly in United Construction Co. s case ( supra ), a Single Judge had dismissed the petition holding that it was clear from the pleadings that the parties were not ad idem in regard to any factum, right from the execution of the alleged agreement till its execution. 25. What will be the ramification of not replying to statutory notice. The respondent has alleged that the notice was not sent at Chandigarh office where the invoices were raised. This is no more res integra that where no response to a statutory notice has been made, winding up order must invariable be passed. Where no reply to the statutory notice is given, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically arise. I continue to be in respectful agreement with this view. Applying this ratio to the facts of the present case, without in any manner diluting or undermining the significance of the failure of the respondent company to respond to the statutory notice, this factor will be duly kept in perspective when the conspectus of facts is considered." (p. 287) 26. In the totality of facts and circumstances and on the basis of the ratio of various judgments cited by the parties, it is inevitable to infer that the disputes raised by the respondent are bona fide and prima facie it is not apparent that there was a concluded contract between the parties and in the circumstances, the amount claimed by the petitioner cannot be held to be ascertained. Even there is no agreement for payment of interest nor the rate at which it has been claimed. The copy of balance sheet filed by the respondent company also does not reflect that the respondent company is unable to meet its debt. 27. In the facts and circumstances, the petition for the winding up of the respondent company is without any merit and it is dismissed. However, considering the facts and circumstances, the parties are l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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