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TMI Blog2012 (11) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as tool for recovery and, therefore, considering the aforesaid facts and circumstances of the case, when the debt itself is disputed the petition for winding up deserve to be dismissed. Hence, the petitions are hereby dismissed. - Co. Petition Nos. 14 & 15 of 2006 - - - Dated:- 6-8-2012 - R.M. Chhaya, J. Ms. Niyati K. Shah and D.K. Puj for the Petitioner. Ms. Avani S. Mehta for the Respondent. JUDGMENT 1. Both these petitions are against the same company and as identical issues arise in these petitions, the same are disposed of by this common judgment. 2. Both these petitions have been filed by the petitioners for an appropriate order of winding up of the respondent-Company, Nilsin Ultrachem Limited, under the provisions of the Companies Act, 1956 (the Act). 3. It is the case of the petitioner in Company Petition No. 14 of 2006 that because of some business relation the petitioner advanced a sum of Rs. 2,00,000/- at the relevant point of time @ 18% p.a. on 28.09.2002. It is the contention on behalf of the petitioner that the said amount was to be repaid by the respondent-Company on 02.12.2002. It is contended by the petitioner-Company that the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-Company, through its authorized signatory, has filed affidavit-in-reply and has denied the contentions raised by the petitioner-Company wherein it is contended that no such amount has been received by the respondent-Company towards loan. It is further submitted that as stated in the petition and has relied upon the audited balance sheet it was contended that no loans are outstanding as on 31.03.2003. It is also contended by the respondent-Company that the present petition is filed only with a view to harass the respondent-Company. It is further contended that the petitioner-Company was engaged in trading of various items of Soda Ash and others, there were transactions of purchase and sales between the parties. It is the case of the respondent-Company that there are three companies of the petitioner-Company and four companies of the respondent-Company wherein such transactions took place. However, it is contended by the respondent-Company that it had never sought any amount from the petitioner-Company towards the money lender i.e. towards the dues. It was further contended by the respondent-Company that the amount raised in the invoices from June 2000 to May 2001 are dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period being over instead of vague reply of the statutory notice no payment was made by the respondent-Company and hence, it is contended that the financial substratum of the respondent-Company is lost and, therefore, the respondent-Company is liable to be wound up. It is also contended by the petitioner-Company that the respondent-Company has become commercially insolvent and has not even filed its annual return. 8. The respondent-Company has filed an affidavit-in-reply in response to the aforesaid petition and has also contended that the petition suffers from delay and latches and the claim raised in the petition pertaining to the year 2002 wherein invoices were raised in the year 2002 and, therefore, the petition is filed in the month of October, 2005 i.e. beyond the period of three years. It is contended that there is dispute with regard to the invoices for the purchase of raw material. The respondent-Company has also contended that in the reply to the notice given by the respondent-Company it is specifically pointed out that on the contrary the respondent-Company is entitled to refund of the amount. It is contended that the debit note of Rs.9,38,525/- was raised and as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting debt payable by the respondent-Company to the petitioner and even though the respondent-Company was also aware about the non-payment of the dues the respondent-Company has not paid the debt. It is also averred that the respondent-Company is now dormant and it can hardly be contended that the company is solvent and there are any chance of resurrection. It was further averred that the company is kept alive only for the name. Reliance was placed upon the decisions of - (i) Aluminium Extrusions Industrial Components (P.) Ltd. v. Central Paints Ltd., [1990] 68 Comp. Cas. 477 (MP); AND (ii) Joti Prasad Bala Prasad v. A.C.T. Developers (P.) Ltd. [1990] 68 Comp. Cas. 601 (Delhi). 13. Mr.Vakharia, learned Senior Counsel for the respondent-Company, contended that the petitions are filed for winding up of the respondent-Company on the ground of inability to pay the debts and specifically under Section 433 (e) of the Act. He further relied upon the ratio of decision of the Apex Court in the case of IBA Health (I) (P.) Ltd. v. Info-Drive Systems Sdn. Bhd. [2010] 104 SCL 367, more particularly Paragraph Nos.29-35 thereof: 29. On a detailed analysis of the various terms and conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its approach and did not make any endeavour to ascertain as to whether the company sought to be wound up for nonpayment of debt has a defence which is substantial in nature and if not adjudicated in a proper forum, would cause serious prejudice to the company. MALICIOUS PROCEEDINGS FOR WINDING UP 33. We may notice, so far as this case is concerned, there has been an attempt by the respondent company to force the payment of a debt which the respondent company knows to be in substantial dispute. A party to the dispute should not be allowed to use the threat of winding up petition as a means of enforcing the company to pay a bona fide disputed debt. A Company Court cannot be reduced as a debt collecting agency or as a means of bringing improper pressure on the company to pay a bona fide disputed debt. Of late, we have seen several instances, where the jurisdiction of the Company Court is being abused by filing winding up petitions to pressurize the companies to pay the debts which are substantially disputed and the Courts are very casual in issuing notices and ordering publication in the newspapers which may attract adverse publicity. Remember, an action may lie in appropriate C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 realising debts due from a company. 24. The Madras High Court in Tube Investments of India Ltd. v. Rim and Accessories (P.) Ltd. [1990] 3 Comp LJ 322 (326) (Mad.) has evolved the following principles relating to bona fide disputes : (i) If there is a dispute as regards the payment of the sum towards principal however small that sum may be, a petition for winding up is not maintainable and the necessary forum for determination of such a dispute existing between parties is a Civil Court; (ii) The existence of a dispute with regard to payment of interest cannot at all be construed as existence of a bona fide dispute relegating the parties to a Civil Court and in such an eventuality, the Company Court itself is competent to decide such a dispute in the winding up proceedings; and (iii) If there is no bona fide dispute with regard to the sum payable towards the principal, it is open to the creditor to resort to both the remedies of filing a civil suit as well as filing a petition for winding up of the company. 25. The Rules as regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Where, however, there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely. (See Tweeds Garages Ltd., In re [1962] Ch 406; [1962] 32 Comp Cas 795 (Ch D)). The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law, and, thirdly, the company adduces prima facie proof of the facts on which the defence depends. Another rule which the court follows is that if there is opposition to the making of the winding-up order by the creditors the court will consider their wishes and may decline to make the winding-up order. Under section 557 of the Companies Act, 1956, in all matters relating to the winding-up of the company the court may ascertain the wishes of the creditors. The wishes of the shareholders are also considered, though, perhaps, the court may attach greater weight to the views of the creditors. The law on this point is stated in Palmer's Company Law, 21st edition, page 742, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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