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TMI Blog2015 (12) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... d the arbitration proceedings. The petitioner cannot be allowed to use the threat of winding up petition as a means of enforcing a company to pay a bona fide disputed debt. The petitioner chose to reduce this court as a debt collecting agency or means for bringing improper pressure on the company to pay the bona fide debts thereby abusing the jurisdiction of the company court. In the circumstances, the company petition requires to be dismissed with substantial cost. - Company Petition No. 864 of 2014 - - - Dated:- 8-12-2015 - K. R. Shriram, J. For the Petitioner : Mr. Pravin Samdani Sr. Advocate a/w Mr.Paritosh Jaiswal, Mr.N.Mehta, Mr.Parag Sharma i/by Udwadia Co. For the Respondent : Mr. Venkatesh Dhond, Sr.Advocate and Mr.Shyam Kapadia a/w Mr.Gaurav Shah, Ms.Smruti Kanade and Ms.Heena Daulat i/by M/s.Negandhi Shah Himayatullah for the respondent. ORDER P. C. 1 The petitioner has approached this court alleging that the company is indebted to the petitioner a sum of ₹ 4,69,42,986/- on account of outstanding dues payable for services provided by the petitioner for transportation of the company's equipments from one place to another in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner's claim was. The status of this arbitration is, there is an award against the petitioner wherein the petitioner has been directed to pay to the company a sum of ₹ 3,61,83,472/- plus interests and cost of ₹ 30,00,000/-. 4 The counsel for the company submitted that in view of this, the defence of the company that they have to recover monies from the petitioner is a bonafide defence and on this ground alone the petition shall stand dismissed. 5 The counsel for the company also submitted that even assuming for the sake of argument that they have admitted, as alleged by the counsel for the petitioner, that the amounts claimed as invoice charges are payable to the petitioner still this cannot be used as a forum to recover amounts and it is not a case requiring winding up of the company. 6 The company also took a defence that the statutory notice is defective in as much as the notice issued states that the petitioner would take action against the company under Section 271 of the Companies Act 2013 and not under Sections 433 434 of the Companies Act 1956. The counsel also submitted that the Corrigendum sent by the company to the statutory notice vide thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n challenging the award and if the award is set aside, there will be no amount payable to the company and the entire amount claimed herein would become payable. The counsel wanted this court to club the present petition with the arbitration petition and wanted both the matters to be heard together. In my opinion, this request of the petitioner has to be rejected. The arbitration proceedings has nothing to do with the present company petition. This company petition is not a forum for the petitioner to recover its amount. It is the case of the petitioner that the company has failed and neglected to pay the amounts claimed and hence the company requires to be wound up. The parameters to be considered while hearing a company petition is totally different from the parameters while hearing an arbitration petition challenging an award. Therefore, I was not inclined to tag this petition along with the arbitration petition but decided to proceed with hearing of this petition. 11 Moreover, the pendency of the arbitration petition is irrelevant to examine whether the company is unable to pay its debts or not. In 1964 Company Cases Vol-xxxiv 963 Federal Chemical Works Ltd., decided by a sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a good reason for the court to hold, as on the date of disposal of the petition, that the dispute raised by the company was not a bonafide dispute. The court concluded that it must be held that the company had a reasonable excuse for not making payment of the decree to the petitioners and that the company was not negligent. The court held that the word neglected used in Section 434 (1) (a) would mean that if there is a refusal to pay without any reasonable cause then it could be said that the company had neglected to pay the amount. Mere omission to pay is not a neglect to pay and if the company bona fide disputes its liability to pay the amount, even though the amount may be a decretal amount, then in that case it cannot be said that the company has neglected to pay within the meaning of Section 434(1) (a). If there is a genuine cross-claim then it amounts to this that the claim of the petitioner is a disputed claim. The disputed claim would never be a good subject matter of a winding up petition. The following passages from C.A.Galiakotwala (supra) will be useful. In the present case, I have been saved the trouble of going through the materials to find out whether the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the company had a reasonable cause for not making payment of the decree to the petitioners and further that the company was not negligent within the meaning of s.434(1)(a) of the Companies Act, 1956, in not making payment of the amount on receipt of statutory notice. (emphasis supplied) 13 The Delhi High Court in (2004) 114 DLT 52 Jubilant Organosys Ltd. Vs. DCM Shriram Industries Ltd. has held that where there are claims and cross claims between a creditor seeking the winding up and a company sought to be wound up, the debt can be said to be bona fide disputed and the court will not order the winding up of the company. It is for the petitioner to show that the company has omitted to pay without a reasonable excuse and winding up proceedings are not intended to exploit as a normal alternative to the ordinary mode of debt realization. Paras-7, 9, 12 13 are read as under :- 7 On the basis of aforesaid admitted position, the question that falls for consideration is as to whether the respondent can raise counter-claim on the basis of the Award ? To put it differently, whether such a counterclaim would be a legitimate ground to deny the petitioner payment which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim is the result of legal proceedings. Even if the SLP is pending that would not render the character of the counter-claim as frivolous. On the contrary till the Award is set-aside, the amount is payable in the said Award by the petitioner to the respondent. This petition is therefore, misconceived and is dismissed. (emphasis supplied) 14 Facts in the case before us and the facts in C.A.Galiakotwala (supra) and Jubilant Organosys Ltd. (supra) are also similar. Here also the company's claim has already been adjudicated before the arbitrator and has resulted in the award. It is not merely a claim pending adjudication. Further in this case also the claim before the arbitrator was not an ofter thought. The reference was filed much before the present petition was filed, for that matter much before the (statutory) notice was even issued. These two cases therefore, squarely apply to the case in hand. 15 It will be useful to quote the following paragraphs-20, 21, 22, 23, 31 33 from IBA Health (supra). 20 The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt is bona fide disputed, there cannot be neglect to pay within the meaning of Section 433(1)(a) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts is not substantiated and non-payment of the amount of such a bona fide disputed debt cannot be termed as neglect to pay so as to incur the liability under Section 433(e) read with Section 434(1)(a) of the Companies Act, 1956. 24........ 25........ 26........ 27........ 28........ 29........ 30........ 31 Where the company has a bona fide dispute, the petitioner cannot be regarded as a creditor of the company for the purposes of winding up. Bona fide dispute implies the existence of a substantial ground for the dispute raised. Where the Company Court is satisfied that a debt upon which a petition is founded is a hotly contested debt and also doubtful, the Company Court should not entertain such a petition. The Company Court is expected to go into the causes of refusal by the company to pay before coming to that conclusion. The Company Court is expected to ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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