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TMI Blog2017 (5) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Rule 9 of the Company Court Rules, 1956. 2. Briefly the facts of the case are that both the petitioner-Company and the respondent-Company (henceforth to be referred to as merely the Petitioner and the respondent , for short) are registered under the Companies Act, 1956. The petitioner is engaged in the business of designing, procuring, manufacturing, supplying/selling the plant and machinery, and equipments required for the construction of a sugar plant. According to the petitioner, on 05.05.2011, the petitioner and the respondent entered into an agreement for supply of sugar mill house machinery and equipments required by the respondent for their sugar plant situated in Karjol village, Bijapur District. According to the said agreement, the petitioner was required to supply machinery, and equipment worth ₹ 25.70 Crores. Further, according to the petitioner, it has supplied the machinery and equipment worth ₹ 12,43,01,035/-. However, according to the respondent, the petitioner has supplied machinery and equipment worth merely ₹ 11.20 Crores. 3. Further, during the course of supply of machinery, and equipment, the respondent defaulted in paying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up before this Court. 6. Smt. Sunita, the learned Counsel for the petitioner, has vehemently argued that firstly, by email dated 21.09.2012, the respondent has clearly admitted its liability to pay ₹ 6. 5 Crores. Therefore, the respondent cannot wriggle out of its admission. Secondly, merely as an afterthought the respondents are claiming that after reconciling the accounts they owe merely ₹ 11.80 Lacs to the petitioner. Thirdly, since it is an afterthought, the said stand is clearly unacceptable to the petitioner. For according to the petitioner, the respondent owes a debt of ₹ 6.5 Crores. Since the respondent has failed to pay the said amount, the respondent deserve to be wound up by this Court. 7. On the other hand, Mr. Ganapati Hegde, the learned Counsel of the respondent, has pleaded that firstly, the petitioner has filed the winding up petition in order to pressurize the respondent to cough up the amount. However, there are bona fide disputes which exist between the petitioner and the respondent. Secondly, the contract entered between the parties was for ₹ 25.70 Crores, whereas the petitioner had supplied machinery and equipments wort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Conciliation Act, 1996, before the same court. Furthermore, the respondent has also filed a petition under Section 14 of the Arbitration Conciliation Act, 1996, namely O. P. No. 76/2017, before the Hon'ble Madras High Court, for terminating the Arbitral Tribunal appointed under the contract and for appointing a substitute Arbitrator, preferably, a retired Judge of the Madras High Court. By order dated 20.02.2017, the Hon'ble Madras High Court has issued notice to the petitioner. Thus, the entire dispute continues to be pending before the Arbitral Tribunal appointed under the contract. Since the petitioner and the respondent are already before the Arbitrary Tribunal, since the case raises complicated and disputed questions of fact, the winding up petition, which is a summary proceeding, should not be continued by this Court. Thus, the petition deserves to be dismissed by this court. 8. Heard the learned counsel for the parties. 9. In the case of IBA Health (I) (P) Ltd. v. Info-Drive Systems Sdn. Bhd., [ (2010) 10 SCC 553], the Hon'ble Supreme Court has observed as under: 20. The question that arises for consideration is that when there is a substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 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. The Hon'ble Apex Court further opined as under: 25. An examination of the company s solvency may be a useful aid in determining whether the refusal to pay debt is a result of a bona fide dispute as to the liability or whether it reflects an inability to pay. Of course, if there is no dispute as to the company s liability, it is difficult to hold that the company should be able to pay the debt merely by proving that it is able to pay the debts. If the debt is an undisputedly owing, then it should be paid. If the company refuses to pay, without good reason, it should not be able to avoid the statutory demand by proving, at the statutory demand stage, that it is solvent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company and which may also have other economic and social ramifications. Competitors will be all the more happy and the sale of its products may go down in the market and it may also trigger a series of cross-defaults, and may further push the company into a state of acute insolvency much more than what it was when the petition was filed. The Company Court, at times, has not only to look into the interest of the creditors, but also the interests of the public at large. A Company Court, therefore, should act with circumspection, care and caution and examine as to whether an attempt is made to pressurise the company to pay a debt which is substantially disputed. A Company Court, therefore, should be guarded from such vexatious abuse of the process and cannot function as a debt collecting agency and should not permit a party to unreasonably set the law in motion, especially when the aggrieved party has a remedy elsewhere. Therefore, the principles enunciated above by the Hon'ble Supreme Court would have to be kept in mind while deciding the present winding up petition. 10. Admittedly, according to the contract dated 05.05.2011, the petitioner is supposed to have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiate this plea, the respondent has filed the statement of account (Annexure-R.3). However, the petitioner has hotly disputed the said statement of account. For example, the petitioner claims that respondent has arbitrarily deducted Access Claim of ₹ 11 Lacs, although no reason has been given for deducting the said amount in the reconciliation statement. Moreover, while the respondent has claimed that it is entitled to ₹ 1.44 Lacs for Debit Note, but the petitioner has denied this liability. Similarly, while the respondent has claimed ₹ 30 Lacs for Technical Support for Erection and Commissioning, the petitioner has again denied the same. Thus, obviously, there are bona fide disputes between the petitioner, and the respondent with regard to different heads of payment and deductions. 15. Admittedly, the contract dated 05.05.2011, contained an arbitration clause. Undoubtedly, both the parties are before an Arbitral Tribunal created under the contract. Already the petitioner has filed an application under Section 9 of the Arbitration Conciliation Act, before the District Judge, Ghaziabad. Moreover, the petitioner has also filed an application under Section 14 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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