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TMI Blog2015 (6) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said documents, it is always open for the petitioner to file appropriate proceedings with regard to the said so called forged documents. In the present case, before the notice of demand was given by the petitioner on 27th January 2014, the respondent company has already raised the dispute by a communication dated 04.12.2013 and disputed about the poor quality of work. In the case of Tata Iron Steel Company Ltd. [ 2000 (3) TMI 920 - HIGH COURT OF GUJARAT ], the Division Bench of this Court held that winding -up is a remedy of last resort and not to be utilised as a pressurizing tactic to obtain payment of dues and the Court laid down general principles in this regard. In the said case the Court found that the company was financially sound and there were disputed aspects about is liability to pay to the petitioner and therefore dismissed the petition. Considering the facts of case on hand and the correspondence between the parties, the affidavits, and counter affidavits, it appears that debt is not admitted; there are bona fide disputes raised by the respondent company and the said disputes are right from very beginning more particularly even prior to the statutory notice. A C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here in September 2012 for the purpose of availing services of the petitioner for construction, development, interior and exterior designing of its workshop at Wagholi, Pune and showroom situated at Viman Nagar, Pune. The parties undertook discussions with respect to the manner and the phases in which the assignment was to be completed and thereafter the said work was given to the petitioner. The petitioner provided proforma invoice on 12th September 2012 with respect to the initial phase of the assignment comprising of boundary works, main structure work and preengineered building works. The said proforma invoice is produced with the compilation. Thereafter, for the other phases of the assignment, as per the case of the petitioner, as the assignment majorly included standard furniture and fixtures, the respondent was provided with the Bill of Quantity by the petitioner in which the rate of every item that may be required during the work was provided and the respondent agreed for the same and counter signed the rates of Bill of Quantity. It is further the case of the petitioner that the work towards the assignment started in October 2012 and as per the arrangement between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicable taxes of Rs. 47,80,847. However, no reply was given by the respondent nor any payment was made. Petitioner, therefore, issued a statutory notice calling upon the respondent to make payment of Rs. 46,47,913/-. The said statutory notice was issued on 27.03.2014. The respondent gave its reply on 22.04.2014 and denied its liability for making such payment. Respondent has stated that amount of Rs. 3,29,00,000/- is paid by the respondent company to the petitioner out of which Rs. 2,35,00,000/- has been paid in cash, whereas Rs. 94,00,000/- was paid by cheque. Thus, the petitioner has filed this petition alleging that the dispute raised by the respondent company in its reply dated 22.04.2014 cannot be said to be a bona fide and reasonable dispute. Respondent has failed and neglected to make the payment and therefore this petition be allowed and respondent be ordered to be wound up. 2.3. This Court issued the notice to the respondent. In pursuant to the notice issued by this Court, respondent appeared before this Court and filed affidavit-in-reply. In the said reply, the respondent company has mainly contended that respondent is not liable to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said job will be done from other civil engineers and payment to them would be adjusted from the balance payment of the petitioner. 2.5. The petitioner filed affidavit-in-rejoinder in pursuant to the affidavit-in-reply filed by the respondent company in which it is once again stated that there are certain admitted dues as per the e mail of October 2013 sent by the respondent company and therefore alleged turnover of Shivalik group has no bearing whatsoever with regard to the admitted dues of the respondent. The petitioner has further stated in the rejoinder that after filing of the petition on 18th June 2014, the Accounts Manager of the respondent sent email, whereby ledger statement/account of the petitioner maintained in its Books of Accounts was sent. The said document is produced on record with the affidavit-in-rejoinder. It is further stated that the vouchers produced by the respondent along with the affidavit-in-reply are concocted and forged documents and are produced with a view to mislead this Court and therefore this Court may initiate necessary proceedings against the concerned officer of the respondent company. It is once again stated that though the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent has sent email on 10.10.2013, which reads as under: "As per the bill submitted we have a balance of 4147913/- and taxes of 17 lacks. Details of which you have mailed to us. We regret the delay due to unavoidable reasons and assure you 70% on the 15th of Oct 2013 and the balance by the 20th of Oct 2013." 5. Learned counsel further submitted that it is admitted by the respondent that Rs. 41,47,913/- is the balance amount which is to be paid by the respondent to the petitioner with taxes of Rs. 17 lac. The respondent gave an assurance that 70% of the said amount would be paid by 15th October 2013 and the balance would be paid by 20th October 2013. Learned counsel has relied upon this communication and submitted that this amount is not disputed by the respondent company. In spite of that the said undisputed amount is not paid by the respondent company. He further referred to the notice dated 27.01.2014 sent by the petitioner the respondent company whereby the respondent was called upon to pay the outstanding amount of Rs. 2,49,48,913/-. Learned counsel for the petitioner explained thereafter that though the first notice was given for total outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision and under certain circumstances the company shall be deemed to be unable to pay its debt. He referred to the provisions of Section 434(a) of the Act and submitted that if three conditions mentioned in this section are satisfied, this Court is not required to see whether in fact the company is a going concern or is in a position to pay its debt or not. He submitted that Rs. 41,47,913/- is admitted dues. The said amount was not paid and therefore the statutory notice was issued to the respondent company. The said notice was duly served to the respondent company. After the receipt of the notice the respondent has neglected to pay the outstanding dues of the petitioner for a period of three weeks. He, therefore, submitted that all the aforesaid three conditions are satisfied in the present case and therefore this Court may pass an order of winding up of the respondent company. 6. Learned counsel has relied upon the decision rendered by the Hon'ble Supreme Court in the case of Vijay Industries v. NATL Technologies Limited, [(2009) 3 SCC 527] and more particularly the observations made in para 33 and 34 of the said decision. Learned counsel also relied upon the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court will not act upon a defence that the company has liability to pay but chooses not to pay and the creditors will, in such case, be entitled to a winding up order. 9. Learned counsel thereafter referred the oral order dated 18.06.2012 passed by this Court in Company Petition No.154 of 2010. He relied upon the observations made by this Court in para 15.14 to para 15.18. After relying upon the said order, learned counsel submitted that at the time of considering the winding up petition this Court is required to see whether there is a genuine, substantial and bona fide dispute as to the debt and liability of the respondent to pay the same to the petitioner. If the defence of the respondent is unjustified or imaginary or an afterthought dispute, the Court may not accept such defence and hold that the claim of the petitioner is correct. In absence of genuine, substantial and bona fide dispute the petition is required to be admitted by this Court while exercising powers under Section 433 read with Section 434 of the Act. Learned counsel relying upon the observations made in para 15.18 submitted that at the time of considering the winding up petition various options are available wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said work was required to be carried out by other civil engineers. He further submitted that the respondent company has now filed Special Civil Suit No.135 of 2015 before the concerned civil Court against the petitioner company for recovery of Rs. 1,88,00480/-. He referred to the averments made in para 5 to 8 of the said civil suit. He further submitted that total amount of Rs. 2,35,00,000/- was paid in cash to the Director of the petitioner company on different dates and Rs. 92 lac was paid by RTGS. Thus, total amount of Rs. 3,27,00,000/- is paid to the petitioner. That after the possession of workshop and showroom was taken over by the respondent company it was found that the work carried out by the petitioner was substandard and defective. Possession of the showroom was handed over in September 2013 and therefore on 4th December 2013 itself the respondent has raised a dispute and pointed out about the defective work. Learned counsel further submitted that the petitioner has charged heavily for several items the details of which are mentioned in para 8 of the said suit. That the dispute was raised by the respondent on 4th December 2013 i.e. before the first noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind certain guidelines enumerated in the said paragraph. He further referred to para 29 of the said decision and submitted that the Division Bench in the said case held that the dispute raised by the respondent company was bona fide and therefore after referring to the various decisions rendered by the Hon'ble Supreme Court, the Division Bench of this Court held that the order of admission of winding up petition and the resultant directions are not warranted and justified and therefore the order of winding up was quashed. 12. Learned counsel thereafter referred to and relied upon the decision of the Hon'ble Supreme Court rendered in the case of Exposure Insurance Services Limited v. Larsen and Turbo Limited, [(2011) 12 SCC 511]. Learned counsel has, relying upon the observations made by the Hon'ble Supreme Court in para 5 and 6 of the said decision, submitted that if the defence taken by the respondent company was a genuine dispute with regard to the claim put forward by the petitioner company, the winding up petition is required to be dismissed. 13. Learned counsel for the respondent then placed reliance upon the decision of the Hon'ble Supreme Court rendered in the case of IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tember 2013. (iii) Total amount of Rs. 92 lac has been paid on various dates by RTGS by the respondent to the petitioner. The said fact is not in dispute. (iv) The case of the petitioner is that except Rs. 92 lac received through RTGS, no other amount is paid by the respondent, whereas the case of the respondent is that Rs. 2,35,00,000/- by way of cash has been paid to the Director of the petitioner company on various dates and the respondent has produced vouchers and receipts thereof. This aspect is not admitted by the petitioner. (v) That in the email dated 30.09.2013, the petitioner has stated that Rs. 54 lac is balance amount and the same be paid before Navratri. (vi) Against this communication, the respondent sent email on 10.10.2013, wherein it has been stated that balance amount to be paid is Rs. 41,47,913/- and Rs. 17 lac towards the taxes. (vii) On 4th December 2013, the respondent informed the petitioner about the defects in the work carried out by the petitioner and also informed the petitioner that outstanding amount would be adjusted. From the record it is clear that the petitioner has not given any reply to the said letter nor it was poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record the vouchers and the receipts along with the affidavit and when in the reply to the statutory notice also the said aspects are pointed out, prima facie it cannot be said that the dispute raised by the respondent is not genuine. Further, before issuance of the first notice on 27.01.2014, by way of communication dated 4th December 2013, respondent has already pointed out to the petitioner about the defects in the work carried out by the petitioner and it was specifically pointed out that the said work would be completed through other civil engineers and therefore the payment of the petitioner is withheld. By way of an additional affidavit filed in March 2015, respondent has produced on record various documents and pointed out that there was defect in the work carried out by the petitioner and petitioner has overcharged heavily with regard to certain items. The respondent has therefore initiated civil proceedings by filing a civil suit against the petitioner for recover of Rs. 1,88,00,480/. 18. Thus, in the aforesaid facts and circumstances of the present case, this Court is of the opinion that the defence taken by the respondent cannot be said to be moonshine, sham ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued before this Court in exercise of company jurisdiction is whether the respondent company ought to be wound up or not, which issued is not available either to the Civil Court or to the arbitrator for decision. The issue of whether the pendency of a civil suit or arbitration would bar winding up proceedings is no longer res integra. See, Resham Singh & Co. Pvt. Ltd. v. Daewoo Motors India Ltd., (2003) 116 Comp. Cases 529 (Del.). 17. The other defence raised by the respondent is that some of the goods supplied by the petitioner were not as per specifications. However, the respondent raised allegations regarding the supply of defective goods by the petitioner, as well as allegations of a possible breach of the Exclusive Supply Agreement by the petitioner for the first time in its letter dated 25th October, 2008 " 21. In the present case, before the notice of demand was given by the petitioner on 27th January 2014, the respondent company has already raised the dispute by a communication dated 04.12.2013 and disputed about the poor quality of work. Further, as observed hereinabove, in response to the statutory notice dated 27.03.2014 issued by the petitioner, respondent by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 720 of 1999 arising out of SLP (C) No. 14096 of 1998 dated 521999]. It appears to me that the following point may be added to the foregoing considerations. (vii) Generally speaking, an admission of debt should be available and/or the defense 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 favor of the petitioners, 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 exercising ordinary original civil jurisdiction it would have granted unconditional leave to defend, it must dismiss the winding-up petition." 23. In the said case the goods were supplied to the company and a sum of Rs. 4,16,261/- was due and payable. There was a clear admission of debt on the part of the company. However, after the winding petition was filed, objection was raised about defects in goods supplied by the petitioner company. Said objection was taken after a period of three years from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, in the facts and circumstances of the present case, the said decision is not applicable. 28. The Hon'ble Supreme Court in the case of IBA Health (India) Pvt. Ltd. (Supra) in para 30, 31, 33, 34 and 35 observed and held as under: "30. A company petition cannot be pursued in respect of contingent debt unless the contingency has happened and it has become actually due. In the absence of any evidence, it is not possible to conclude that M/s. Solutions Protocol Sdn. Bhd. Had in fact paid any amount to the appellant company towards commission charges due to the respondent company before the cut off date. A legal notice prior to the institution of the company petition could be served on the company only in respect of a debt (then due) and a company could be wound up only if it was unable to pay its debts. In this case, there is a bona fide dispute as to whether the amount claimed is presently due and if, at all, it is due, whether the appellant company is liable to pay the sum unless they have received the same from M/s. Solutions Protocol Sdn. Bhd. 31. Where the company has a bona fide dispute, the petitioner cannot be regarded as a creditor of the company for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale of its products may go down in the market and it may also trigger a series of crossdefaults, 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 public at large. 35. We have referred to the above aspects at some length to impress upon the Company Courts to be more vigilant so that its medium would not be misused. A Company Court, therefore, should act with circumspection, care and caution and examine as to whether an attempt is made to pressurize 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." 29. The Hon'ble Supreme Court in the case of Pradeshiya Industrial & Investment Corporation of Utter Pradesh (Supra) in para 26, 27 and 29 observed and held as under: "26. A debt under this section must be a determined or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al dispute of counter claim. The principles, which we have enunciated herein above, are extensively, explored in catena of judicial pronouncements. For short, we cannot resist the temptation of referring the following decided cases: 1. Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd, (1972) 42 Company Cases, 125 (SC), wherein, it is held that one act of dishonesty on the part of the petitioner is sufficient for rejection of petition. 2. Harinagar Sugar Mills v. Court Receiver, H.C. Bombay, AIR 1966 SC 1707, wherein it has been observed, relying on Palmer's Company Precedents that a winding up order is not a normal alternative. 3. Pradeshiya Industrial & Investment Corporation v. North India Petrochemicals Ltd., (1994)3 SCC 348, wherein it is held that mere inability to pay debt without any other evidence itself is not always sufficient to exercise discretion in favour of the petitioner. 4. American Express Bank Ltd. v. Core Health Care Ltd., (1999) 96 Company Cases, 841, wherein, this Court (Coram: R.Balia, J.) has, lucidly, propounded the material principles and important parameters to be considered by the Court before adjudicating and exercising discre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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