High Court · 2012

Heard Mr. K Goswami, learned Counsel appearing for the Petitioner Company. Also heard Mr. R Dubey, learned Counsel representing the Respondent Company. This is a winding up petition under sections 433, 434 and 439 of the Com 2. panies Act 1956 (for short (cid:29)the Companies Act (cid:29)), which was presented on the 25.0 8.2010. The Respondent Company appeared and filed affidavit-in-opposition. The P etitioner Company also filed its affidavit-in-reply. By the order of this Court dated 22.12.11, this petition was fixed for hearing on 27.02.2012 and notices we re ordered to be advertised in (cid:28)The Assam Tribune (cid:29) and (cid:28)The Dainik Janambhumi (cid:29). Mr. Kaushik Goswami, the learned counsel appearing for the Petitioner Company st ates that the Petitioner Company got the advertisement published in the said two newspapers on 09.01.2012 in terms of this Courts order. The Petitioner Company by filing an affidavit on 13.02.2012 has also placed on record, the copies of th e advertisement published in the said two newspapers. 3. The petitioning-creditor’s claim arises out of supply of Ready Mix Concr ete (for short (cid:28)RMC (cid:29)) at agreed rate in pursuant to the purchase orders dated 08 .08.09 and 28.10.09, whereby the Respondent Company undertook to make payment wi thin 30 days from receipt of the RMC. The Respondent received the entire RMC wit hout any objection and also accepted the bill of the petitioning-creditor. Howev er a total sum of Rs.71,63,850/- was due and payable by the Respondent Company t o the Petitioner towards principal amount. The Respondent Company in fact issued two cheques both dated 12.12.09 amounting for Rs.20,00,000/- each drawn on the Punjab National Bank but upon presentation, the cheques were dishonored by the B ank due to insufficient fund in the account of the Respondent Company.

4. Therefore, it is quite clear that the goods were duly received by the Re spondent Company and the bill was raised at the agreed rate. As the payments wer e not received inspite of repeated demands, the Petitioner Company duly served a statutory notice dated 11.05.2010, under Section 434 of the Companies Act, 1956 for payment of Rs.71,63,850/- plus interest. Though the Respondent Company rece ived the said statutory notice on 17.05.2010, they failed to make the aforesaid payment. Now in the affidavit-in-reply filed before this Court, the Respondent C ompany with a view to raise a dispute has alleged that the goods being of sub-st andard quality was rejected by the Company and the Petitioner Company was also a sked to replace such rejected items. 5. Now, the whole question in this matter appears to be whether the defence of the Respondent Company is in good faith and one of substance and whether the Respondent Company is liable to be wound up.

6. Mr. Goswami, submitted after drawing the attention of this Court to the petition and its annexure and also the affidavit-in-reply, that the Respondent C ompany in order to avoid the liability for making the admitted dues to the Petit ioner Company is disputing the claims of the Petitioner. By referring to paragra ph 11 of the affidavit-in-reply, he submits that the Petitioner Company by adher ing to all its time-lines as per the purchase orders dated 08.08.09 and 28.10.09 , supplied the RMC to the Respondent Company on time and as per the requirement of the Respondent and the Respondent Company has every time accepted RMC supplie d by the Petitioner without any demur by putting signatures of the delivery ch allans and has also acknowledged all the invoices raised by the Petitioner and the Balance Confirmation Certificate without any objection. Mr. Goswami further pointed out that after the cheques were dishonored, the Petitioner had issued no tices dated 23.12.2009 under section 138 of the Negotiable Instruments Act, 1881 and appropriate proceeding was started in Kolkata Court against the Respondent Company under the Negotiable Instrument Act. The Respondent Company did not rais e any dispute when they received the said notices dated 23.12.2009 and hasn’t ra ised any objection, when they received the subsequent statutory notice dated 11. 05.2010 under section 434 of the Companies Act. Therefore, he submitted that the present Winding Up Petition cannot be said to an abuse of the process of the Co urt and the Respondent Company must be held to be unable to pay its debt as it h as not raised any bonafide dispute to the claim of the Petitioner Company and th ere is no substance or merit in its defence either in law or in fact. 7. Mr. R Dubey, appearing for the Respondent Company submitted that since t he RMC of sub-standard quality was supplied by the Petitioner, the Respondent re jected those supplies and therefore no payment can be claimed for such sub-stand ard goods. In so far as the two dishonored cheques are concerned Mr. Dubey submi tted that although the two cheques of Rs 20, 00,000/- each were issued by the Re spondent Company, the same was in the nature of advance payment and encasement o f those cheques were contingent upon satisfactory supply any since the delivery were delayed and material were not of agreed quality, the Petitioner should not have presented the cheques for encashment. He further submitted that the Respond ent Company is a solvent Company. Therefore, he submitted that the company has r aised a bonafide dispute to the claim of the Petitioner Company and the Winding Up petition is an abuse of the process of Court and should be dismissed. In order to examine the merit of the defence, the terms of the supply co 8. ntract has to be examined. It appears from the purchase order itself that paymen t were to be made within 30 days from receipt of materials and accordingly it is difficult for this Court to accept that the dishonored cheques were issued by way of advance payment. 9. Taking the matter as a whole and from the conduct of the Respondent Comp any, this Court is satisfied that the Respondent Company is trying to raise a fr ivolous, false and fictitious dispute. The RMC were accepted by the Respondent C ompany without any objection and as would appear from the averments made in para graph 11 of the affidavit in reply, the Respondent Company has acknowledged all the invoices raised by the Petitioner and balance confirmation certificate witho ut any objection. Furthermore, at no earlier stage, the Respondent Company had r aised any objection on the quality of the supplied RMC or had indicated that the supplies were delayed. Even with the Counter Affidavit, no document is enclosed to show that the Respondent Company had raised any grievance on delayed supply or supply of inferior RMC. In fact, the Respondent Company failed to respond to the notice issued under the Negotiable Instrument Act or the second one issued u nder Section 434 of the Companies Act. 10. On 25.08.2011 when this Court admitted the winding up petition, the then engaged learned counsel for the Respondent Company submitted before this Court that the Respondent is making effort to make payment of its dues to the Petition er and the Managing Director of the Respondent Company by filing an affidavit on 27.09.2011 proposed to pay 15% of the admitted dues to the Petitioner by 1st we ek of January 2012 and the remaining dues in eight-by monthly installments start ing from March 2012. Since the Respondent Company didn’t specify the precise amo unt admitted by them, on query posed by this Court, Mr. Goswami submits that the principle dues admittedly owed by the Respondent Company is Rs.71,63,850/-. How ever the then learned counsel for the Respondent Company submitted that the part y had agreed to receive a lesser amount of Rs.40,00,000/-. Later, on 08.12.2011, the then engaged counsel for the Respondent Company admitted before this Court that the Respondent Company’s liability for the principle amount is to the exten t of Rs.71, 63, 850/-. However the Respondent Company on 14.12.2011 after repla cing their lawyers on record, filed an affidavit admitting its liability to the Petitioner to the extent of Rs.7,00,000/- (Rupees Seven Lakh) only. The Responde nt Company also stated therein that the admission made by the counsel admitting liability of Rs.71,63,850 /- before this Court on 8.12.2011 was without any inst ruction and accordingly the said admission should not be accepted. It appears th at earlier in the affidavit filed on 27.9.2011 by the Managing Director of the R espondent Company, the Respondent Company proposed to pay the entire admitted du es to the Petitioner, which according to the pleadings, is to the extent of Rs.7 1,63,850/-. Further it is found that earlier on 29.09.2011, the then engaged cou nsel indicated to this Court that the Respondent Company has agreed to receive a lesser amount of Rs.40,00,000/- since it was projected by the Petitioner that 2 cheques of Rs.20,00,000/- each was issued by the Respondent Company to liquidat e a part of its outstanding dues. This shows that the Petitioner’s claim might b e higher but the parties agreed on Rs.40,00,000/- which was tendered by the Resp ondent Company through its 2 dishonored cheques. It must also be noted that alth ough the Respondent Company dispute the admission made by their counsel in the C ourt on 8.12.2011 in the affidavit filed on 14.12.2011, they neither challenges the correctness of what was recorded by this Court in its proceeding on 29.9.201 1 and 25.08.2011 nor have rebutted the averments of the Petitioner, relating to the acknowledgement to the balance confirmation certificate. In this circumstanc es, the averment made by the Respondent Company that only Rs.7,00,000/- (Rupees Seven Lakh) is due cannot be accepted. 11. Be that as it may the Respondent Company undisputedly owes debt to the p etitioning creditor, entitling him to a winding up order. It is well settled tha t if the debt is undisputedly owed than it should be paid and where the debt is undisputedly owing, the Court shouldn’t act on a defence that the company has th e ability to pay but it chooses not to pay that particular debt. In the instant case, though the Respondent Company disputes the exact amount of the debt but du es to the extent of Rs.7,00,000/- is admitted. The requirement of law is that th ere must be a debt owing and the Company Court is not required in law to quantif y the debt precisely for the purpose of making a winding up order. Since winding up can be ordered for any admitted dues beyond Rs.1,00,000/- under Section 433 and Section 434 of the Companies Act, this Court is of the view that this windin g up petition be allowed. 12. In this connection, reference may be made to the judgment of the Apex Co urt in M/S Madhushudhan Gordhandas and Co. vs. Madhu Wollen Industies Pvt. Ltd r eported in 1971 (3) SCC 232, in which the Apex Court held that: (cid:28)Where the debt is undisputed the court will not act upon a defence that the com pany has the ability to pay the debt, but the company chooses not to pay that pa rticular debt, &. Where however there is no doubt that 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 t o quantify the debt precisely &. The principles which the court acts are first th at the defence of the company is in good faith and one of substance, secondly th e defence is likely to succeed in point of law and thirdly the company adduces p rima-facie proof of the facts on which defence depends (cid:29) 13. In the above circumstances this Court is of the opinion that defence put up by the Respondent Company is not genuine as Respondent Company at no earlier point of time, raised any objection about delayed supply or on inferior materia l. The Respondent Company in fact failed to pay its debt without there being any reasonable cause. It is clear that inspite of repeated demands by the petitione r the Respondent Company has neglected to pay which shows that the Respondent Co mpany is unable to pay its dues and it is therefore liable to be wound up. Merel y by raising dispute which is not bonafide, a debt cannot be converted to a disp uted debt without any factual foundation. 14. In the result, the winding up petition is allowed. The Respondent Compan y accordingly be wound up and the Official Liquidator is accordingly directed to take immediate possession of the assets and properties of the Respondent Compan y. 15. Let the Registrar General inform the Official Liquidator under Rule 109 of Company (Court) Rules 1959 in form 50 and draw up necessary orders under Rule 111 in form 52 under the Companies (Court) Rules 1959.

16. The Petitioner Company is directed to take steps to advertise the order for winding up of the Respondent Company by the Company Court in Form 53 under R ule 113 of the Companies (Court) Rules 1959. The advertisement be published in (cid:28) The Assam Tribune (cid:29) and the (cid:28)Dainik Janambhumi (cid:29). 17. The case is disposed of with the above orders.