Court orders winding up of company for unpaid dues and mala fide defense

The court ordered the winding up of the respondent company due to unpaid dues and interest claimed by the petitioner, noting the respondent's mala fide defense and commercial insolvency. The official liquidator was directed to take over the respondent's assets for winding up proceedings, with citations to be published in newspapers and the Official Gazette, and the Registrar of Companies notified.

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Issues Involved:

1. Claim for outstanding dues and interest.
2. Allegations of excessive breakages of supplied goods.
3. Bona fide dispute regarding the debt.
4. Commercial insolvency of the respondent company.

Issue-Wise Detailed Analysis:

1. Claim for Outstanding Dues and Interest:

The petitioner, Universal Glass Ltd., sought the winding up of the respondent company, Meerut Bottlers Pvt. Ltd., under sections 433, 434, and 439 of the Companies Act due to unpaid dues amounting to Rs. 1,70,947.16 for the supply of glass bottles. The petitioner also claimed interest at 18% per annum on the outstanding amount. The respondent had issued two cheques that were dishonoured and confirmed the outstanding balance in February 1979. Despite repeated demands and a statutory notice, the dues remained unpaid. The court noted that all bills submitted by the petitioner mentioned the interest rate, and the respondent, having accepted the bottles under those bills, could not contest the interest claim.

2. Allegations of Excessive Breakages of Supplied Goods:

The respondent contested the petition, claiming excessive breakages in the consignments, with breakages as high as 44.18% on some occasions. The respondent informed the petitioner about the breakages, and the petitioner assured tightening quality control. Despite this, breakages continued, leading the respondent to deny the amount due and the interest rate. The respondent sought to deduct Rs. 1,36,500 from the claimed amount due to breakages. However, the court observed that the respondent did not quantify the breakages before the petition and did not return any damaged goods. The court found that the respondent waived their rights towards breakages when they confirmed the outstanding amount without reservation.

3. Bona Fide Dispute Regarding the Debt:

The respondent argued that there was a bona fide dispute about the amount due, suggesting that the petitioner should pursue independent civil action for recovery. The court noted that the respondent admitted liability for Rs. 70,947.12 but disputed the balance due to breakages. The court found that the dispute raised by the respondent was not bona fide, as the respondent had repeatedly confirmed the outstanding amount and assured payment in instalments. The court held that the defence set up by the respondent was mala fide, false, and motivated to delay and thwart the petitioner's claim.

4. Commercial Insolvency of the Respondent Company:

The court examined the commercial insolvency of the respondent company, noting that its factory had been closed since November 1980. The respondent failed to pay salaries and bonuses to employees, did not deposit amounts due towards Employees' State Insurance and provident fund contributions, and faced multiple suits and criminal cases for dishonoured cheques. The respondent admitted financial difficulties and liabilities, including a suit by Oriental Bank of Commerce for Rs. 62 lakhs and demands from sales tax authorities and Central Excise. The court concluded that the respondent company had become commercially insolvent and lost its substratum.

Judgment:

The court ordered the winding up of the respondent company, noting that the petitioner's claim was genuine, and the respondent's defence was mala fide. The official liquidator was directed to take over the respondent's assets and proceed with the winding up. Citation of the winding up was to be issued in specified newspapers and the Official Gazette, and the Registrar of Companies was to be informed.

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