1994 (3) TMI 314 - HC - Companies Law

Court dismisses winding up petition due to genuine debt dispute

Wimco Ltd. Versus Sidvink Properties (P.) Ltd.

The court dismissed the petition for winding up under sections 433 and 434 of the Companies Act, 1956, as there was a genuine dispute regarding the debt ... Winding up - Company when deemed unable to pay its debts Issues involved: Petition for winding up u/s 433 and 434 of the Companies Act, 1956 due to alleged debt neglect by respondent-company.Summary:The petitioner sought winding up of the respondent-company under sections 433 and 434 of the Companies Act, 1956, claiming non-payment of a debt despite statutory notice. The dispute arose from a security deposit of Rs. 3,00,000 given by the petitioner to the respondent-company for a flat, with an agreement for refund on vacation. The petitioner alleged non-clearance of the balance amount of Rs. 93,336 despite multiple communications and a statutory notice.The respondent contended that the deposit settlement was made through cheques and salary adjustments, with documents returned on the same day. The petitioner did not mention a crucial letter dated August 23, 1988, in the petition or statutory notice. The court noted that the mere omission to reply to communications or notices does not imply admission of liability. The key question was whether a bona fide dispute existed regarding the debt owed by the respondent.The court emphasized that for the deeming provisions of section 434 to apply, there must be a prima facie determination of the debt owed by the respondent. In this case, a genuine dispute was evident regarding the liability of the respondent-company. The petitioner's failure to address the letter and account settlement raised doubts on the debt claim. As there was a bona fide dispute, the court dismissed the petition for winding up, allowing each party to bear their own costs.