1998 (10) TMI 433 - HC - Companies Law

Winding-Up Petition Upheld, Liability Established, Official Liquidator Appointed

The court found the winding-up petition against the respondent company maintainable, dismissing arguments on a running account and entity distinction. The ... Winding up - Company when deemed unable to pay its debts Issues:Winding up petition based on outstanding debt for air tickets sold and delivered. Maintainability of the petition due to alleged running account. Distinction between Network Limited and Network Medical entities. Claim of the petitioner against the respondent company. Reflection of payments and statutory notice service location.Analysis:The petitioner sought winding up of the respondent company due to an outstanding debt of Rs. 1,13,289.16 for air tickets sold and delivered, with an additional claim of interest at 24% per annum. The respondent raised defenses including the maintainability of the petition based on a running account and the distinction between Network Limited and Network Medical entities. The respondent denied liability, claiming payments were not correctly reflected in the accounts, and the statutory notice was not served at the registered office.The court found the respondent's arguments regarding the petition's maintainability unsubstantiated. The claim was not based on a running account but on outstanding amounts against specific bills. The respondent admitted liability for Network Medical's outstanding amount of Rs. 75,143, which was not paid, making the denial of liability mala fide. The court cited a similar case where an acknowledgment of dues rendered a petition maintainable despite being a running account.Regarding the distinction between Network Limited and Network Medical, the court found no merit in the respondent's argument. The petitioner was appointed as the travel agency for Network Limited, and Network Medical was considered a unit of Network Limited, not a separate entity. The court emphasized that maintaining separate accounts did not establish distinct entities.The court also dismissed the respondent's claim of payments not being reflected in the accounts, as the petitioner had provided evidence of reflecting payments. The statutory notice was found to have been correctly served at the registered office, contrary to the respondent's argument of it being served elsewhere.Lastly, the court rejected the respondent's argument of a bona fide dispute, finding the defenses raised to be mala fide. The respondent's failure to pay admitted amounts and the lack of genuine disputes led to the admission of the winding-up petition. The court appointed the official liquidator as the provisional liquidator of the company, ordering the seizure of assets and preparation of inventory.