2004 (6) TMI 336 - HC - Companies Law

Winding-Up Petition Admitted Due to Default in Payment: Court Orders Publication & Sets Returnable Date

The court admitted the winding-up petition filed by the petitioners against the company due to its default in paying the balance sum of Rs. 22.26 lakhs as ... Winding up - Circumstances in which a company may be wound up Issues involved:1. Breach of memorandum of understanding regarding software supply and payment.2. Disputes raised by the company regarding the software's completion and payment obligations.3. Failure to allocate shares and complete payment as per the agreement.4. Company's inability to pay the balance sum leading to a winding-up petition.Analysis:Issue 1: Breach of memorandum of understandingThe petitioners entered into a memorandum of understanding with the company for the supply of a software device in exchange for a payment of Rs. 25 lakhs in cash and Rs. 25 lakhs through share allotment. The petitioners claimed that a balance sum of Rs. 22.26 lakhs remained unpaid, leading to the issuance of multiple statutory notices demanding payment.Issue 2: Disputes raised by the companyThe company, in response to the statutory notices, raised disputes regarding the completion of the software and alleged breaches by the petitioners in fulfilling the terms of the memorandum of understanding. The company claimed that incomplete software led to financial losses and that partial payments were made to the petitioners for the work done.Issue 3: Failure to allocate shares and complete paymentThe company failed to allocate the shares as agreed upon in the memorandum of understanding. The petitioner sought admission of the winding-up petition due to the company's default in making the payment of the balance sum of Rs. 22.26 lakhs, despite the agreement specifying the payment terms.Issue 4: Winding-up petition due to payment defaultThe court acknowledged the complexity of the software device and the terms of the agreement, emphasizing that the company could have taken steps to address any breaches by the petitioners. However, since the company expressed its inability to pay the outstanding sum, the court admitted the winding-up petition, concluding that the petitioners had established a prima facie case for winding up the company.In the final judgment, the court admitted the winding-up petition, directing advertisements in specific publications and setting a returnable date. The petitioners were instructed not to publish any advertisements for a specified period.