2007 (6) TMI 281 - HC - Companies Law

Appeal allowed against dismissal of company petition due to limitation period, legal precedent supports winding-up order.

The appeal was allowed by the Supreme Court against the Company Judge's order dismissing the company petition. The Court held that the petition was not ... Winding up - Circumstances in which a company may be wound up Issues:1. Dismissal of company petition due to lack of ascertained debt and entries in petitioner's books of account.2. Dispute regarding liability acknowledgment and reconciliation with company's books.3. Question of limitation for filing the company petition.Issue 1: Dismissal of company petitionThe appeal was filed against the Company Judge's order in CP No. 143 of 2002, which dismissed the company petition primarily because there was no ascertained or determined debt and the application related to entries made in the petitioner's books of account prior to three years. The appellant challenged both findings, arguing that the last transaction on the running account was on 2-3-2002 to 23-3-2002, and there was an agreement (Ex. A59) confirming outstanding amounts. The appellant contended that the liability of Rs. 24,80,592 was accepted subject to reconciliation, not that the liability was acknowledged. The Supreme Court's judgment in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries was cited to support the argument that a winding-up order could be made even if the exact amount of the debt was disputed.Issue 2: Dispute regarding liability acknowledgmentThe dispute centered around the acknowledgment of liability and reconciliation with the respondent company's books. The appellant argued that although the liability was accepted to the tune of Rs. 24,80,592, it was subject to reconciliation, indicating that the liability was not acknowledged. The Company Judge's decision not to consider Ex. A59 as admitted liability was based on the outstanding amount being subject to reconciliation. The appellant relied on legal precedents to support the contention that where a debt is undisputed but the exact amount is disputed, a winding-up order can still be made without requiring precise quantification of the debt.Issue 3: Question of limitationThe Company Judge concluded that the company petition was barred by limitation based on the dates of the last agreement (Ex. A59) on 21-3-2002 and the end of the running account on 23-3-2002. However, the appellant argued that if the dates were taken as 21-3-2001 or 23-3-2002, the petition was within the limitation period of three years. The Court found that the company petition, filed on 31-3-2002, was within the limitation period, contrary to the Company Judge's decision. Consequently, the appeal was allowed, and the company petition was admitted for further consideration on merits, without delving into the substantive issues of winding up at this stage. The Company Judge was directed to proceed with the case and make appropriate orders.