2008 (7) TMI 568 - HC - Companies Law

Company winding up petition admitted, official liquidator appointed. Citations to be published. Debts undisputed.

The court admitted the petition for winding up the respondent-company, appointing the official liquidator to take over the company's assets and records. ... Winding up - Held that:- The respondent-company is unable to pay its debts since, despite the service of statutory notice under section 434 of the Act by the petitioner, on the company at its registered office (proof of service whereof is also on record), the respondent has neglected to pay the amount admitted to be due or to secure or compound for it to the reasonable satisfaction of the petitioner within three weeks from the date of receipt of the notice. The petitioner has placed on record a copy of the notice dated 15-2-2006 sent through speed post item No. EE285750970 IN on 16-2-2006 as well as the certificate issued by the postal authorities certifying that the speed post article had been delivered on 17-2-2006. Even otherwise, there is no denial by the respondent in its reply to the specific averments with regard to the issuance and service of the notice by the petitioner. Reference may made to paragraph 8 of the petition and the corresponding reply of the respondent in this regard. Therefore, admit this petition and direct that the respondent company be wound up. The official liquidator attached to this Court is appointed as the liquidator in respect of the respondent-company. He shall forthwith take over all the assets and records of the respondent company and proceed according to law. Citation shall be published in the ‘Statesman’ (English) and ‘Jansatta’ (Hindi) for 8-8-2008. Petitioner may take steps accordingly. Issues Involved:1. Whether the respondent-company is indebted to the petitioner and unable to pay its debts.2. Whether the quality of packaging materials supplied by the petitioner was inferior and defective.3. Whether the balance confirmation certificate dated 23-1-2006 is genuine or forged.4. Whether the respondent's defense and counter-claims are bona fide or merely an afterthought to avoid liability.Issue-wise Detailed Analysis:1. Indebtedness and Inability to Pay:The petitioner sought the winding up of the respondent-company under sections 433(e), 434, and 439 of the Companies Act, 1956, claiming an outstanding debt of Rs. 57,42,572.41. Despite numerous reminders and a statutory notice served on 17-2-2006, the respondent-company failed to settle the debt. The court noted that the petitioner had made supplies of packaging materials to the respondent, and the receipt of these materials by the respondent was undisputed. The respondent's justification for non-payment was the alleged inferior quality of the materials supplied, which the court found to be unsubstantiated.2. Quality of Packaging Materials:The respondent claimed that the materials supplied by the petitioner were defective and substandard, causing damage to their products. However, the court found no evidence of any communication from the respondent to the petitioner regarding the alleged defects until after the winding-up notice was served. The court also noted that the respondent continued to acknowledge the outstanding debt and sought further supplies from the petitioner, which contradicted their claim of inferior quality. The court concluded that the respondent's defense regarding the quality of materials was not bona fide and was raised merely as an afterthought.3. Balance Confirmation Certificate:The respondent challenged the authenticity of the balance confirmation certificate dated 23-1-2006, claiming it was forged. The petitioner provided evidence, including a sales tax form signed by the same individual, Mr. Sidharth Nanda, who was purportedly non-existent according to the respondent. The court found that the respondent's attempts to discredit the certificate were unconvincing and that the certificate was genuine. The court noted that the respondent failed to provide an affidavit from Mr. Nanda denying the issuance of the certificate, further undermining their claim of forgery.4. Bona Fide Dispute and Counter-Claims:The court examined whether the respondent's defense raised a bona fide dispute requiring a trial. It found that the respondent's claims of defective materials were not supported by any contemporaneous evidence or independent reports. The court also noted inconsistencies in the respondent's documentation, such as the inclusion of amounts in a debit note for goods allegedly returned after the date of the note. The court concluded that the respondent's defense was not bona fide and was intended to avoid liability. The court referenced several precedents where similar belated disputes were deemed insufficient to constitute a bona fide dispute.Conclusion:The court admitted the petition for winding up the respondent-company, appointing the official liquidator to take over the company's assets and records. The court directed that citations be published in specified newspapers and scheduled further proceedings. The judgment highlighted the respondent's inability to pay its admitted debts and the lack of a bona fide dispute regarding the quality of materials supplied by the petitioner.