2010 (10) TMI 87 - HC - Companies Law

Winding-up petition dismissed due to payment disputes & machinery quality issues.

The court dismissed the winding-up petition based on non-payment of dues and disputes over machinery supply and installation. Despite partial payments, ... Winding up - Circumstances in which a company may be wound up - Held that:- The admitted position is that the respondent company had given post dated cheques beginning from 17-3-2008 till 20-11-2009. These cheques were not encashed by the petitioner. In fact they were never presented for encashment. There is no explanation and reason why these cheques were not presented. This indicates the dispute. These cheques have lapsed. The reluctance and failure to encash the cheque supports the case of the respondent. Only one cheque dated 20-11-2009 for ₹ 4,00,000 was presented and bounced. After the said cheque had bounced, the respondent company made the payment for the said cheque. It is clear from the correspondence that there were problems/disputes and parties were talking to each other. I have already quoted above the letter dated 16-12-2009 written by the respondent company, which is a defence raised by the respondent company against the claim of the petitioner. In these circumstances, it cannot be said that the alleged debt due is an admitted debt which the respondent company has wilfully failed or neglected to pay. The respondent company has disputed the claim of the petitioner on the grounds and reasons which been set out in the correspondence. The claim of the petitioner cannot be regarded as an admitted claim. In view of the above, I am not inclined to entertain the present petition for winding up under section 433(e) of the Act and the same is accordingly dismissed. Issues:Petition under section 433(e) read with section 434(1)(a) of the Companies Act, 1956 for winding up based on non-payment of dues and disputes regarding machinery supply and installation.Analysis:1. The petitioner filed a petition seeking winding up of the respondent company for non-payment of dues related to the supply of machines. The petitioner alleged that the respondent company failed to make payments as per the agreed terms, leading to a substantial outstanding amount.2. The respondent company had made partial payments but failed to adhere to the payment schedule agreed upon for the supplied machines. The petitioner highlighted the specific instalment amounts and the issuance of post-dated cheques by the respondent company, which were not encashed by the petitioner.3. The petitioner contended that despite issuing a legal notice demanding payment, the respondent company did not respond adequately. The petitioner also presented correspondence indicating allegations made by the respondent company regarding the quality and functionality of the supplied machines, along with disputes over the clamping frames and operational issues.4. The respondent company raised defenses against the petitioner's claims, citing discrepancies in the supplied machinery's performance and quality, leading to operational challenges. The respondent company expressed dissatisfaction with the machines and offered to repurchase them at a reduced price due to alleged shortcomings.5. The court noted that while certain payments were made by the respondent company, disputes and communication regarding the quality and functionality of the machines existed between the parties. The court observed that the respondent company disputed the debt claimed by the petitioner, indicating a lack of acknowledgment or admission of the alleged dues.6. Ultimately, the court dismissed the winding-up petition, stating that the disputed nature of the claim and the respondent company's objections required resolution through civil court proceedings. The court emphasized that the petitioner's claim was not admitted by the respondent company, and the dispute needed to be addressed through appropriate legal channels for a conclusive determination of the outstanding dues.