Court admits winding up petition due to non-payment of debts, lack of defense.

Tata Communications Ltd. Versus Channel-99 Media Networks (P.) Ltd.

Tata Communications Ltd. Versus Channel-99 Media Networks (P.) Ltd. - [2011] 110 SCL 395 (RAJ.) , [2012] 171 COMP. CAS. 259 (RAJ.) Issues:
Winding up petition under Sections 433 & 434 of Companies Act, 1956 read with R.95 of Companies (Court) Rules, 1959.

Analysis:
The petitioner filed a company petition seeking winding up of the respondent company for non-payment of dues. The respondent company was alleged to have failed to make payments for services provided by the petitioner, despite entering into a memorandum of settlement agreeing to pay a specified sum. The petitioner issued a statutory notice demanding payment, which went unanswered. The respondent company contended that final payment was subject to reconciliation, but failed to provide evidence of any such reconciliation. The court found that the respondent company had not made payments as agreed, leading to the conclusion that it was unable to pay its debts.

The court noted that the winding up petition was maintainable if the debt was not bonafide disputed and the company failed to pay its debt. It was emphasized that the defense must be in good faith and likely to succeed in law for the petition to be refused. The court clarified the legal requirements for invoking Sections 433(e) and 434(1)(a) of the Companies Act in relation to winding up, highlighting the necessity for the company to pay its debt within a specified period after notice.

The respondent company raised objections, claiming readiness to pay outstanding dues after reconciliation. However, the court found that the respondent company failed to establish a bonafide defense and had neglected to pay the outstanding dues despite repeated demands. The court concluded that the respondent company was unable to pay its debts, leading to the decision to admit the winding up petition and publish notices in newspapers as required by law.

In conclusion, the court found that the respondent company's failure to pay its debts as agreed indicated its inability to meet its financial obligations. The court admitted the winding up petition and ordered the publication of notices in newspapers, scheduling further orders after publication.