2014 (3) TMI 53 - HC - Companies Law

Dismissed winding-up petition due to genuine disputes, time-barred claim. Each party bears own costs.

The court dismissed the winding-up petition, ruling that the respondent's disputes were genuine and contemporaneous, not illusory. Additionally, the court ... Winding up petition - unable to pay debts - whether the defense raised by the respondent is bonafide or not - Held that:- the dispute between the parties is extant and not illusory. The exchange of emails clearly indicate that the disputes raised by the respondent are bonafide and contemporaneous to the claim made by the petitioner in 2010. The respondent has stated in its reply that the software applications provided by the petitioner are not being used on account of the defects. This clearly would raise a substantial dispute and in the circumstances it cannot be held that the disputes raised by the respondent are not bonafide. Following the decision in IBA Health (I) (P.) Ltd. [2010 (9) TMI 229 - SUPREME COURT OF INDIA], the winding up petition for nonpayment of the invoice would not be maintainable. Issues Involved:1. Whether the dispute raised by the respondent is a bonafide dispute.2. Whether the petition for winding up is maintainable.3. Whether the claim is barred by limitation.Issue-Wise Detailed Analysis:1. Whether the dispute raised by the respondent is a bonafide dispute:The primary controversy in this case is whether the dispute raised by the respondent regarding the unpaid invoice is bonafide. The petitioner claimed that the respondent owed Rs. 19,41,280/- for services rendered, as per an invoice dated 14.05.2010. The respondent, however, disputed this amount, alleging that the petitioner failed to perform obligations under the agreement dated 13.01.2010. The respondent argued that the software provided suffered from significant defects, which were communicated through various emails and a legal notice. The court found that the disputes raised by the respondent were genuine and contemporaneous, indicating that they were not illusory or fabricated. As the Supreme Court has held in Amalgamated Commercial Traders (P) Ltd. v. A. C. K. Krishnaswami, a winding-up petition is not a legitimate means to enforce payment of a debt that is bona fide disputed by the company.2. Whether the petition for winding up is maintainable:The court examined whether the winding-up petition was a legitimate means to enforce the debt. It was established that if a company disputes a claim bona fide, it cannot be said to be unable to pay its debts. The court referred to the principle that a winding-up petition should be dismissed if the debt is bona fide disputed on substantial grounds, as reiterated in M/s IBA Heath (India) Private Limited v. Info-Drive Systems SDN. BHD. The court concluded that the disputes raised by the respondent were substantial and bona fide, thus rendering the winding-up petition for nonpayment of the invoice dated 14.05.2010 as not maintainable.3. Whether the claim is barred by limitation:The respondent contended that the petition was barred by limitation, as the invoice was dated 14.05.2010 and the petition was filed in July 2013. The petitioner argued that reminders were sent, which should extend the limitation period. However, the court found that unilateral actions by the claimant do not extend the limitation period. The petitioner failed to provide any document where the respondent acknowledged the debt after 14.05.2010. The court referred to Gautam Electricals Co. Pvt. Ltd. v. Seth & Sons Pvt. Ltd., which held that a winding-up petition for a time-barred debt is not maintainable. Consequently, the court found merit in the respondent's contention that the claim was barred by limitation.Conclusion:The court dismissed the winding-up petition, finding that the disputes raised by the respondent were bona fide and that the claim was barred by limitation. The petition was deemed without merit, and each party was ordered to bear its own costs.