2016 (2) TMI 50 - HC - Companies Law

Order to Pay Over Rs. 10 Lakh Within 3 Months or Face Winding-up Petition

The court directed the Respondent-Company to pay Rs. 10,99,615/- within three months. Failure to pay would result in the admission of the winding-up ... Winding up petition - Held that:- In the instant case, despite receiving the legal notice, that no payment has been made to liquidate the amount payable by the Respondent-Company has not been disputed. Admittedly, the software was purchased by the Respondent-Company pursuant to the Agreement and even assuming that the alleged termination has to be accepted, a sum of ₹ 10,99,615/- was due by the Respondent-Company to the Petitioner. Consequently, in case of the default of the payment of the said amount or any part thereof within the time specified herein the petitioner would be entitled for the relief in the above petition. The Petitioner are directed to pay a sum of ₹ 10,99,615/- in this Court within three months from today.In case the Respondent -Company fails to deposit the said sum of ₹ 10,99,615/- or any part thereof within the said period, the petition shall stand admitted and the Petitioner shall proceed to publish the notice in two newspapers one in “The Navhind Times” and other in regional language Marathi “Gomantak”.In case the amount is deposited within the said period stipulated herein above, the petition shall stand accordingly dismissed with liberty to the Petitioner to recover the legal dues from the Respondent in accordance with law. Issues Involved:1. Validity of the winding-up petition under Sections 433, 434, and 439 of the Companies Act, 1956.2. The right of the Respondent-Company to terminate the agreement.3. The financial solvency of the Respondent-Company.4. The existence of a bona fide dispute regarding the debt.5. The amount of debt payable by the Respondent-Company to the Petitioner.Detailed Analysis:1. Validity of the Winding-Up Petition:The Petitioner filed the winding-up petition under Sections 433, 434, and 439 of the Companies Act, 1956, alleging that the Respondent-Company neglected to pay its outstanding dues after being served with a statutory notice for winding up. The Respondent-Company contended that the petition was misconceived and not maintainable, arguing that the Petitioner was not a creditor and that the claim was bona fidely disputed.2. Right to Terminate the Agreement:The Petitioner argued that the Respondent-Company had no right to terminate the agreement after the supply and installation of the software, especially after using it for over a year. The Respondent-Company claimed that it had terminated the agreement due to dissatisfaction with the software and the services provided, and thus, was not liable to make further payments. The court examined the terms of the agreement, including the termination clause, which required a two-month notice for termination. The court found that the Respondent-Company had not adhered to these terms and thus owed payments up to February 2013.3. Financial Solvency:The Petitioner claimed that the Respondent-Company was commercially insolvent, citing financial statements that showed significant losses and delayed payments on loans. The Respondent-Company countered that it was a financially healthy entity with substantial turnover and assets. The court noted that despite the Respondent-Company's claims of financial health, the statutory notice for winding up was not met with payment, indicating financial distress.4. Existence of Bona Fide Dispute:The Respondent-Company argued that there was a bona fide dispute regarding the debt, which precluded the winding-up petition. The court, however, found that while some amounts were disputed, there was an admitted debt of Rs. 10,99,615/- that the Respondent-Company had not paid. The court held that the existence of this undisputed amount indicated that the Respondent-Company was unable to pay its debts, thus justifying the winding-up petition for that amount.5. Amount of Debt Payable:The court examined the amounts claimed by the Petitioner and the Respondent-Company's defenses. It determined that the admitted amount payable by the Respondent-Company, prima facie, was Rs. 10,99,615/-, covering the period from October 2012 to February 2013. The remaining amounts were disputed and would require separate proceedings for resolution.Conclusion:The court directed the Respondent-Company to pay Rs. 10,99,615/- within three months. If the Respondent-Company failed to make this payment, the winding-up petition would be admitted, and the Petitioner could proceed with the publication of the notice. If the amount was paid within the stipulated period, the petition would be dismissed, allowing the Petitioner to recover any remaining dues through appropriate legal channels. The petition was thus disposed of accordingly.