2014 (11) TMI 1185 - HC - Companies Law

Court Orders Company Deposit, Stays Winding Up Petition

The court directed the company to deposit the due amount with the court, staying the winding up petition. If the deposit is made, the petitioner can file ... Winding up on ground of inability to pay debts - winding up court is not a debt-collecting forum - bona fide dispute - dishonour of cheques and its evidentiary significance - deposit on terms to stay winding up petitionWinding up on ground of inability to pay debts - bona fide dispute - winding up court is not a debt-collecting forum - Admissibility of the winding up petition filed by the petitioner for recovery of the claimed debt - HELD THAT: - The court examined the petitioner's claim of a sum due and the company's reply and affidavit-in-opposition. The court recognised that where a bona fide dispute is raised by a company as to a creditor's claim, the proper forum is a suit and the winding up petition ought to be rejected. The court found inconsistencies between the company's reply to the statutory notice (denying extra work) and its affidavit-in-opposition (admitting additional work), and noted the dishonour of post-dated cheques issued by the company. The company also asserted delay and defective supply and claimed to have made subsequent payments, but it had not filed the suit it threatened for damages and did not clearly explain whether post-dated cheque-related payments related exclusively to the furniture contract or to a separate ID Works contract. These factors cast doubt on the bona fides of the defence and on the company's conduct, leading the court to decline immediate admission of the petition but to impose conditional terms instead of treating the petition merely as a debt-collection matter.Winding up petition not admitted; petition stayed on terms requiring the company to deposit the claimed balance with the Registrar to determine further steps.Deposit on terms to stay winding up petition - consequences of non-deposit or non-filing of suit - Terms and consequences ordered for continuance or admission of the winding up petition - HELD THAT: - The court directed the company to deposit the balance claimed by the petitioner with the Registrar, Original Side, within four weeks. Upon such deposit the winding up petition would be permanently stayed and the petitioner would have liberty to file a suit for realisation of its claim within four weeks of the deposit; the Registrar was to invest the sum in a fixed deposit in a nationalised bank. If the company failed to make the deposit within the time directed, the winding up petition would stand admitted and the petitioner permitted to publish the requisite advertisements. If the deposit was made but the petitioner did not institute the suit within the prescribed period, the winding up petition would stand dismissed and the company permitted to withdraw the deposited amount.Company to deposit the specified sum within four weeks to secure a stay; failure to deposit results in admission of the petition; deposit followed by no suit results in dismissal and withdrawal of deposit.Final Conclusion: The winding up petition is not admitted but is stayed on terms: the company must deposit the claimed balance with the Registrar within four weeks, failing which the petition shall be admitted; if deposit is made the petitioner may sue within four weeks or else the petition will be dismissed and the company permitted to withdraw the deposit. Issues:Claim of due payment under the Companies Act, 1956Analysis:The petitioner claimed a due amount of Rs. 1,16,67,100 along with interest from the company under Sections 433, 434, and 439 of the Companies Act, 1956. The petitioner contended that despite serving a statutory notice, the company failed to pay the outstanding debt, indicating its inability to pay its debts and warranting winding up.Case of the Petitioner:The petitioner was awarded a contract for supplying and installing furniture for a hotel by the company. The total contract sum was Rs. 4,04,67,847, out of which a balance of Rs. 1,02,11,720 remained unpaid by the company. The company issued two dishonored cheques, leading to a statutory notice. The company admitted the dues but failed to make the payment, justifying the winding up petition.Case of the Company:The company argued that the supply of furniture was delayed and defective, with missing parts. There were disputes regarding additional supplies and payments made. The company contended that after the dishonored cheques, it had paid Rs. 1,32,81,250 to the petitioner, raising substantial disputes and questioning the validity of the winding up petition.Court's View:The court noted disputed facts and a bona fide dispute raised by the company regarding the petitioner's claim. While the company's defense seemed inconsistent, the court emphasized that it is not a debt collection court. The court directed the company to deposit the due amount with the court, staying the winding up petition. If the deposit is made, the petitioner can file a suit; otherwise, the winding up petition will proceed. This approach aimed to address doubts about the company's bona fides and provide a fair opportunity for resolution without immediate winding up.