2015 (1) TMI 1448 - HC - Companies Law

Dismissal of Winding-Up Petition Due to Disputes, Arbitration Required

Shree Associates Versus M/s. Gammon India Limited

The Court dismissed the winding-up petition, citing bona fide disputes that necessitated resolution through arbitration or legal proceedings. The ... Winding up of Company - Works contract - Company has failed to pay to the Petitioner an amount of ₹ 24,75,170/despite deducting TDS for ₹ 24,752/- - claim rejected on the ground of time limitation - HELD THAT:- According to the petitioner no payment is made towards the said amount of ₹ 24,75,170/by the Company which is due since 31st August 2010. The claim of the Petitioner therefore prima facie appears to be barred by the Law of Limitation. The argument advanced on behalf of the Petitioner that the period of limitation would get extended till the Petitioner gained knowledge of the fact that the Company had on 7th September 2010 deposited TDS on the said amount of ₹ 24,75,170/is prima facie unacceptable - in the case of S.P. BROTHERS VERSUS BIREN RAMESH KADAKIA [2008 (3) TMI 754 - BOMBAY HIGH COURT] the Division Bench of this Court has held that the issuance of TDS Certificates does not amount to an acknowledgement of Defendant within the meaning of Section 25 of the Evidence Act. The TDS certificate is primarily to acknowledge deduction of tax at source. This being a triable issue, on this ground alone the Petition deserves to be dismissed - the certificates issued by DMRC would not assist the Petitioner since the Petitioner had privity of contract only with the Company and the said certificate again in any event cannot be construed as an admission of liability on the part of the Company. As regards the fact that in the ledger account maintained by the Petitioner, an amount of ₹ 12, 19,097/is found due and payable by the Company to the petitioner, the Petitioner has correctly submitted that the said amount does not pertain only to the subject subcontract assigned by the Company to the Petitioner but pertains to various contracts between the Petitioner and the Company. The Company has raised the aforestated bona fide disputes which need to be adjudicated either in a suit or in arbitration proceedings after giving an opportunity to the parties to lead evidence - petition dismissed. Issues involved:- Winding up petition under Section 434 of the Companies Act, 1956.- Claim for unpaid amounts by the subcontractor.- Dispute regarding the law of limitation.- Validity of certificates issued by the Company and DMRC.- Allegations of collusion and unauthorized certificate issuance.- Disputed amount in the ledger account.- Offer of arbitration declined by the Petitioner.Analysis:1. The petitioner filed a winding-up petition seeking recovery of unpaid amounts totaling &8377; 24,75,170 from the Company. The work was completed to satisfaction, as confirmed by certificates from the Company and DMRC. The Company failed to pay despite deducting TDS, leading to the petition for recovery.2. The Company raised a defense based on the law of limitation, claiming the petitioner's demand was time-barred. The Company contended that TDS payment does not imply admission of liability, citing legal precedent. The ledger account discrepancy was also highlighted by the Company to challenge the claim.3. The validity of certificates confirming satisfactory work completion was disputed by the Company, alleging collusion in obtaining the certificates. The Company emphasized that the petitioner's privity of contract was solely with them, not with DMRC, rendering the DMRC certificates irrelevant.4. The Company argued that the disputed amount in the ledger account was not solely related to the specific subcontract in question but encompassed various contracts. This raised genuine disputes requiring adjudication through arbitration or a suit, an offer declined by the petitioner.5. The Court dismissed the winding-up petition, citing bona fide disputes that necessitated resolution through arbitration or legal proceedings. The petitioner's refusal of arbitration was noted, and any future recovery actions were to be decided independently without influence from the judgment.