2016 (2) TMI 1332 - HC - Companies Law

Petition for Winding Up Dismissed, Costs Imposed for Misrepresentation.

The court dismissed the petition for winding up the respondent-company, acknowledging substantial disputes over the quality and quantity of goods supplied ... Seeking winding up of the respondent-company - order of admission was obtained without mentioning the relevant facts - violation of principles of natural justice - HELD THAT:- The petitioner has approached this Court to obtain a discretionary order. It also obtained discretionary order of admission on 16.03.2012 of admitting the Petition based on false averments in the Petition. It is a different matter that the order was later recalled. The indisputable fact is the petitioner had obtained an order on false averments to his knowledge. It is settled law that when a discretionary relief is obtained by misrepresentation, a dishonest litigant loses his remedy. There should be no concealment of material facts. The facts should be stated in a manner not to mislead the Court as to the true facts. Inspite of the Courts repeatedly stating and reaffirming the principle that it is the duty of a party to bring to the notice of the Court all facts material and relevant to the issue, litigants continue in their efforts to obtain favourable orders from the court, even exparte, without disclosing all the material facts to the court. This Petition is an ideal example of how an order of admission was obtained without mentioning the relevant facts. Petition dismissed. Issues Involved:1. Petition for winding up of the respondent-company.2. Allegation of non-payment for goods supplied.3. Dispute over the quality and quantity of goods supplied.4. Dishonored cheques issued by the respondent-company.5. Allegation of suppression of facts by the petitioner.6. Examination of bona fide disputes under Companies Act, 1956.7. Petitioner's misrepresentation and false averments.Detailed Analysis:1. Petition for Winding Up of the Respondent-Company:The petitioner sought the winding up of the respondent-company due to non-payment for goods supplied under two purchase orders. The petitioner claimed an outstanding amount of Rs. 1,26,79,064, including interest at 24% p.a. Despite assurances and issuance of cheques, the respondent-company failed to honor the payments, leading to the filing of the petition.2. Allegation of Non-Payment for Goods Supplied:The petitioner supplied DPC paper-covered copper conductor to the respondent-company between 26.11.2009 and 12.01.2010. The company allegedly accepted the goods without any demur regarding quality and quantity. However, the respondent-company did not pay the outstanding amount, resulting in the issuance of statutory notice, which went unresponded.3. Dispute Over the Quality and Quantity of Goods Supplied:In the affidavit-in-reply, the respondent-company alleged that the supplied materials were defective, not as per specification, delayed, and short supplied. The company provided contemporaneous correspondence from 30.11.2009 to 16.01.2010 to support these claims. The court recognized these as triable issues, indicating a substantial dispute.4. Dishonored Cheques Issued by the Respondent-Company:The petitioner claimed that the respondent-company issued cheques as part payment, which were dishonored with the endorsement 'stop payment by drawer.' The respondent argued that the cheques were given as security and were not to be deposited without confirmation from the company, as evidenced by letters dated 14.11.2009 and 15.12.2009.5. Allegation of Suppression of Facts by the Petitioner:The respondent-company accused the petitioner of suppressing material facts and making false averments in the petition. The court noted that the petitioner failed to disclose the respondent's objections to the quality and quantity of the goods, which were raised immediately after receipt.6. Examination of Bona Fide Disputes Under Companies Act, 1956:The court referred to the Supreme Court's observations in IBA Health (India) Pvt. Ltd. v. InfoDrive Systems SDN.BHD. (2010) 10 SCC 553, emphasizing that a winding-up petition should not be entertained if there is a bona fide dispute. The court must ascertain whether the company's refusal to pay is supported by a reasonable cause or a bona fide dispute that requires adjudication by a trial in a civil court.7. Petitioner's Misrepresentation and False Averments:The court found that the petitioner made false statements in the petition, particularly in paragraph 8, claiming that the company accepted the goods without any demur. The respondent had raised serious objections, which were not disclosed by the petitioner. The court emphasized that a discretionary order obtained by misrepresentation results in the loss of remedy for the dishonest litigant. The petitioner had obtained an ex parte order of admission on 16.03.2012 based on false averments, which was later recalled.Conclusion:The court dismissed the petition with costs, recognizing the substantial and bona fide disputes raised by the respondent-company regarding the quality and quantity of the goods supplied and the issue of dishonored cheques. The petitioner was ordered to pay Rs. 1 lakh as costs to the respondent-company for misrepresentation and suppression of material facts.