Court Orders Payment to Avoid Winding Up; Emphasizes Genuine Disputes

The court admitted the winding-up petition under Sections 433(e), 434, and 439 of the Companies Act, 1956, appointing the Official Liquidator as the Provisional Liquidator. The respondent company was directed to pay outstanding dues amounting to Rs. 39,86,897.33 within six weeks to avoid winding up. The court found the respondent's defense lacking bona fides and noted the absence of genuine disputes during the delivery period, emphasizing the importance of genuine disputes before allowing winding-up petitions. If the outstanding amount was paid within the specified period, the order would stand revoked, with the next hearing scheduled for 12.11.2018.

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Issues:
Petition seeking winding up of respondent company under Sections 433(e), 434, and 439 of the Companies Act, 1956 based on outstanding dues.

Analysis:
The petitioner, a small scale industrial unit, filed a petition seeking winding up of the respondent company due to outstanding dues amounting to Rs. 39,86,897.33. The petitioner supplied automobile components to the respondent from April 2013 to February 2014, with invoices duly acknowledged by the respondent. A legal notice was sent to the respondent on 26.06.2014, to which the respondent replied on 07.07.2014, raising issues regarding the quality of the supplied goods. The respondent alleged that the components supplied were coated with oil, causing damages to the paint on the metal components/sheets of three-wheelers. However, the respondent did not raise any concerns about the goods during the delivery period but only after receiving the legal notice for outstanding dues.

The petitioner's counsel highlighted that all 115 invoices were duly received by the respondent, with no denial of receipt in the respondent's reply to the legal notice. The respondent's defense was based on complaints received from customers about the peeling of paint, allegedly due to the oil-coated sheets supplied by the petitioner. The court noted that the respondent's defense appeared to be an afterthought, as no issues were raised during the delivery period. The court emphasized that the respondent's defense lacked bona fides and did not appear to be genuine.

Referring to a Supreme Court judgment, the court emphasized the importance of examining whether a company has a genuine dispute to a claimed debt before allowing a winding-up petition. The court admitted the petition, appointed the Official Liquidator as the Provisional Liquidator, and directed the publication of citations in newspapers and the Delhi Gazette. The petitioner was instructed to deposit a sum towards the cost of publication with the Official Liquidator. However, the court suspended the order for six weeks to allow the respondent to pay the outstanding amount. If the amount was paid within the specified period, the order would stand revoked, with the next hearing scheduled for 12.11.2018.

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