2014 (11) TMI 1292 - HC - Companies Law

Hospital company escapes winding up petition despite debt due to financial health and payment willingness

The HC dismissed a winding up petition filed under Companies Act, 1956 against a hospital company for unpaid debt of Rs. 5,96,907/-. The court found the ... Petition for winding up filed u/s 433(e) and (f), 434 and 439 of the Companies Act, 1956 - respondent-company is unable to pay debt of Rs. 5,96,907/- as principal and interest due thereon despite repeated reminders and notice for winding up of the company - HELD THAT:- The dispute primarily remains regarding payment of Rs. 3,64,000/-. The receipt of AICD pacemaker against that bill has not been disputed by the respondent. The date of the bill is dated 25.8.2007. The stand of the respondent is that as against the pacemaker of particular mark and specification approved by the Government, the petitioner supplied a different one, which was costlier, it was with the understanding that payment thereof will be made after the same is reimbursed to the respondent. For the procedure carried out on patient-Jagir Singh, the respondent had raised a bill of Rs. 6,60,047/- to ECHS. The payment has still not been made, though it is being pursued. Even though the petition is dated 5.8.2013, but still the fair stand of the respondent is that as and when the payment is received, the same shall be made to the petitioner. Mere fact that issue regarding a particular bill which is six years old is being specifically raised, itself shows that there was some dispute regarding that between the parties. Considering the totality of circumstances, where the respondent-company is ready and willing to make payment of the bills bearing Nos. 442, 735, 000909 and 000910 and considering its financial health, where it is running a hospital and earning profits, it is not deemed appropriate to direct its winding up. The amount, as undertaken by the respondent, be paid to the petitioner within a period of one month from the date of receipt of a copy of the order and a sum of 3,64,000/- be paid immediately after receipt from ECHS. The petition is dismissed. Issues:Petition for winding up under Sections 433(e) and (f), 434 and 439 of the Companies Act, 1956 due to unpaid debt of Rs. 5,96,907/-; Dispute over outstanding amount between petitioner supplying medicines and respondent operating a nursing home; Respondent's contention of financial health and willingness to pay disputed amounts; Disagreement over payment for AICD pacemaker supplied by petitioner; Allegations of rude behavior leading to change in supplier by respondent; Decision on whether to wind up the respondent-company.Analysis:The petition for winding up was filed based on the respondent-company's failure to clear a debt of Rs. 5,96,907/-, which was undisputed by the respondent despite repeated reminders and a statutory notice. The petitioner, engaged in supplying medicines and surgical goods, had a longstanding business relationship with the respondent involving payments for supplies since 2007. The respondent's failure to pay the outstanding amount led to the petition for winding up under relevant sections of the Companies Act, 1956.The petitioner argued that the respondent's claim of awaiting payment from ECHS for a specific medical procedure involving an AICD pacemaker was not a valid reason for non-payment, as the transaction was directly with the respondent-company. The petitioner contended that the respondent's financial health claims were inconsistent with the outstanding debt in their books, and the lack of a clear response further supported the petition for winding up.On the other hand, the respondent presented its defense by highlighting its profitability as a running hospital and regular payment practices with the petitioner. The respondent disputed certain bills due to missing records but expressed readiness to settle those amounts. The main contention arose over the payment for the AICD pacemaker, where the respondent alleged that the petitioner supplied a different and more expensive model than agreed upon, leading to delays in reimbursement from ECHS.The court considered the evidence presented by both parties, including invoices and communications, to determine the validity of the outstanding debt and the respondent's willingness to pay. Despite the dispute over the AICD pacemaker payment, the court found that the respondent's overall financial stability and readiness to settle most outstanding bills did not warrant the extreme measure of winding up the company. The court directed the respondent to pay the undisputed amounts within a specified time frame and the disputed amount upon receipt from ECHS, ultimately dismissing the petition for winding up based on the totality of circumstances and the respondent's willingness to settle the debts.