2014 (6) TMI 1085 - HC - Companies Law

Company Ordered to Wind Up Over Unpaid Dues; Quality Dispute Dismissed as Insincere, Official Liquidator Appointed.

Maratt Plantations Private Limited Versus Naturaflex Private Limited, Bangalore

The HC admitted the petition for winding up the respondent company under the Companies Act, 1956, due to unpaid dues. The respondent's defense of disputed ... Seeking winding up of company - unpaid dues resulting from business transactions - HELD THAT:- This Court by order dated 07.03.2014 while adverting to this aspect had admitted the petition permitting the petitioner to take out the advertisement of the order in English as well as in Kannada daily news paper. The advertisement has been carried out and placed before this Court, which has been taken on record. Despite the said advertisement being made with regard to the admission of the petition, the respondent has not chosen to either secure the earlier order recalled wherein an observation was made by this Court that, there is no merit in the defence of the respondent. That apart, after the publication was made, no person has approached this Court opposing the petition for winding up. In any event, the respondent had not raised the dispute with regard to the payment that is to be made or with regard to the quality of the goods supply at an earlier instance, but was raised for the first time in the instant petition. Taking note of these aspects, it is clear that the dispute sought to be raised by the respondent is not bonafide. The respondent infact is unable to pay its debts. Hence, the respondent company is liable to be wound up. The respondent company is ordered to be wound up. The Official Liquidator shall take charge of the assets of the respondent company in terms of the provisions contained in the Companies Act - Petition allowed. Issues:- Petition for winding up under the Companies Act, 1956 based on unpaid dues and disputed quality of goods supplied.Analysis:The petitioner filed a petition seeking the winding up of the respondent company under the Companies Act, 1956, due to unpaid dues resulting from business transactions. The transactions involved the supply of Creamed Latex to the respondent as per purchase orders. Despite partial payments, a significant amount remained outstanding, leading the petitioner to issue a legal notice demanding payment. The respondent, while not responding to the notice, contested the quality of goods supplied as per the order, which was raised as a defense during the proceedings.During the evidentiary stage, the petitioner submitted affidavit evidence and relevant documents supporting the claim, including invoices, communications, and notices. The respondent, despite being given the opportunity, did not cross-examine the petitioner's witness. The court, after considering the evidence presented and the lack of challenge from the respondent, admitted the petition for winding up. An advertisement regarding the admission of the petition was published in newspapers, inviting opposition, but no challenge was raised.The court found that the respondent's belated dispute on the quality of goods and non-payment was not genuine, especially since no previous objections were raised. This lack of bona fide dispute, coupled with the respondent's apparent inability to settle debts, led to the court's decision to order the winding up of the respondent company. The Official Liquidator was directed to take charge of the company's assets, and the petitioner was required to deposit provisional costs for the liquidation process. The notice of winding up was instructed to be published in specified newspapers as per legal requirements.