https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=459412 https://www.taxtmi.com/caselaws?id=459412 Winding up of company - breach of the express covenants of the Novation Agreement For Assumed Contracts - Section 433 and 434 of the Companies Act, 1956 - HELD THAT:- It is to be borne in mind that a debt is a sum of money which is now payable or will be payable in future by reason of a present obligation debitum in prasenti solvendum in futuro. Furthermore, a debt must be a determined or definite sum of money payable immediately or at a future date. A contingent debt or a conditional liability is not a debt when the contingency or condition has already happened. It may not be out of place for this Court to point out that if a Court of Law is satisfied that a debt upon which a petition to wind up is founded is a hotly contested debt and also doubtful, then, it should not make up a winding up order based upon such debt. Bona fide dispute implies the existence of a substantial ground for the dispute raised. Where the company has a bona fide/genuine dispute, the Petitioner cannot be regarded as a creditor of the company for the purposes of winding up - the power of winding up is to be exercised judicially and with most circumspection. No wonder, the proceedings under Section 433 and 434 are not the proceedings to recover debts due from any particular company. It is to be noted that the ingredients of Section 434 of the Companies Act, 1956 enjoins that when a notice is served in that Section in the manner specified and if the payment is not made within a period of three weeks, it will be presumed that the company is unable to pay its debts, but, in the considered opinion of this Court, this gives only a presumption that the company is unable to pay debts. However, the said presumption is a rebuttable one in the manner known to law and in accordance with law. As such, the nonissuance of reply to a statutory notice of the Respondent by the Appellant cannot be considered as an adverse circumstance against the Appellant, when it has raised defences, which are substantial and one of substance in so far as the present case is concerned. This Court holds that the Appellant/Respondent has raised a substantial and tangible defences by raising contentious factual and legal issues which required detail investigation. Also that, the defences raised by the Appellant/ Respondent are not a mere cover or empty disputes with a view to cover up its real inability. In short, this Court is subjectively satisfied that the defences raised by the Appellant/Respondent in the present case are bona fide and genuine one. As a matter of fact, these contested mixed questions of Facts and Law are to be adjudicated only by a Civil Court. As such, the proper remedy for the Respondent/ Petitioner is to approach the competent Civil Court for resolving the mixed questions of Facts and Law in regard to the bona fide dispute of Debt and its liability. Further, in a summary proceedings, under Section 433 of the Companies Act, 1956, the divergent stand taken by the respective parties cannot be gone into and bona fide disputes being raised by them. Therefore, this Court directs the Respondent/ Petitioner to approach the competent civil forum for recovery of the amount/debt from the concerned parties. Appeal allowed. Case-Laws Companies Law Fri, 25 Jul 2014 00:00:00 +0530