TaxTMI 
TaxTMI 
2009 (7) TMI 777
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....ine, from 14,28,003.44 which is the total outstanding amount due on the German Homeopathic Distributors Private Limited (hereinafter referred as 'Appellants') on account of eight different orders for purchase of homoeopathic medicines, which were undisputedly duly supplied. 2. The Appellant is an Indian Company which was the sole selling agent for Dr. Willmar Schwabe Gmbh & Co. KG in India of which the Respondent is an affiliate. The last Contract dated 24-6-1998 was agreed between the Appellant and Dr. Willmar Schwabe Gmbh & Co. KG to be current till 31-3-2003, automatically extendable from year to year. Either party had the right to terminate it by six months advance notice of initial or any extended period of the Agreement. The said Agreement stood prolonged for one year, that is, up to 31-3-2004. It was from 19-5- 2003 to 6-10-2003 that the appellant placed eight orders for purchase of Homoeopathic medicines in respect of which the respondent has raised Invoices bearing numbers 10560, 11970, 09530, 17110, 17140, 17210, 19650 and 19860. 3. The appellant has not disputed that supplies were made against the Invoices raised and amount due and payable under the Invoices raised by ....
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....dge only held claim of 75,000 for the year 2001 to be a genuine counter-claim. Fourthly, an amount of 3,50,717.55 has been claimed towards the stock which, according to them, was bound to be purchased back by the respondent as per Clause IX of the Agreement dated 24-6-1998 limited to three months requirement. The learned Company Judge has held that the first letter written by the respondent-company for repurchase was on 24-11-2004, that is, after lapse of nearly eight months. Further, he held that neither in the letters nor in the pleadings the respondent-company has pointed out or stated "the three-months, requirement" nor was any letter written within the three months period. Thus, the claim was ex facie not held to be valid and substantial. Fifthly, counter-claim of 9,75,000 has been raised as a reimbursement of loss suffered by the appellant on account of misdescription on the medicines supplied between the years 2003 and 2004 which wrongly indicated its manufacturing to be "made in Germany" though the same were, in fact, manufactured in Czechoslovakia. The learned Company Judge has declined to consider the claim applying the doctrine of caveat emptor (buyer beware) and being a....
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....ection 433(e), (f), section 434 read with Section 439 of the Companies Act, 1956 (hereinafter referred to as the 'Act') and misapplied Jural discretion by ascertaining the amount of the counter-claim of the appellant and holding that evidence has not been placed on record for certain counter-claims. In a Company Petition the scope of enquiry is limited to prima facie determining whether the counter-claim raised is in good faith and is one of substance and not mala fide. It has been the pivotal contention of the appellant's counsel that the winding up petition is not a legitimate or legally permissible method of seeking to enforce payment of a debt or an alternative to the ordinary mode of debt realization. It is argued that the allegations of both the adversaries require appreciation of evidence and cannot be decided in a company petition for winding up. 8. Before running the marathon of analyzing each and every counter-claim like the learned Company Judge has diligently done, we would analyze the scope of enquiry required to be made by a Company Court in case of a winding up Petition filed under sections 433(e) and 434 on the ground that the company is unable to pay its debts; an....
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....as no reason to believe that the debt, if established, would not be paid, the petition was dismissed. The modern practice has been to dismiss such petitions. But, of course, if the debt is not disputed on some substantial grounds, the Court may decide it on the petition and make the order." (p. 463) In the instant case, I find that the facts are disputed and there is case and counter case and in that view of the matter, in my opinion, in view of the ratio laid down by the Supreme Court in Amalgamated Commercial Traders (P.) Ltd.'s case (supra) this petition for winding up is not sustainable and it must be dismissed. 10. The law of winding up has been succinctly and elaborately discussed by the Division Bench of the Gujarat High Court in Tata Iron & Steel Co. v. Micro Forge (India) Ltd. [2001] 104 Comp. Cas. 5331 where our learned Brothers have articulately covered all contours and aspects of this subject. It was opined that a claim to an order of winding up is not a matter of right, but it is the discretion of the Court to grant or to reject. Secondly, if a disputed debt has been disclosed, it should be adjudicated by a competent civil court. Thirdly, a petition for winding up wi....
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....ined by the Court and be held to the credit of the suit, if any. [see Ambala Bus Syndicate (P.) Ltd. v. Bala Financiers (P.) Ltd. [1983] 2 SCC 322 and Civil Appeal No. 720 of 1999 arising out of SLP (C) No. 14096 of 1998 - Nishal Enterprises v. Apte Amalgamations Ltd. decided on February 5, 1999]; (vii ) Generally speaking, an admission of debt should be available and/or the defence that has been adopted should appear to the Court not to be dishonest and/or a moonshine, for proceedings to continue. If there is insufficient material in favour of the petitioners, such disputes can be properly adjudicated in a regular civil suit. It is extremely helpful to draw upon the analogy of a summary suit under Order XXXVII of the Code of Civil Procedure. If the Company Court reaches the conclusion that, had it been exercising ordinary original civil jurisdiction it would have granted unconditional leave to defend, it must dismiss the winding up petition. 13. As regards the prima facie proof of a bona fide character of a counter-claim, the burden lies on the party who sets-up the counter-claim, which burden can be discharged by producing sufficient material in support. The adequacy of the mate....
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....udication and could not have been dismissed by the learned Company Judge in a winding up petition. 15. The contract between the parties was concluded by Schwabe by letter dated 27-10-2004. The appellant in the reply to the petition has filed a letter dated 5-11-2004, Annexure R-18, wherein, along with other claims against the respondent, the appellant had requested the respondent to repurchase the medicines in transit and also those in stock with the appellant. The Agreement required the respondent to have bought back these medicines within a stipulated time period which the respondent allegedly has not done. The arguments in favour and against this claim would appropriately be considered by a civil court for complete adjudication. It seems to us that this stand of appellant should be seen as a valid counter-claim. As regards the claim towards medicines alleged to have been made outside Germany but sold as being made in Germany, appellant had filed letters of correspondence filed as Annexures 21 and 30 where the respondent was called upon to settle the pending dispute. The learned Company Judge has held the claim of the appellant to be prima facie exorbitant, but its rejection out....