TaxTMI 
TaxTMI 
2009 (3) TMI 576
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....y accepted by the respondent on arrival. 2. In terms of the agreement, the payment for the first shipment of US $ 5,687,959.16 became due and payable on 28-11-2001 and the payment of US $ 5,987,361.04 under the second shipment became due and payable on 10-12-2001. However, on 26-11-2001, the respondent wrote to the petitioner stating that because of the financial difficulties faced by them, they were not able to make the payment on the due date, i.e., 28-11-2001. They proposed re-scheduling of payments due to the petitioner in seven instalments beginning from February, 2002 and ending August, 2002. The proposed re-scheduling of due payment in instalments was a clear breach of the agreement. Still, as a gesture of goodwill, the petitioner agreed for the proposal, with a condition that the respondent strictly adhere to the schedule without any default. Thereafter, the petitioner received US $ 5,00,000 from the respondent in December 2001, but, the respondent did not make any in January or February 2002, as per the schedule. The respondent paid a sum of US $ 3,00,000 in March, 2002 and thereafter, defaulted in paying the subsequent instalments. Due to the repeated efforts of the pe....
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....nce through their counsel and filed a counter statement. According to the respondent, the company suffered a set back during the financial year 2001-02 due to the reasons like :- (1)The move of the Government of India recovering fertiliser subsidy on an ad hoc basis; (2)The company's DAP plants could not meet the production targets due to funds constraints as well as stiffening of terms of supply imposed by the goods raw material suppliers and there was a shortage in the company's fertiliser production in the financial years 2001-02 and 2002-03. 4. Therefore, it resulted in under-utilisation of plant capacities, thereafter, sharp rise in the specific consumption norms and also the direct cost of manufacture. These adverse factors caused a temporary impediment in an otherwise sound performance that the respondent-company has been consistent in turning out the financial year after the financial year. To overcome the difficult situation and also to tide over it at the earliest, the respondent-company is taking various steps to revise its business strategy and to restructure the operations. It is further stated that a Corporate Debt Re-structuring (CDR) mechanism was evolved b....
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....e out to wind up the company as per the provisions of the Act. In support of his submissions, he relied on the following decisions :- 1.Pradeshiya Industrial & Investment Corpn. of Uttar Pradesh v. North India Petro Chemical Ltd. [1994] 79 Comp. Cas. 835 (SC). 2.National Conduits (P.) Ltd. v. S.S. Arora [1967] 37 Comp. Cas. 786 (SC). 3.Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 (SC). 4.Mediqup Systems (P.) Ltd. v. Proxima Medical System GMBH [2005] 59 SCL 255 (SC). 8. Per contra, learned counsel for the respondent-company submits that the failure to pay its debt is only temporary due to reasons beyond its control and, therefore, a case has not been made out to wind up the company. According to him, the company is undergoing a temporary crunch and the same would be removed sooner or later. In such circumstances, he submits that proper remedy for the petitioner is to sue the company for recovering its debts and the company petition is misconceived. 9. I have considered the rival submissions carefully with regard to the facts and citations. 10. It is not in dispute that the respondent-company placed an order with the....
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....l court to recover the outstanding amounts. 11. In Mediqup Systems (P.) Ltd.'s case (supra), the Hon'ble Supreme Court held as under :- "19. This Court in catena of decisions held that an order under section 433(e) of the Companies Act is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under this section must be a determined or a definite sum of money payable immediately or at a future date and that the liability referred to in the expression 'unable to pay its dues' in section 433(e) of the Companies Act should be taken in the commercial sense and that the machinery for winding up will not be allowed to be utilised merely as a means for realising debts due from a company. ****** 27. The rules as regards the disposal of winding up petition based on disputed claims are, thus, stated by this Court in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. AIR 1971 SC 2600. This Court has held that if the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. The principles on which the Court acts are :- (i)that the defence of the company is in good faith and one o....