TaxTMI 
TaxTMI 
TaxTMI 
2009 (9) TMI 578
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....0,000 (rupees five hundred and fifty crores only). It is the case of the petitioner that the respondent placed a purchase order dated 19-4-1995, with the petitioner for supply of four ship loaders for bagged and bulk material of value of Rs. 11,00,00,000 (rupees eleven crores only). The respondent had drawn a hundi dated 25-12-1996, for an amount of Rs. 1,78,08,795 (rupees one crore seventy eight lakhs eight thousand seven hundred and ninety five only), being 70 per cent value of material imported by the petitioner for manufacturing ship loaders. The petitioner furnished a bank guarantee for an amount of Rs. 1,10,00,000 (rupees one crore and ten lakhs only) in favour of the respondent. In February 1996, the respondent invoked the bank guarantee, as the petitioner allegedly failed to perform the contract. Therefore, the petitioner instituted a suit being O.S. No. 1177 of 1997 on the file of the court of the XI Senior Civil Judge, City Civil Court, Hyderabad, for recovery of a sum of Rs. 2,17,82,129 (rupees two crores seventeen lakhs eighty two thousand one hundred and twenty nine only) with interest at the rate of 12 per cent per annum till the date of delivery and 6 per cent per an....
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....missed. 5. In addition to the above pleas, the respondent also alleged the following. The respondent-company, which is the world's largest cement company, has capacity of 3 MTPA with technology of Fuller International Incorporated, U.S.A. It has sold 17,15,509 tonnes of cement as well as 41,483 clinker for domestic market and 83.827 tonnes of cement and 2,45,630 tonnes of clinker in the export market earning foreign exchange of Rs. 199.66 crores. The respondent paid an amount of Rs. 100 crores to exchequer. It has 60 MW Power Plant, Desalinization Plant, Road network and Jetty to cater needs of sea route transportation. It placed an order for supply of four ship loaders valued at Rs. 11 crores. As per the purchase order, the respondent is required to pay 10 per cent of value as advance against bank guarantee and 70 per cent after delivery of machinery at site and the balance 20 per cent on commissioning the machinery delivered by the petitioner with performance guarantee after 24 months. Accordingly, an amount of Rs. 1,10,00,000 (rupees one crore ten lakhs only) was paid by the respondent against the petitioner's furnished bank guarantee. As per the purchase order, it is the respo....
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....dent that the debt is bona fide disputed, has any substance. 7. Insofar as the first issue is concerned, the law appears to be fairly settled. Section 443(2) of the Act empowers the Court to refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioner and that the petitioner is acting unreasonably in seeking to have the company wound up instead of pursuing other remedy. In this case, no doubt the petitioner obtained a decree from the Civil Court and no doubt it is a basis for filing winding up petition. There is no dispute that the decree is in appeal. In such a situation, winding up the respondent-company under section 433(e) of the Act would not lie. A reference may be made to some of the decided cases cited by learned counsel for the respondent. 8. In Atul Durg House Ltd., In re [1971] 41 Comp. Cas. 352 , the High Court of Gujarat laid down that a person approaching the company court for winding up of a company must convince the court that there is no alternate remedy open to petitioner. The relevant observations are as follows (page 360) : "Section 443(2) in terms enacts that where the petition is presented on the groun....
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....This court upheld the contention of the respondent therein, observing as follows : "It is settled that if a decree or order passed by the court or judicial forum is enforceable, and after receiving statutory notice an incorporated company fails to pay the amount, presumption can be drawn relying on section 434 of the Act, that the company is unable to pay debts. In such an event, it would always be a different aspect of the matter whether the creditor could have moved the Civil Court for execution of the decree. But, where the award of the arbitrator is obtained by the creditor and after receiving notice demanding payment of award amount, presumption under section 434 of the Act cannot be drawn especially in a case where award is challenged by respondent-company under section 34 of the Arbitration Act. The fact that award has been passed by the arbitrator would presupposes two things; that there is a dispute regarding the amount claimed and that award passed has not attained finality and enforceability, especially when the same is challenged in the civil court." 10. In National Research Development Corporation v. Elector Flux (P.) Ltd. [2006] 66 SCL 429, this court considered a s....
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....n execution petition, filed the present company petition. Further, the decree in O.S. No. 1177 of 1997 is under appeal. Both counsel brought to the notice of this court that the judgment and decree under appeal have been suspended. As a necessary corollary, it becomes clear as on today, the decree is unenforceable and hence, it cannot be said that there is enforceable debt against the respondent-company. On issue number one, therefore, this court holds against the petitioner and in favour of the respondent. 12. Insofar as the second issue is concerned, there cannot be any doubt that as per rules 3 and 4 read with rule 6 of the Companies (Court) Rules, 1959, all applications and petitions filed under the Act, as far as possible, must comply with Rules adopting various forms prescribed therein, wherever applicable. Part 3 of the Rules contain rules 95 to 338 to regulate winding up proceedings from the stage of filing of petitions, (both creditor's winding up petition and voluntary winding up), the other proceedings in relation thereto and liquidation subsequent to winding up order. 13. Rule 95 of the Rules lays down that a petition for winding up of a company shall be in Form No. 4....
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....otice of demand in writing and that such company is insolvent and unable to pay its debts. This appears to be essential in view of section 434(1)(c) of the Act, which stipulates that the company shall be deemed to be unable to pay its debts if it is proved to be so. When there is a proper pleading as required in Form No. 46, the question of proof under section 434(1)(c) of the Act does not arise. Therefore, compliance with rule 95 of the Rules is essential to succeed in winding up petition. The Karnataka High Court considered this aspect of the matter in Kanchanaganga Chemical Industries v. Mysore Chipboards Ltd. [1998] 91 Comp. Cas. 646, and held as follows (page 650) : "Machinery for winding up will not be allowed to be utilised merely as a means for realising debts due from a company. It is also well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of debt. An order will not be made if a sufficient case is not stated in the petition even if such a case is proved in evidence. The petition must disclose the assets of the company and whether they are insufficient to meet the liabilities including contingent and prospective liabilities, and....
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.... Forge (India) Ltd. [2001] 104 Comp. Cas. 533 2 (Guj.). 17. The petitioner herein, filed a suit and obtained decree. The same is under appeal before this court. Therefore, it cannot be in absolute terms said that there is an enforceable debt against the respondent. The very fact that the respondent appealed to this court against the judgment and decree of the civil court would show that the debt is bona fide disputed. Insofar as the defence is concerned, it is the case of the respondent that in the first instance, when the order was not executed by the petitioner, they encashed bank guarantee for an amount of Rs. 1,10,00,000 (rupees one crore ten lakhs only). Again, there were negotiations between the parties. As per the minutes dated 12-3-1990, the purchase order was revived. In pursuance thereof, the respondent returned the pay order given by the bank and thus fulfilled the condition of depositing 10 per cent as advance towards purchase order. Even thereafter, the petitioner allegedly did not deliver ship loaders and therefore, the respondent declined to honour their Hundi for an amount of Rs. 1,78,08,295 (rupees one crore seventy eight lakhs eight thousand two hundred and ninet....