TaxTMI 
TaxTMI 
2011 (6) TMI 295
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.... manufacturing various kinds of chocolates. The respondent-company represented by its directors approached, induced and persuaded the petitioner-company to supply its products on credit under a running account assuring to pay the value of the products supplied. The petitioner-company supplied its products to the respondent-company on credit basis. During the business transactions, the respondent-company indebted to a tune of Rs. 2,08,31,551 together with interest to the petitioner-company. The petitioner-company through its directors and personnel made repeated requests to the respondent-company to clear the outstanding liability. The efforts made by the petitioner-company to recover the amount due from the respondent-company proved to be futile. The petitioner-company got issued a legal notice, dated December 22, 2009, to the respondent-company and all its directors calling upon them to pay the due amount of Rs. 2,08,31,551 with future interest within 21 days from the date of receipt of the notice. The respondent-company and its directors got issued a reply, dated January 18, 2010, disputing the amount claimed by the petitioner while admitting the transactions. The petitioner-comp....
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....cupying majority of the godowns, which was meant for storing the finished Cadbury chocolates, eclairs, etc. The discrepancies in the supplies made by the petitioner-company were pointed out and had given a handwritten note. The respondent-company requested the petitioner-company to take back the materials weighing about 12½ tonnes amounting to Rs. 30,00,000 and also requested to take back the rejected unused materials worth of Rs. 10,00,000 to Rs. 12,00,000. The petitioner-company knowing fully well that it owes lakhs to the respondent-company, resorted to arm twisting methods to put pressure on the respondent-company to pay the amount. The petitioner-company besides filing the company petition on June 11, 2010, also filed criminal case for the offences under sections 120B, 406, 420, 421 and 506 of the Indian Penal Code, 1860, before the VIII Metropolitan Magistrate, Rajendranagar. The Police of RGI Airport, Shamshabad P. S., arrested the managing director of the respondent-company. Thereupon, the respondent-company along with other directors filed an application to quash the proceedings in criminal case and obtained interim stay of the proceedings. It is the petitioner-comp....
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....entions, reliance has been placed on the decision of the Supreme Court in IBA Health (I) (P.) Ltd. v. Info-Drive Systems Sdn. Bhd. [2010] 159 Comp. Cas. 369/104 SCL 367 wherein the Supreme Court held that the dispute should be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The company court at the stage of a winding up petition is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute must not consists of some ingenious mask invented to deprive a creditor of a just and honest entitlement must not be a mere wrangle. If there is no dispute as to the company's liability, the solvency of the company might not constitute a stand alone ground for setting aside a notice under section 434(1)(a), meaning thereby, if a debt is undisputedly owing, then it has to be paid. If the company refuses to pay on no genuine and substantial grounds, it should not be able to avoid the statutory demand. The law should be allowed to proceed and if demand is not met and an application for liquidation is filed under section 439, in reliance of the presumption under section 434(1)....
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.... to many of its other creditors, whom it has been avoiding by concealing and shifts its assets. It is pertinent to mention here that the respondent is having ample means and funds and assets and solvent enough to satisfy the claims of the creditors, but it lacks intention to pay. The respondent has failed and neglected to pay the amounts which are legitimately due to the petitioner. The petitioner submits that all their efforts to secure payment of the dues of sum of Rs. 2,08,31,551 (rupees two crores eight lakhs thirty one thousand five hundred and fifty one only) from the respondent proved futile." 9. In support of his submissions, apart from referring the decisions cited by learned counsel appearing for the petitioner, placed reliance on the judgments of this court in Walnut Packaging (P.) Ltd. v. Sirpur Paper Mills Ltd. [2009] 148 Comp. Cas. 330; and National Research Development Corpn. v. Electro Flux (P.) Ltd. [2005] 127 Comp. Cas. 23/[2006] 66 SCL 429 (AP). 10. The issue that calls for adjudication in this company petition is : "Whether the petitioner made out prima facie case for admission of this winding up petition against the respondent-company-M/s. Sampre Nutri....
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....reed upon and the sum demanded by the creditor was unreasonable. Where the debt is undisputed, the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. It is beyond dispute that the machinery for winding up will not be allowed to be utilised merely as a means for realising its debts due from a company. In Amalgamated Commercial Traders (P.) Ltd. v. A. C. K. Krishnaswami [1965] 35 Comp. Cas. 456 (SC), the Supreme Court quoted with approval the following passage from Buckley on the Companies Acts, 13th edition, page 451 : "It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a scandalous abuse of the process of the court." (p. 463) 14. To raise a presumption of a company's inability to pay its debts, it is not enough merely to show that the company has omitted to pay the debt despite service of statutory notice, it must be further shown tha....
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....r purposes of winding up. At the initial stage the court would be circumspect and judicious in exercising discretion and should take all relevant facts and circumstances into consideration before even issuing process regarding admission. 17. The petitioner claims that the respondent is due and liable to pay a sum of Rs. 2,08,31,551. When the petitioner issued a statutory notice, the respondent issued a reply disputing its liability. The respondent also referred the memorandum of understanding dated February 9, 2008. As per the terms of the memorandum of understanding, the accounts between the parties are required to be re-settled by adjusting the over-billing against the outstanding amount. 18. The dispute between the parties is with regard to the unit price quoted in the purchase order. For better understanding, I may refer the terms of memorandum of understanding, dated February 9, 2008, which read as hereunder : "(1) The parties shall take out few bills of each year of transaction as a comparative rate and shall arrive at the rate that existed during that period for computation of a rate that would be taken as a bench-mark for calculation of difference, if any, and woul....