TaxTMI 
TaxTMI 
2013 (3) TMI 346
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....a contending that the respondent Company is in debt to the petitioner company to the tune of Rs. 61,85,951=90, made up of principle and interest component as detailed in paragraph 5 of the company petition, this application has been filed by contending that both the petitioner and the respondent company entered into an agreement on 7.4.2009, for the purpose of identifying potential opportunities for the respondent Company's services to various designated customers, particularly in Thailand. Various procedures were contemplated in the agreement and the terms and conditions were incorporated with regard to payment. 5- It is the grievance of the petitioner company that the respondent company did not come forward and make payment of the third installment of 60% and the balance 40%, as agreed upon, with the result the statutory notice as required under section 433 was sent and when they have neglected to make payment, this petition has been filed. Interalia contending that inspite of statutory notice being sent under section 433(1)(a) of the Companies Act, 1956, respondent company has failed and neglected to clear the debts, therefore, steps for proceeding in the matter for windin....
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....dent company is unable to pay the debt. 9- When a winding up proceedings are filed under section 434, this Court is required to follow the statutory provisions contemplated in Part III of the Company Court Rules 1959 and if Rules 95, 96 and 97 are taken note of and the discretion available to this Court in accordance to the aforesaid rule is read alongwith the law laid down by the Supreme Court in the case of Cotton Corporation of India Limited Vs. United Industrial Bank Limited and others, (1983) 4 SCC 625, it would be seen that the purpose of incorporating the statutory rules, particularly Rule 96, is to give adequate safeguard to the company against whom the process is to be initiated and this Court cannot for the mere asking issue notice or direct for advertisement. The purpose of scrutiny of the records in the chamber before admission and thereafter the procedure to be followed as is laid down in the statutory rules clearly contemplates that a wide discretion is conferred on the Company Court to initiate the process and if the Company Court comes to the conclusion that the material available are not sufficient enough to initiate action and it is found that the company petit....
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.... Industries Private Limited, (1971) 3 SCC 632: (1972) 42 Company Cases 125, again the Apex Court, upon considering the judgment in the case of Amalgamated Commercial Traders Private Limited (supra), had opined as under (page 131): 'Two rules are well-settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The Court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and (notice) in the name of the appellant-company was issued on May 6, 2005. The said notice was returned with the postal endorsement 'company closed'. Invoking section 433(e) and (f) read with sections 434(1)(a) and 439(11)(g) of the Act, the appellant-company approached this court for winding up of the respondent company on the ground that the respondent-company failed and is unable to pay the debts." 12- If the case in hand and the facts as available on record are evaluated in the backdrop of the aforesaid principle, it would be seen that after the statutory notice was sent by the petitioner company to the respondent vide Annexure H, on 17.5.2011, and when a demand was made for payment of t....
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....)(a), the respondent company has given its say, defence and objection and has prima facie demonstrated in the notice that the debt is disputed, they are not liable to pay the same and there is breach of contract. Under such circumstances, the law laid down in the cases relied upon by the learned counsel for the petitioner, which pertains to negligence on the part of a company to pay the debt after the statutory notice, will not be applicable. On the contrary, the law laid down by the Supreme Court in the case of Amalgamated Commercial Traders Limited (supra) and Madhusudan Gordhandas and Company (supra), will apply and, therefore, I am of the considered view that it is not a fit case where action should be initiated for winding up of the Company. Instead, the petitioner company should take recourse to the remedy available in accordance to the common law and resorting to the procedure contemplated under section 434 of the Companies Act, is not warranted. 16- The power conferred on this Court for initiating an action for winding up under section 433(e) of the Companies Act is a discretionary power. Before exercising the said power, it is required to be proved from the material ava....