TaxTMI 
TaxTMI 
2015 (6) TMI 857
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....oprietary concern into the respondent-company, another sub-contract was entered on December 5, 2005, by the proprietary concern in respect of contract M-26. On the same dates, general powers of attorney were executed in favour of the managing director of the petitioner-company by the principal contractor. By April 30, 2008, the petitioner claimed to have completed a major portion of the work and surrendered the site to the respondent by informing the latter that it is unable to execute the balance work. The managing director of the petitioner has also sent a statement of account in his capacity as the general power of attorney holder of the respondent-company wherein a sum of Rs. 6,52,45,125 was claimed. The petitioner claimed that the said amount was excluding one bill and that if that amount is included the respondent is liable to pay Rs. 7,52,11,528. 3. The petitioner pleaded that the respondent has sent a cheque bearing No. 944769 for a sum of Rs. 8,60,03,488 comprising Rs. 7,52,11,528 as the principal and Rs. 1,07,91,960 as interest. The cheque was dishonoured with the endorsement "funds insufficient" made on October 28, 2009, by the banker. On November 23, 2009, the petiti....
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....een admitted. The counter-affidavit also admitted the fact that the proprietary concern of M. Venkat Rao was converted into a limited company by its incorporation on October 4, 2005. The counter-affidavit further averred that while the petitioner could not complete the works, the employer gave extension of contracts twice and the petitioner expressed its inability to complete the works and surrendered the balance portion of the contract, as a result of which the agreements between M. Venkat Rao and the petitioner-company stood terminated. The respondent, while stating that it has never admitted its liability in its reply dated December 29, 2009, also denied issuing of cheque. It was however conceded that the dishonoured cheques were issued by M. Venkat Rao. The respondent has also denied that it has given assurance that once the final bill is settled by the employer, the petitioner's bill will be settled. The respondent has reiterated that it is not admitting its liability. The counter-affidavit refers to various averments which may not be relevant for the present purpose. 7. At the hearing, Sri S. Vivek Chandrasekhar, learned counsel for the petitioner, submitted that the d....
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....se, it has neglected to pay the same for more than three weeks after such service, or to secure or to compound for it to the reasonable satisfaction of the creditor, and (ii) if the execution or other process issued on a decree or order of any court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part. The scope of these provisions is well explained in a catena of judgments of the apex court. In Madhusudan Gordhandas and Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp Cas 125 (SC), the Supreme Court held that in the matter of winding up of a company for non-payment of its debts, two rules are well-settled for refusing an order of winding upfirst, if the debt is bona fide disputed and the defence is a substantial one ; secondly, where the defence is likely to succeed in point of law and that the company adduces prima facie proof of facts on which the defence depends. It was further held that while considering the winding up of a company for its inability to pay its debt, the court will consider the wishes of its creditors and may decline to make the winding up order by attaching greater weight to their views. The Supreme Court also ....
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....ll not be made on a creditor's petition if it would not benefit him or the company's creditors generally and the grounds furnished by the creditors opposing winding up will have an impact on the reasonableness of the case." 12. Keeping in view the settled legal position, it needs to be examined whether the petitioner has made out a case for admission of the company petition. 13. As noted hereinbefore, the first and the foremost plea raised by learned counsel for the respondent is that the debt is seriously disputed and that therefore the company petition is not maintainable. The fact that the erstwhile proprietary concern M/s. M. Venkat Rao has entrusted three works to the petitioner under sub-contracts is admitted. Further, the fact that the petitioner has executed substantial works is also not in dispute. That while giving up the balance works, the managing director of the petitioner has sent a statement of account, albeit, as an agent of M/s. M. Venkat Rao, is also not in dispute. Learned counsel for the respondent has candidly admitted that no reply to the said statement of account was sent either by M. Venkat Rao or on behalf of the respondent disputing the corre....
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....ct your client office is also situated very close to my client's office. On further enquiry it is revealed that the managing director of your client with a criminal intention has stolen and misused the cheque by forging the signature of my client and filing up the blank cheque bearing No. 944769, dated October 21, 2009, with a mala fide intention to gain himself and sustain loss to my clients. There is no liability at all cost upon our clients to issue any cheque to your client and in particular the cheque referred to above. That my clients have come to know about the incident of stealing, misusing, forgery and extraction of money only after receiving your legal notice and therefore my clients are advice to take necessary legal steps to file appropriate criminal proceedings against your client and managing director for the above illegal acts. Therefore my clients reserve their right to initiate such criminal proceedings." 16. The respondent, having categorically admitted its liability to settle the petitioner's bills took a complete volte-face in the counter affidavit wherein it went to the extent of denying the admission of its liability made in the reply notice date....
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....spondent. 19. Clause (1) of the memorandum of association of the respondent-company, which relates to the main objects to be pursued on its incorporation, to the extent the same is relevant, reads as under : "To undertake and to continue, to carry on, as a going concern, the business of M/s. M. Venkat Rao with all the assets, i.e., all movables, immovable, tangible and intangible assets including all the rights, titles, privileges, licenses, permits, sanctions, awards, grants, all other work orders on hand and work in progress, experience status such as special contractors, pre-qualifications given by the principals to M. Venkat Rao and with all the liabilities, obligations and payables of every nature and description including secured, unsecured loans, funded and non-funded facilities/sanctions by bankers, financial institutions besides overdrafts, cash credits, term loans, bank guarantees, letters of credit, etc., availed by proprietary concern of M. Venkat Rao." (Emphasis supplied) 20. Though the cheque in question was issued by M. Venkat Rao instead of by the respondent-company, it is not in dispute that even after incorporation of the respondent-company, M. Venkat Rao....