TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 538
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....n amount of Rs. 12,55,534/, however did not pay the remaining amount of Rs. 85,356/. It is further the case of the petitioner Company that again the respondent Company placed a further order of 100 tons of kraft paper by mail dated 11.06.2008 for which a bill of Rs. 26 lakhs plus sales tax as applicable ex Kolkata was raised by the petitioner Company. It is further the case of the petitioner Company that the respondent Company issued two post dated cheques being cheque no.050185 and cheque no.050186 for an amount of Rs. 13,39,000/each. It is further the case of the petitioner Company that on the due date of the deposit of the first cheque of Rs. 13.39 lakhs, the respondent Company requested the petitioner not to deposit the cheque due to paucity of funds and as a prudent businessman, the petitioner agreed to such a request. It is further contended by the petitioner Company that even though repeated requests were made, the respondent Company did not respond to the same and therefore, the petitioner Company deposited cheque no.050185, which came to be dishonoured. It is contended that after continuous followup, the respondent Company made payment of Rs. 7 lacs on 10.12.2008. However,....
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....respondent Company has also denied the factum that the respondent Company has failed to make payment of Rs. 10,09,403/. It is contended by the respondent Company that in fact, two cheques were given earlier for Rs. 13,39,000/, which have been utilised by the petitioner Company inspite of making payment of Rs. 7 lakhs, which was really due. The respondent Company has further contended that even the postal acknowledgment receipt does not contain the name or stamp of the respondent Company. The respondent Company has contended in its reply that no transaction at all has taken place between the parties after February, March 2009. The respondent Company has also denied the veracity of the account produced before this Court and has pointed out that the debts are not admitted debts. It is also contended that the respondent Company is a going concern and commercially solvent and hence, the petition deserves to be dismissed. Relying upon the judgment of this Court in the case of Tata Iron & Steel Company Ltd. vs. Micro Forge (India) Ltd. reported in 2000 (2) GLR 1594, and para 17 thereof, it is contended that the present petition by way of prayer for winding up of respondent Company is not ....
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....rs to my client vide Bill No.21 dated 3/7/2008 amounting of Rs. 3,99,789/Bill No.29, dated 11/8/2009 amounting of Rs. 4,08,143/respectively but upon delivery of said goods same found humid and substandard upon receiving the same my client has informed you for the same and demanded credit note with regard to the said goods. At that time you have accepted my client claim and assured that amount of said goods will be credited. 5. Kindly note that during the course of business tenure my client has made huge amount towards payment of juge amount towards different invoices which shows bonafied intention of my client. After unfortunate inccent of "humid Kraft Paper" my client has requested you to send credit note for the same but in vain. Till date you have not credit my clients A/c. which shows your oblige notice. 6. Kindly note that the cheque in question was given you towards the security purposes but you have use it/adjusted it my clients outstanding which is not fair on your part." 9. The aforesaid fact which is not denied as such by the petitioner Company establishes the fact that from the beginning the dispute as regards the humid and substandard goods supplied vide Bill No.2....
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....;Substantial' means having substance and not frivolous or vexatious and which the Court should ignore. There must be so much doubt and question about the liability to pay the debt that the Court sees that there is a question to be decided. It must also be remembered that the onus is on the company to bring forward a prima facie case, which satisfies the court that there is something which ought to be tried either before the Court, itself or in an action or by some other proceedings. There are various factors and facets, contours and chronicles emerging from the facts of the case requiring consideration before adjudicating upon the plea of winding up by the Court. When the petitioner is forcing payment of debt, which it knows to be in substantial dispute the evidence may support an action by the company against the petitioner for the tort of malicious prosecution. No monetary loss or special damage to the company need be proved for the presentation of the petition is, from its very nature, calculated to injure the credit of the company. It will be interesting to refer to a decision in A Company (No.003729 of 1982), (1984) 1 W.L.R. 1090, that even in a case where the company in....
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.... In fact, in such a situation, the dismissal of the petition is not at any rate, initially, a matter of discretion of the court. It is founded on the petitioner's inability to establish the locus standi to present a petition under what is now section 124(1) of the Insolvency Act, 1986. The case of an undisputed debt with a genuine and serious crossclaim is different, in that the dismissal or staying of the petition can only be a matter for the discretion of the court, albeit that its exercise may have been narrowed by authority. So, there may be two categories of cases, one disputed debt category and another crossclaim case category. In the present case, there is a bonafide dispute of debt and also substantial dispute of counter claim. The principles, which we have enunciated hereinabove, are extensively, explored in catena of judicial pronouncements. For short, we cannot resist the temptation of referring the following decided cases: (1) Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd, (1972) 42 Company Cases, 125 (SC), wherein, it is held that one act of dishonesty on the part of the petitioner is sufficient for rejection of petition. (2) Harinagar Sugar....
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....eme of the Companies Act is to provide for continued operation of the company except in the circumstances indicated in the Act. The company is not to be wound up unless it is essential to do so. Learned counsel for the petitioner then contended that as the petitioner has also invoked section 433(f) and having regard to the financial position of the company it is just and equitable to wind up the company. After the petitioner had ceased to be a creditor, the winding up petition at the instance of such person either on the ground of inability to pay its debts, or on the ground that it is just and equitable to wind up, will not lie. Moreover, a petition on just and equitable grounds will not be entertained when an adequate alternative remedy is available to the petitioner. If the petitioner has a legally enforceable claim against the respondent, it is open to the petitioner to resort to remedies in civil courts which he is entitled to do. The petitioner cannot, merely by asserting that it has a claim even though the claim is barred by limitation, further assert that it is just and equitable to wind up the company. A case for winding up on the grounds that it is just and equitable ....
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....t of one or more instalment, the whole amount has to fall due. It would not apply in cases where a default may exist in a different form, for example, where the right of brining the suit is confined to recovering the amount of each instalment in respect of which default may have been committed. It will be seen that in clause 3(b) of the agreement, all that is provided is that, on a default, the defaulting company would be liable to pay the interest @ 3% per month. There is no clause suggesting that whole of the amount would become due and recoverable on a single or more defaults. I respectfully agree with the law laid down in the above mentioned ruling. 22. The end result of all this discussion would be that a suit would clearly be barred by limitation on the date on which the petition under section 433 of the Companies Act was filed. In that view, the petition itself would be of no consequence and will be required to be dismissed as there is a valid and bona fide defence of limitation available to the respondent company." 13. It would also be advantageous to refer to the judgment of the Apex Court in the case of Madhusudan Gordhandas and Co., Vs. Madhu Woollen Industries Pvt. ....
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....value of the creditors, and if, for some goods reason, they object to a windingup order, the court in its discretion may refuse the order.' The wishes of the creditors will, however, be tested by the court on the grounds as to whether the case of the persons opposing the windingup is reasonable; secondly, whether there are matters which should be inquired into and investigated if a winding up order is made. It is also wellsettled that a windingup order will not be made on a creditor's petition if it would not benefit him or the company's creditors generally. The grounds furnished by the creditors opposing the winding up will have an important bearing on the reasonableness of the case. (See P & J. Macrae Ltd. In re [1961] 1 All ER 302; [1961] 31 Comp Case 424 (CA). It is beyond dispute that the machinery for winding up will not be allowed to be utilized merely as a means for realising its debts due from a company. In Amalgamated Commercial Traders (P.) Ltd. vs. Krishnaswami (A.C.K.) [1965] 35 Comp Case 456, 463 (SC) this court quoted with approval the following passage from Buckley on the Companies Acts, 13th edition, page 451: It is wellsettled that a windingup pe....
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..... A determination of examination of the company's insolvency may be a useful aid in deciding whether the refusal to pay is a result of the bona fide dispute as to liability or whether it reflects an inability to pay, in such a situation, solvency is relevant not as a separate ground. 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)(a) that the company is unable to pay it debts, the law should take its own course and the company of course will have an 5 opportunity on the liquidation application to rebut that presumption. 25. An examination of the company's solvency may be a useful aid in determining whether the refusal to pay debt is a result of a bona fide dispute as to the l....