AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 995
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....oner in the company petition) had filed the said petition under Section 433(e) and 433(f) of the Companies Act, 1956 (hereafter 'the Companies Act') seeking winding up of the appellant company (respondent in the company petition). 3. It was the respondent's case, that it was interested in purchasing an aircraft and had accordingly entered into an arrangement with the appellant in this regard. In terms of the said arrangement, the respondent was required to pay 30% of the agreed consideration in advance. The balance 70% of the consideration was required to be paid four weeks before the date of delivery of the aircraft. 4. The aircraft was required to be purchased from an Austrian aircraft manufacturer named, Diamond Aircraft Industries....
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....he respondent had failed to pay the balance amount when called upon to do so, and the amount paid was not refundable. 7. The learned counsel appearing for the appellant states that notwithstanding the said dispute, the appellant has deposited a sum of Rs.1,38,92,389/- (Rupees One Crore Thirty Eight Lacs Ninety Two Thousand Three Hundred Eighty Nine Only) with the Registry of this Court in compliance with the orders passed by this Court. He contends that the same clearly indicates that the respondent's allegation that the appellant is unable to pay the debt is erroneous. 8. At this stage, it would be briefly necessary to refer to the documents referred to by the learned Single Judge in the impugned order. It is observed in the impugned....
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....t the letter dated 11.07.2013 was addressed by the respondent to PCI Middle East FZE and not to the appellant company. 10. The same was in response to a quotation dated 01.07.2013. It is not clear whether the said document is signed on behalf of the appellant. Prima facie, the arrangement mentioned in the said communication is between Centaur Mercantile Pvt. Ltd. and PCI Middle East FZE and not the appellant. 11. The appellant had sent a communication dated 04.11.2014, inter alia, stating that "Your new DA42 bearing MSN: 42, N165 is in the final stage of being manufactured and tested" and calling upon the respondent to pay the balance payment of EUR417,168 (Euro Four Hundred and Seventeen Thousand One Hundred and Sixty Eight Only) for....
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.... status. We are glad that things are moving regarding the permissions on your side. Regarding the aircraft purchase agreement that you have with PCI we would like to inform you about the following. Last week we have been sitting together with PCI (In Austria) in order to agree on the best way to solve the current situation. As agreed with Mr. Mehta from PCI (Chairman of the company in copy of this email), PCI will send back to you the down payment received from you last year in July 2014. A new contract for the airplane will be established directly between your company and Diamond Aircraft for this plane. Kindly send us the down payment once you receive the invoice from us. The remaining payment will be paid at delivery. T....
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....ication dated 11.07.2013, the down payment was a non-refundable payment. 17. In view of the above, we are unable to accept that the amount, as claimed by the respondent, is an admitted debt payable by the appellant to the respondent. 18. It is well settled that proceedings for winding up of the company are not recovery proceedings. A company is liable to be wound up under Section 433(e) of the Companies Act, 1956 if it is unable to pay the debt. In terms of Section 434 of the Companies Act, if a company fails to pay an admitted debt after receipt of the notice under the said Section, it would be deemed to be unable to pay the debt. We are unable to accept that in the given facts, the appellant has failed to repay an admitted debt. ....
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....by the respondent, with the Registry of this Court. Thus, the question of accepting that the appellant is unable to pay its debt does not arise. 23. There is also no reason to wind up the appellant company under Section 433(f) of the Companies Act on the ground that it is just and equitable to do so. There is not material to hold that the substratum of the appellant company stands eroded. 24. In view of the above, the present appeal is allowed and the impugned order is set aside. 25. Having stated the above, it is also relevant to note that the respondent's petition for winding up was allowed by the impugned order and the present appeal has been pending adjudication for over four years. In the meantime the respondent has not availe....