2005 Supreme(SC) 501

2005(3) Supreme 39
Supreme Court of India
(From Calcutta High Court)
Ashok Bhan & Dr. AR. Lakshmanan, JJ.
Mediqup Systems Pvt. Ltd. —Appellant
versus
Proxima Medical System G.M.B.H. —Respondent
Civil Appeal No. 1811 of 2005
(Arising out of SLP (C) No. 22740 of 2003)
Decided on 17-3-2005
Counsel for the Parties :
For the Appellant : Dhruv Mehta and Mrs. Sarla Chandra, Advocates.
For the Respondent : Braj Kishore Mishra, D.P. Sharma, Mrs. Aparna Jha and Abhishek Singh, Advocates.

Important point
Machinery for winding up of a company will not be allowed to be utilized merely as a means for realising debts due from a company and if the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the Company.

Headnote:Companies Act, 1956—Section 433(e)—Disposal of winding up petition based on disputed claims—If debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company—Appellant Company is engaged in business of import of medical equipment and service thereof—Respondent Company filed a winding up petition against appellant Company—Allegations that appellant Company is liable to pay the respondent a sum of US $ 5000 and US $ 11000 aggregating to US $ 16000—It was alleged that despite notice, the Company failed and/or neglected to refund the amount—Appellant disputed its liability—Company Judge disposed of winding up petition holding that US $11000 should be repatriated to remitter (which in the present case is not the respondent)—Remitter of US $ 11000 was not the petitioning creditor but altogether a different Company—Whether winding up proceedings is maintainable against appellant Company by the respondent—(No).

       Held : It is a matter of fact that the appellant- Company had duly deposited Rs. 2 lakhs in compliance of the direction given by another Division Bench of the High Court on 28.10.2002 when the interim stay of the advertisement was granted and the said sum of Rs. 2 lakhs is now in the custody of the Registrar, Original Side, of the High Court at Calcutta. In our opinion, the High Court has failed to appreciate that there is a bona fide dispute concerning US $ 11000. While the learned single Judge has held that the dispute concerning US $ 5000 is a bona fide dispute, he has erred in not holding that the dispute concerning US $ 11000 also is bona fide. The High Court, on the one hand, has held that the Company has admitted in no uncertain terms that US $ 11000 should be repatriated to the remitter on the other hand, the learned judge failed to appreciate that the petitioning creditor in the instant case was not the remitter and was not entitled to the said sum of US $ 11000. It is not in dispute and as admitted by the respondent-petitioning creditor that the remitter of the sum of US $ 11000 was one M/s Pameda Medizinische Systems and not the petitioning creditor and that because of the discrepancy in the name of the remitter, the Reserve Bank of India had initially withheld permission. In our view, the prima facie case has been made out by the appellant for not remitting the Indian amount equivalent of US $ 11000 as admittedly the petitioning creditor was not the remitter and cannot have any claim in respect of US $ 11000. In our opinion, the learned Judges of the High Court have erred in directing the Company to ­deposit a sum of Rs. 4,69,480/- with the Registrar, Original side of the High Court at Calcutta. The question of the company ­depositing the same with the Registrar, Original side, did not and could not arise since the petitioning creditor was not the remitter. A reading of the order of the High Court would show that the learned Judges themselves had doubt regarding lawful entitlement of the petitioning creditor and erred in directing the appellant-Company to deposit the amount and in default directing admission of the ­appeal. We have carefully perused the order. There is no clear cut finding by the learned Single Judge that a debt is prima facie due and payable by the Company to the petitioning creditor. In our opinion, the impugned orders have been passed in a purported ­exercise of jurisdiction not vested with the Court sitting in the Company Court for an application for winding up of the company, the Company Court had no jurisdiction to direct the company to deposit the amount payable to third party or to a party other than the petitioning creditor. (Paras 14 to 16)

       This Court in catena of decisions held that an order under Section 433(e) of the Companies Act is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under this section must be a determined or a definite sum of money payable immediately or at a future date and that the inability referred to in the expression ‘unable to pay its dues’ in Section 433(e) of the Companies Act should be taken in the commercial sense and that the machinery for winding up will not be allowed to be utilized merely as a means for realising debts due from a company. (Para 18)

       In view of the judgment now passed, the appellant will be entitled for refund of the sum of Rs. 2 lakhs deposited by them in compliance of the direction given by the High Court when the matter was pending before it. The High Court is directed to refund the same to the appellant on production of a certified copy of this judgment. (Para 25)