Back
SUPREME COURT OF INDIA
R.F. NARIMAN, B.R. GAVAI, HRISHIKESH ROY, JJ.
Shital Fibers Ltd. - Appellant
Versus
Indian Acrylics Limited - Respondent
Civil Appeal No. 1105 of 2021 [Arising out of Special Leave Petition (Civil) No.2353 of 2017]
Decided On : 06-04-2021
Companies Act, 1956 – Section 433(e) and (f) – Winding-up of company – Payment of outstanding amount – If debt is bona fide disputed and defence is a substantial one, court will not wind up company – Where debt is undisputed, court will not act upon a defence that company has ability to pay debt but company chooses not to pay that particular debt – Principles on which court acts are first, that defence of company is in good faith and one of substance, secondly, defence is likely to succeed in point of law and thirdly company adduces prima facie proof of facts on which defence depends – As to whether defence of a Company is in good faith or as to whether it is of a substance and as to whether it is likely to succeed in point of law and as to whether company adduces prima facie proof of facts on which defence depends, would depend upon facts of each case – Both Company Judge as well as Division Bench upon appreciation of materials placed on record have found, that defence as sought to be raised by appellant with regard to quality of material supplied by respondent being defective was by way of an afterthought – It was concurrently found that defence of appellant was not bona fide one nor a substantial one – Division Bench has not issued a direction to grant interest as claimed by respondent – On the contrary, it has declined to enter into the question, as to whether appellant was also liable to pay interest since Company Judge had not referred to said issue – Division Bench, while dismissing appeal, has done so without prejudice to respondent’s contention regarding interest which may be claimed either by way of an application for clarification before the Judge or by way of an appeal or by any other proceeding – Appeal dismissed. (Paras 9, 10, 19, 20, 25 and 29)
Facts of the case:
Present appeal challenges the judgment and order passed by the Division Bench of the Punjab & Haryana High Court in Company Appeal No. 58 of 2015 dated 29.4.2016, arising out of the order passed by Company Judge of the said Court, in Company Petition No.106 of 2009 dated 28.9.2015.
Findings of Court:
Division Bench has not issued a direction to grant the interest as claimed by respondent. On the contrary, it has declined to enter into the question, as to whether the appellant was also liable to pay the interest since the learned company judge had not referred to the said issue.
Result : Appeal dismissed.
JUDGMENT :
B.R. GAVAI, J.
1. Leave granted.
2. The present appeal challenges the judgment and order passed by the Division Bench of the Punjab & Haryana High Court in Company Appeal No. 58 of 2015 dated 29.4.2016, arising out of the order passed by the learned Company Judge of the said Court, in Company Petition No.106 of 2009 dated 28.9.2015.
3. The facts, in brief, giving rise to the present appeal are as under:
The respondent – M/s Indian Acrylics Limited is a manufacturer of acrylic yarn having its manufacturing unit in village Harkrishanpura, District Sangrur. There was a transaction between the appellant – M/s Shital Fibers Ltd. and the respondent M/s Indian Acrylics Limited under which the respondent was to supply acrylic yarn to the appellant on credit basis. As per the said arrangement, the supply of raw material commenced from 20.4.2007. The respondent supplied material worth Rs.81,98,014.45. There were certain issues raised by the appellant with regard to the quality of the material supplied by the respondent. As such, a sum of Rs. 6,22,073/- was credited by the respondent in the account of the appellant on account of material returned and also a credit note of Rs.5,00,000/- was given on account of some defect in quality. As per the respondent, appellant had made a payment of Rs.61,83,218/-. However, there was an outstanding balance of Rs.8,92,723/- as on 28.7.2008. Since despite repeated requests, balance amount was not paid, the respondent issued a statutory notice to the appellant. The same was duly responded to. As the payment was not made despite notice being duly served on the appellant, the respondent filed the aforesaid Company Petition seeking winding up of the present appellant for its inability to pay admitted debts. The learned Company Judge vide order dated 28.9.2015 admitted the Company Petition. However, while doing so, the learned Company Judge observed, that since the appellant was an ongoing concern, an opportunity should be granted to it to settle the accounts with the respondent by 31.12.2015. Only in case of failure of the settlement, the citation was directed to be published.
Being aggrieved thereby, the appellant preferred an appeal before the Division Bench of the High Court. By an order dated 24.12.2015, the Division Bench of the High Court, while issuing notice, stayed the publication of the admission notice, subject to the appellant paying the amount in question by 31.12.2015. Accordingly, the amount was so paid by the appellant.
Though the Division Bench of the High Court came to a conclusion, that there was no bona fide dispute and as such, there was no question of directing the respondent to repay the amount, since the appellant had satisfied the respondent’s claim to the extent mentioned in the order impugned in the appeal, it dismissed the appeal.
However, insofar as the claim of the respondent with regard to interest at the rate of 24% per annum is concerned, the Division Bench of the High Court found it not necessary to enter into the question, as to whether the appellant was liable to pay interest to the respondent since the learned Company Judge had not gone into that issue. However, the Division Bench clarified, that the dismissal of the appeal was without prejudice to the respondent’s contention regarding interest which may be claimed either by way of an application for clarification before the learned Judge or by way of an appeal or by any other proceeding.
Being aggrieved thereby, the present appeal.
4. Shri Karan Nehra, learned counsel appearing on behalf of the appellant submits, that the defence of the appellant was a bona fide one. He submitted, that it was a specific case of the appellant, that on account of the defective material supplied by the respondent, the appellant had suffered huge losses and as such, it was the appellant who was entitled to receive the damages from the
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
