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2007 Supreme(Bom) 753
2008(1) Bom.C.R. 879
Britto N.A., J.
Osnar Paints and Contractors Pvt. Ltd.... Petitioner.
Versus
Western India Shipyard Limited ... Respondent.
A.A. Agni & M. A. Prabhudesai, for petitioner.
V.A. Lawande, for respondent.
Headnote:Companies Act, 1956 - Sections 433(e) and 434-Petitioner issued notice to company for dues-But in petition restricted shorter to demand petitioner was contractor-Company/Respondent claimed clearance of due alter deduction of damages-Winding-up petition filed as company is unable to clear its due-Petition dismissed as filed only to exercise pressure to pay said bills.
Companies Act, 1956 - Section 433(e) - Company petition - For winding up of respondent-company - Allegation that respondent indebted to petitioner in sum of Rs. 41,48,696.25 - Petitioner, a sub- contractor entrusted job of external painting of Rig by virtue at two work orders - Petitioner’s work completed prior to stipulated date to extent at only 12,158 sq. metres as against allotted work at 26,145 sq. metres - Balance work done by another company - Respondent deducted Rs. 10,32,023/- for damages - Respondent’s claim for deduction against bill presented by petitioner bona fide - Claim in a winding up petition not to be a running claim - Claim crystallized - Counter claims raised by respondent-company cannot be denied - Dispute raised by respondent involves disputed questions of fact - Can be gone into only in a full fledged enquiry before Civil Court - Not scope of winding up petition - Petition dismissed with cost. - Reference has been made to the above correspondence or record only to indicate that there has been serious disputes between the petitioner and respondent as well as the owners of Pride Pennsylvania as regards delay and unsatisfactory completion of work for which the respondent has deducted the said sum of Rs. 10,58,696/-. Prima facie, they would be justified in doing so as demonstrate by them by the correspondence produced. In any event, it must be stated that the petitioner’s bill as completion certificate was not accepted by the respondent at any time and even prior to the first notice dated 7.6.2005 the respondent by his letter dated 4.12.2004 had clearly indicated to the petitioner that the respondent did not owe them any money than what was paid to them and as already stated the notice dated 7.6.2005 came to be sent only thereafter and presumably to pressurize the respondent to pay the petitioner the amount claimed, part of which has not been pressed for. Whether the petitioner would be entitled to the said two sums of money could be decided only if detailed investigations are made which cannot be done in this summary proceedings. The respondent’s claim for deductions of the said two sums against the bill presented by the petitioner appears to be prima facie bona fide. In I.T.C. Ltd. v. Fomento Resorts and Hotels Ltd., 1991 Company Cases 459 (Vol. 70) High Court has held that it is well settled that a winding up petition should not be allowed to be resorted as a means to recover debts from a company and the claim in a winding up petition should not be a running claim but one which is crystallized. It is only after a creditor establishes that a debt is clear, valid in law, unimpeachable and undisputable that the creditor is entitled to a winding up order ex debito justitiae but if the debt, disputed and the dispute is bona fide and genuine, no winding up order can be made. Neglect to pay is not equivalent to omission to pay, for it requires that such omission is without reasonable cause or valid excuse. As far as the facts of that case go, the Court also observed that it was apparent from the company’s letter dated 4.11.1988, that in the course of such discussions, the company had disputed several claims made by the petitioner and had raised several counter claims and thus it could not be denied that the dispute was raised by the company much before statutory notice was served on them and hence, in the background of the prolonged discussions for the settlement of accounts, the defence raised was genuine and bona fide. The same position is reflected in this case as well since the bill presented by the petitioner was never accepted by the respondent-company and soon after the first notice a sum of Rs. 10,32,023/- was deducted towards consumables, medical expenses, store rental changes, etc. and subsequently another sum of Rs. 10,58,696/- was deducted towards damages which prima facie appears to be inconsonance with clause 30 r/w clause 24 of the agreement.
The petition has been filed only to exercise pressure to pay the said bill. The dispute raised by the respondent appears to be bona fide and it also involves disputed questions of fact which can be gone into only in a full-fledged inquiry before the Civil Court which is not the scope of summary proceedings like a winding up petition.
BRITTO N.A., J.: - Heard the learned Counsel on behalf of both the parties. This petition was filed for the winding up of the respondent company under section 433(e) of 4 the Companies Act, 1956 on the allegation it that the respondent was indebted to the petitioner in the sum of Rs. 41,48,696.25 as of on 15-7-2005 with interest at the rate of 18% .d per year but the claim is now restricted only to Rs. 20,68,015.70 which is payable to the petitioner as per bill dated 20-4-2004. In other words, the petitioner has abandoned its claim in the sum of Rs. 61,181.25 and Rs. 19,500/- of bills dated 15-4-2004 and 11-5-2004, respectively.
2. There is no dispute that the petitioner, a sub-contractor, was entrusted the job of external painting which included the erection of scaffolding, chipping of rust scales prior to blasting followed by fresh water washing etc. of Rig known as Pride Pennsylvania by virtue of two work orders dated 612-2003 and an agreement dated 1-1-2004.
3. By virtue of the first work order the petitioner was assigned an area of 11,055 sq. meters at an estimated cost of Rs. 41,45,625/- and by the second work order an area of 15090 sq. meters estimated at Rs. 45,27,0001-. The date of completion of work was stipulated as 28-2-2004 but the petitioner's work was completed on 19-4-2004 and the petitioner raised the bill dated 204-2004. Admittedly, the petitioner completed the work to the extent of only 12,158 sq. meters as against allotted work of 26, 145 sq. meters, and the balance work was got done by the respondent through M/s. Palongi and Company and regarding which the petitioner has raised no dispute and this prima facie shows that all was not well with the work being carried out by the petitioner pursuant to the said two work orders and the agreement.
4. The petitioner called upon the respondent by notice dated 7-6-2005 to pay the said amount of Rs. 41,48,696.95 and thereafter it appears that there were meetings between the representatives of both the petitioner and the respondent and the respondent deducted an amount of Rs. 10,32,023/- being due to the respondent largely towards the supply of consumables supplied to the petitioner which according to the respondent had to be paid by the petitioner. That made the petitioner to send a second notice dated 15-72005 again claiming the said sum of Rs.41,48,696.95. The receipt of the first notice is admitted by the respondent and the receipt of the second notice has not been specifically denied by the respondent and therefore can be taken as having been admitted, to have received the same.
5. As far as the difference of the amount claimed in the notice and the amount now restricted in the petition, Mr. Lawande, the learned Counsel on behalf of the respondent, has fairly conceded, relying upon (Ofu Lynx Ltd. Vs. Simon Carves India Ltd.), A.I.R. 1970 Calcutta 418 that claiming an amount in the notice which is more than claimed in the petition would not render the notice invalid. The learned Counsel on behalf of the respondent has also relied on an unreported decision of this Court dated 5-9-2006 in Company Petition No. 1-N of 2002 in the case of (Mr. N.N. Valechha Vs. M/s. I.G. Petrochemicals Ltd)., This judgment would be relevant as it affirms out three propositions. The first is that unless the statutory notice served on a company under section 432 of the Companies Act is in conformity with the mandatory requirements of section 434(1)(a) of the Act, the presumption under the section as to the Company's inability to pay its debts cannot be raised. Secondly, apart from the legal fiction of section 434(1)(a) it is open to a petitioner to make and prove an alternative claim that the company is unable to pay its debts. The third is that the procedure prescribed under section 433 of the Companies Act is of summary nature and detailed investigations which are required to be made, the appropriate forum to do the same is the Civil Court. A winding up petition is not a legitima
