Winding-up of a company can proceed based on admitted debts; mere disputes of amount do not suffice to prevent orders under Section 433(e) of the Companies Act.

JUDGMENT :

(JITENDRA JAIN, J.)

1. This appeal, filed by the appellant (original respondent), challenges the order dated 11 October 2007 passed by the learned Single Judge of this Court in Company Petition No.921 of 2001 whereby the appellant (original respondent) was ordered to be wound up since the appellant (original respondent) was unable to pay the debt due to the respondent (original petitioner).

Brief facts :-

2. In November 1992, the appellant (original respondent) entered into an agreement with the respondent (original petitioner) for availing the benefits of the “raw material assistance scheme” in the form of finance, which was to be lent by the respondent (original petitioner). An undertaking and personal guarantee of the Managing Director of the appellant (original respondent) was also executed for repayment of money to the respondent (original petitioner). A Letter of Credit was also drawn in favour of the respondent (original petitioner) by the appellant (original respondent).

3. In August 1998, two cheques were issued by the appellant (original respondent) in favour of the respondents (original petitioner) for a sum of Rs . 90,00,000/- and Rs . 1,77,80,849/-. These cheques were not honoured and therefore, proceedings under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) were initiated against the appellant (original respondent) by the respondent (original petitioner).

4. In September 1998, the appellant’s (original respondent) bankers raised certain objections with regard to the Letter of Credit worth Rs.44,74,000/-. Though the appellant (original respondent) cleared discrepancies, the amount was not paid to the respondent (original petitioner).

5. In December 1998, the respondent (original petitioner) wrote a letter to the appellant (original respondent) requesting that they resolve the issue of non-payment of dues.

6. In January 1999, the appellant’s (original respondent) Managing Director executed a demand promissory note in favour of the respondent (original petitioner) confirming the balance as on 31 March 1999 at Rs . 2,83,70,700/-.

7. On 3 July 2001, the respondent (original petitioner) issued a winding-up notice calling upon the appellant (original respondent) to make payment within 21 days. However, the appellant (original respondent) in its reply to the winding-up notice vaguely denied liability and demanded an inspection of certain documents.

8. The respondent (original petitioner) filed a winding-up petition under Section 433 of the COMPANIES ACT , 1956, against the appellant (original respondent)-Company.

9. The appellant (original respondent) and the respondent (original petitioner) filed their reply and rejoinder in March/April 2002 and finally on 11 October 2007, the impugned order came to be passed in Company Petition No.921 of 2001 for winding up of the appellant (original respondent)-Company.

10. This Court stayed the impugned order on 17 September 2008, and the appeal was admitted. Against the order granting stay, the respondent (original petitioner) challenged the order by filing SLP to the Supreme Court. On 5 October 2009, the Hon’ble Supreme Court did not interfere with the interim order but requested the High Court to expeditiously hear and dispose of the present appeal within one year.

11. On 11 November 2009, the Coordinate Bench of this Court expedited the hearing and fixed the appeal for 19 November 2009. However, thereafter, the matter was lis