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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S.SONAK, JITENDRA JAIN
Bassein Metals Pvt. Ltd. – Appellant
Versus
National Small Industries Corpn. Ltd. – Respondent
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 cheque
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.
A company cannot be wound up for non-payment of disputed debts; readiness to settle admitted liabilities negates grounds for winding up.
An adjudication decision under the Construction Industry Payment and Adjudication Act creates an indisputable debt for winding up purposes, regardless of any pending disputes or appeals.
A debt adjudicated under CIPAA becomes indisputable for winding-up proceedings, even amidst ongoing disputes, establishing the creditor's right to seek a winding-up order without further contest.
A winding up petition can be filed without a judgment debt if the respondent cannot substantiate a bona fide dispute regarding the debt owed.
A company is deemed unable to pay its debts if it cannot meet current liabilities as they fall due, and the burden of proof lies on the company to demonstrate solvency.
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