A winding up petition is not a legitimate means of seeking to enforce payment of a disputed debt and should be dismissed if the debt is bona fide disputed and the defence is substantial.

Vikramajit Sen, J.

1. The present Company Appeal is directed against the impugned Judgment and Order of the learned Company Judge dated 20.11.2006 admitting the winding up petition of Deutshe Homeopathic Union DHU Arzneimittel GmbH & Co. Kg, the Respondent in the present Appeal. Publication of citations and appointment of provisional liquidator had been deferred for a period of two months so as to enable the said Respondent company to pay € 9,87,044.97 along with interest at the rate of five per cent per annum from the date of filing of the Petition till payment. The amount of said € 9,87,044.97 has been reached by the learned Company Judge by setting-off € 4,41,438.67, the counterclaim that was held to be genuine, from € 14,28,003.44 which is the total outstanding amount due on the German Homeopathic Distributors Private Limited (hereinafter referred as Appellants) on account of eight different orders for purchase of homeopathic medicines, which were undisputedly duly supplied.

2. The Appellant is an Indian Company which was the sole selling agent for Dr. Willmar Schwabe Gmbh & Co. KG in India of which the Respondent is an affiliate. The last Contract dated 24.6.1998 was agreed between the Appellant and Dr. Willmar Schwabe Gmbh & Co. KG to be current till 31.03.2003, automatically extendable from year to year. Either party had the right to terminate it by six months advance notice of initial or any extended period of the Agreement. The said Agreement stood prolonged for one year, that is, upto 31.03.2004. It was from May 19, 2003 to October 6,2003 that the Appellant placed eight orders for purchase of Homoeopathic medicines in respect of which the Respondent has raised Invoices bearing numbers 10560, 11970, 09530, 17110, 17140, 17210, 19650 and 19860.

3. The Appellant has not disputed that supplies were made against the Invoices raised and amount due and payable under the Invoices raised by the Respondent herein. However, they have sought to raise counterclaims against the Respondents, which are pending adjudication in Civil Cases filed by them. It is contended that these are substantial, bona fide and are in excess of the claims of the Respondent.

.4. The Appellant has raised its counterclaims against the Respondent on several grounds. Firstly, the Appellant claims an amount of € 2,19,243.45 against the commission payable under the Agreement dated 24.06.1998. The learned Company Judge has, in respect to this claim held that prima facie evidence in support has been filed by the Appellant. Secondly, an amount of € 9,32,500.00 has been claimed against the loss/damages and the expenses incurred in removing the adverse impression of quality of CMS Eye Drops and obtaining approval including arranging, airfreight, demurrage, storage charges, custom duty, testing charges etc. for the new CMS Eye Drops from the Authorities. The learned Company Judge has, on a prima facie view, held the claim to be inflated and excessive as no documents have been filed, justifying or supporting the quantum claimed. He has, however, treated an amount of € 1,82,500 as a defence to the debt claimed.

.5. Thirdly, an amount of € 2,60,037 has been claimed against alleged defective packaging and cost of additional labeling incurred by the Appellant. It is the case of the Appellant that the packaging of the medicines supplied by the Respondent neither conformed to the requirements of INCOTEMS nor the mandatory requirements of the Standards of Weights & Measures (Packaged Commodities) Rules and Foreign Trade (Development & Regulation) Act. To conform with the requirements of the law, the Appellant was required to affix additional labels on the bottles and the outer packaging, for which the Appellant had to incur heavy costs. The learned Company Judge, while adjudicating on this claim, had perforce to refer to the correspondence made between the parties and not the Agreement because the learned Judge held the same to be inconsequential for this claim