The admissibility of a winding up petition can be influenced by the presence of genuine and substantial counter claims, and the balance of debt and counter claims determines the outcome of the petition.

Sanjiv Khanna, J

1. Deutsche Homoopathie-Union DHU-Arzneimittel GmbH & Co. KG (hereinafter referred to as the petitioner, for short) has filed two Company Petition Nos. 191/2005 and 192/2005 under Sections 433(e), (f), Section 434 read with Section 439 of the Companies Act, 1956 (hereinafter referred to as the Act, for short ) for winding up of M/s R.K. Import Private Limited and German Homoeopathic Distributors Private Limited (hereinafter referred to as R.K. Imports and German respectively and collectively as the respondent companies).

2. It is the case of the petitioner that R.K. Imports and German were appointed as sole agents for sale and distribution of homeopathic medicines of Dr. Willmar Schwabe Arzneimittel GmbH and Co.KG. The said agreement was signed and executed in June, 1998 and expired by efflux of time on 31st March, 2003.

3. In CP No. 191/2005, it is stated that R.K. Imports had placed two orders on the petitioner for purchase of homeopathic medicines in the month of October, 2003 and the supplies were made but payment as agreed upon, of EUROs 34,804.78 has not been made by R.K. Imports.

4. In CP No. 192/2005, it has been alleged that during the period 19th May, 2003 onwards, German had placed as many as eight different supply orders for purchase of homeopathic medicines. These were duly supplied but payment of EUROs 1,428,483.64 has not been made. It is further stated that a credit note for EUROs 480.20 was issued because of over delivery of goods and after reducing this amount the total outstanding amount due payable by the German to the petitioner is EUROs 1428,003.44.

5. The petitioner has stated that procedure followed by the parties was that R.K. Imports and German would place orders for purchase of homeopathic medicines. On receipt of the order, the petitioner would send a letter of confirmation along with proforma invoice to the R. K. Imports or German as the case may be. The Homeopathic medicine were released and the shipping documents were forwarded to the respondent companies through the banks of the parties. These documents were leased, only after acceptance by R.K. Imports or German and on their agreeing to pay amount on the maturity date. The bank of the respondent companies used to then inform the bank of the petitioner that the documents have been accepted by R.K. Import or German. The respondent companies were liable to make payment 75 days after the date of the invoice.

6. The two respondent companies have filed identical response/reply. The placement of orders, the supplies, invoices raised and the amount due and payable under the invoices by the respondent companies have not been disputed. Respondent companies have, however, raised counter claims against the petitioner and its associate companies. It is further claimed that vide letter dated 5th July, 2002, in terms of Clause VIII of agreement dated 24th June, 1998 under a tacit understanding the said agreement was extended for a further period of one year i.e. up to 31st March, 2004. Some other contentions were also raised and these have been noticed and dealt with in this order.

.7. In support of the defense raised by the respondent companies, a number of judgments of Supreme Court and High Courts have been referred to in the written submissions. However, I feel I need not specifically refer to case law cited by both the parties, as the principles of law are well settled and have already been examined in depth and detail by the Supreme Court and this Court in similar cases. While dealing with the scope of Section 433(e) of the Act, Supreme Court in the case of Madhusudan Gordhandas & Co. v. Madhu Woollen Industries Private Limited AIR 1971 SCC 632 has observed as follows:

20. Two rules are well settled. First, if the debt is bona fide disputed and the defense is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company