Back
2014 Supreme(Del) 573
High Court of Delhi
THE HONOURABLE MR. JUSTICE VIBHU BAKHRU
United Decoratives Pvt. Ltd.
Versus
Dolphin Footwear Pvt. Ltd.
CO.PET. No. 173 of 2013
Decided On : 21-02-2014
For the Petitioner:Mithilesh Kumar with Sanjeev Goyal, Advocates.
For the Respondent: Counsel (presence not given).
The main legal point established in the judgment is the assessment of the bonafide nature of a defense raised in the context of winding up proceedings under the Companies Act, 1956.
Headnote:
Section 433 (e) - Companies Act, 1956 - 434 (1)(a) - The court addressed the defense raised by the respondent under Section 433 (e) of the Companies Act, 1956 and the notice issued under Section 434 (1)(a) of the Act. The key legal provisions discussed were the terms and conditions of the contract, specifically clauses 6, 9, 11, and 17, which were used to assess the bonafide nature of the defense raised by the respondent.
Fact of the Case:
The petitioner filed a petition under Section 433 (e) of the Companies Act, 1956 alleging non-payment of dues by the respondent. The respondent contended that no amount was payable and raised a defense regarding defective goods supplied by the petitioner.
Finding of the Court:
The court found that the defense raised by the respondent was spurious and created for the purpose of resisting the petition. The court also directed the petitioner to publish the citation and renotified the case for a future date.
Issues: The main issue was whether the defense raised by the respondent was bonafide or a sham defense.
Ratio Decidendi: The court emphasized that winding up proceedings cannot be used to pressurize a party to make disputed payments. It also highlighted the importance of testing the genuineness of a defense and considered the timing of complaints and responses in assessing the bonafide nature of the defense.
Final Decision: The court admitted the petition and directed the petitioner to publish the citation. However, it allowed a period for the respondent and petitioner to settle the dues before implementing the publication of citations.
Vibhu Bakhru, J. (Oral)
1. The petitioner has filed the present petition under Section 433 (e) of the Companies Act, 1956 (hereinafter referred to as the ‘Act’) alleging that the respondent has been unable to pay its admitted dues to the petitioner. The respondent contends that no amount is payable to the petitioner and on the contrary certain amounts are recoverable from the petitioner on account of defective goods supplied by the petitioner.
2. The only controversy that needs to be addressed in the present case is whether the defence raised by the respondent is bonafide or a sham defence.
3. Briefly stated, the facts are as under:-
3.1 The petitioner is in the business of manufacturing, trading and distribution of synthetic leather (Rexine). The said material is used by the respondent in manufacturing shoes. The petitioner has been supplying the said goods to the respondent since over two years and the business relations amongst the parties are stated to have been cordial. The only complaint that the petitioner had was regarding minor delays in payment of the invoices. However, there is no dispute that the payments, for the goods delivered in the past, were effected.
3.2 The petitioner supplied certain goods in the month of November and December, 2012. The goods were supplied on credit and the invoices were due and payable after a specified period. The details of the invoices and the respective dates on which the same were due for payment are as under:-
S.No. Invoice No. Date Amount (Rs.) Due Date
1 12873 09.11.2012 2,45,404.00 24.01.2013
2 13187 05.12.2012 3,93,921.00 20.02.2013
3 13156 20.12.2012 2,67,938.00 07.03.2013
Total 9,07,263.00
3.3 The aggregate amount payable by the respondent in respect of the said goods adds upto Rs.9,07,263/-. The last of the aforesaid invoices was required to be paid by the respondent on or before 07.03.2013.
3.4 The petitioner sent a reminder on 07.01.2013 to the respondent calling upon the respondent to ensure that the invoices are paid on or before the due dates. The letter dated 07.01.2013 was followed by a reminder dated 12.01.2013. The petitioner also unequivocally put the respondent to notice that if the said invoices were not paid in time the petitioner would be constrained to take legal action. In response to the said letter the respondent sent a letter dated 22.01.2013. It is relevant to note that the payments due to the petitioner were not disputed in the said letter. However, the respondent alluded that the goods supplied by the petitioner had certain defects which required to be addressed. The said letter was immediately responded to by the petitioner by a letter dated 30.01.2013 and the allegation that there were any defects which had been pointed out earlier was stoutly disputed. The petitioner also exercised its right to curtail the credit period and called upon the respondent to immediately discharge the entire payment against the pending invoices. No further communication was issued by the respondent in this respect thereafter.
3.5 Given the fact that the payments due had not been effected by the respondent, the petitioner was constrained to issue a notice dated 16.02.2013, under Section 434 (1)(a) of the Act, calling upon the respondent to make the payment. This notice also elicited no response from the respondent.
3.6 In view of the fact that the payments against the invoices had not been made by the respondent despite the notice under Section 434 (1)(a) of the Act, the petitioner was constrained to file the present petition. The notice of this petition was served on the respondent on 01.05.2013.
4. It has been contended on behalf of the petitioner that the dispute raised by the respondent that there was any defect in the goods is ex-facie a sham defence since the payments due to the petitioner were not disputed at any stage prior to filing of the present petition. Although the respondent in its letter dated 22.01.2013 had alluded to certain defects, the same was refuted a
