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1998 Supreme(Ker) 186
Judges : K.A.MOHAMED SHAFI
Sree Lakshmi Silks - Appellant
Versus
Ramanika Silks P.Ltd. - Respondent
Case No : C.P.No. 20 of 1996
Decided On : 05/21/1998
Advocates Appeared :
K.P. Dandapani, Mallika & Anil Narendran For Petitioner E.R. Venkiteswaran For Respondent
A winding up petition can proceed even if a civil suit for the same amount is pending, provided there are sufficient grounds for winding up. Additionally, a dispute must be bona fide to disentitle a petitioner from seeking winding up, and a company must prove its solvency and ability to meet its liabilities to avoid winding up.
Headnote:
The petitioner filed a winding up petition against the respondent-company for non-payment of dues. The respondent disputed the claim, alleging that the goods supplied were damaged and that there was a bona fide dispute. The court considered the dispute and the pendency of a civil suit for the same amount. The court found that the respondent's contentions were not bona fide and that the petitioner was entitled to seek winding up. The court also found that the respondent failed to prove its solvency and ability to meet its liabilities, leading to the decision to wind up the company.
Fact of the Case:
The petitioner supplied sarees to the respondent, who failed to pay the outstanding amount. The respondent disputed the claim, alleging damaged goods and a bona fide dispute. The petitioner filed a winding up petition, which the respondent opposed.
Finding of the Court:
The court found that the respondent's dispute was not bona fide and that the petitioner was entitled to seek winding up. The court also found that the respondent failed to prove its solvency and ability to meet its liabilities.
Issues: The court considered whether the winding up petition was maintainable given the pendency of a civil suit for the same amount and whether the respondent's dispute was bona fide. The court also examined the respondent's solvency and ability to meet its liabilities.
Ratio Decidendi: The court held that a winding up petition can proceed even if a civil suit for the same amount is pending, provided there are sufficient grounds for winding up. The court also emphasized that a dispute must be bona fide to disentitle a petitioner from seeking winding up. Additionally, the court established that a company must prove its solvency and ability to meet its liabilities to avoid winding up.
Final Decision: The court overruled the respondent's objections and ordered the winding up of the respondent-company under S.433(e) of the Companies Act.
K.A. Mohamed Shafi, J.
This petition under S.433 (e) of the Companies Act is filed by the petitioner for winding up of the respondent-company.
2. The respondent is a Private Ltd. Company incorporated on 4th May, 1993 under the provisions of the Companies Act engaged in the business of manufacturing, designing, printing, processing, purchasing, exporting, importing, selling and dealing in Silk Sarees and other silk materials. The petitioner is a dealer in sarees particularly silk sarees in Coimbatore. The respondent used to place orders with the petitioner for supply of sarees in the course of the business and the petitioner jeed to supply sarees as per the orders.
3. According to the petitioner, they supplied sarees worth Rs. 45,51,830/- under invoice Nos. 5087 to 5097 dated 1.2.1994 and invoice Nos. 5360 to 5369 dated 25.5.1994. Deducting a sum of Rs. 23,20,945/- being the value of the goods returned on various dates, a sum of Rs. 20,05,150/- was due to the petitioner from the respondent in that transaction. Subsequently, the respondent paid a sum of Rs. 9,50,0007* on various dates towards part payment of the total outstandings. An amount of Rs.. 10,55,150/- is due and payable by the respondent to the petitioner for the goods supplied. The respondent is also liable to pay interest at 18% per annum as per the trade usage and custom since it is a commercial transaction. Therefore, the balance amount inclusive of interest due from the respondent to the petitioner as on 11.12.1995 in the above transaction is Rs. 15,76,040/60. The respondent has not paid the amount in spite of demands and the registered notice caused to be sent on behalf of the petitioner. In that registered notice it was clearly stated that in case the respondent fails to pay the amount within 21 days the petitioner will initiate winding up proceedings as provided under S.433 of the Companies Act.
4. The respondent has caused to send a reply denying the claim made by the. petitioner and disputing the liability. The respondent had admitted their liability in the letter dated 7.2.1995 sent by them to the petitioner and promised to pay the amount. Several suits are pending against the respondent filed by the financiers, dealers and suppliers of the respondent. The petitioner has filed O.S. No. 1621/95 for the recovery of Rs. 15,76,040.60 with interest thereon against the respondent before the Sub Court, Coimbatore. The petitioner understands that the respondent is trying to remove the goods from the present business premises and to start fresh business under different names at various places. The respondent has become insolvent and neglected to pay its debts. Therefore, in order to preserve the assets and to protect its creditors it is necessary to wind up the respondent-Company.
5. The respondent filed a counter affidavit denying the allegations made by the petitioner and contending as follows. The respondent does not owe any debt to the petitioner as alleged by the petitioner. The petition is filed with malafide intention to pressurize the respondent and to extract maximum amount possible on a disputed claim based on substantial grounds. In almost all the consignments sent by the petitioner during the last three years there used to be damaged items which the respondent had returned on all occasions. It is true that sarees worth Rs. 45,51,830/- under invoice Nos. 5087 to 5097 dated 1.2.1994 and invoice Nos. 5360 to 5369 dated 25.5.1994 were supplied by the petitioner, but major portion of the goods sent by the petitioner were damaged and defective. The petitioner has taken back part of those damaged goods and requested the respondent to dispose of the balance at any reasonable price. But the respondent could»not dispose of those damaged goods in spite of their best efforts and offering to sexton more than 50% reduction. Though the respondent requested the petitioner to remove the damaged sarees worth Rs. 6,15,000/-, the petitioner did not take back the same.
