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2002 Supreme(HP) 71
High Court Of Himachal Pradesh
R.L.KHURANA
MARIGOLD PAPERS LTD. - Appellant
Versus
RENUKA PACKAGES PVT.LTD. - Respondent
Company Petition No. 8 of 2000
Decided On : 03/22/2002
Mr. Sanjiv Sharma, Advocate with Mr. B.N. Misra, Advocate, for the Petitioner; Mr. Kuldip Singh, Sr. Advocate with Mr. Bitnal Gupta, Advocate, for the Respondents.
A winding up petition is not a legitimate means to enforce payment of a debt that is bona fide disputed by the company.
Headnote:
Companies Act - Winding Up Petition - Sections 433, 434, 439 - The court discussed the provisions of Sections 433, 434, and 439 of the Companies Act, 1956. It highlighted the requirement for a winding up petition, the time limitation for claims, and the acknowledgment of debt under the Limitation Act, 1963. The court emphasized that a winding up petition is not a legitimate means to enforce payment of a debt that is bona fide disputed by the company and that disputed questions should be appropriately decided in a suit.
Fact of the Case:
The petitioner sought winding up of the respondent-company for non-payment of a debt. The respondent resisted the petition on grounds of competency, time limitation, and privity of contract.
Finding of the Court:
The court found that the petitioner's claim was barred by time and that the defences raised by the respondent were likely to succeed in a civil court. Therefore, it dismissed the petition.
Issues: Competency of the petitioner, time limitation, and privity of contract were the key issues.
Ratio Decidendi: The court emphasized that a winding up petition is not a legitimate means to enforce payment of a disputed debt and that disputed questions should be decided in a suit.
Final Decision: The petition for winding up was dismissed by the court.
R.L. Khurana, J.—The present petition under Sections 433 and 434 read with Section 439 of the Companies Act, 1956 (for short: the Act) has been preferred by the petitioner Messrs. Marigold Papers Limited, for the winding up of the respondent-company Messrs. Renuka Packages (Pvt.) Limited, having its registered office at Trilokpur Road, Kala Amb, in District Sirmaur.
2. Briefly, the averments made in the petition are these. The respondent-company had approached the petitioner-company through Messrs. Ratna Vanijya Paper and Board Merchants, for the supply of 10 MT Kraft Paper vide confirmed order dated 1.4.1997, at the agreed rate of Rs. 14.05 paise per Kg. In pursuance of such order the petitioner company supplied Kraft Paper worth Rs. 1,34,793 to the respondent company vide invoice dated 10.4.1997. As per the terms of the invoice vide which the supply of Kraft Paper was made, payment for the supply was to be made by the respondent-company within seven days of the receipt of the consignment failing which interest at the rate of 24% per annum was to be charged. The total amount of interest claimed till the date of the present petition has been assigned at Rs. 91,600.
3. Further case of the petitioner-company is that since the respondent company failed to supply "C" forms in respect of the transaction, the petitioner company had to bear additional burden of sales tax amounting to Rs. 7,777. On this amount also interest at the rate of 24% per annum amounting to Rs. 5,688 has been claimed. The petitioner-company has, therefore, averred that total amount recoverable from the respondent company comes to Rs. 2,40,038 as on 31.1.2000. The respondent-company failed to pay the outstanding amount inspite of repeated demands. Ultimately, the statutory notice dated 31.1.2000 under Section 434 of the Act was served by the petitioner company calling upon the respondent-company to pay the outstanding amount of Rs. 2,40,038 within three weeks of the receipt of notice. The respondent company did not pay the amount. Hence, the present petition.
4. The respondent-company resisted the petition on the following grounds :— (a) the petition on behalf of the petitioner-company has not been made by a duly competent and authorised person; (b) the claim of the petitioner-company is barred by time; (c) there is no privity of contract between the parties.
5. It was also pleaded that the respondent-company has a sound financial position and can discharge all its financial obligations.
6. It is well settled that a winding up petition is not a legitimate means to enforce payment of a debt which is bona fide disputed by the company A petition filed ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court. [See: Amalgamated Commercial Traders (P) Ltd. v. A.C.K. Krishnaswami and another, (1965) 35 Com. Cases 456 (SC)]. In T. Srinivasa v. Flemming (India) Apotheke (P) Ltd., (1990) 68 Comp. Cases 506, it has been held by the High Court of Karnataka that it is not for the court hearing a petition for winding up under Section 433 of the Act to assess evidence and refuse a decree or to draw up a decree in favour of the petitioner and then to proceed to wind up the company In summary procedure which the company court must follow, if the court is satisfied, prima facie, that the defence raised in the circumstances of the case is bona fide and is likely to succeed in a civil court, that would constitute sufficient reasons for the court to reject the petition, relegating the parties to the civil court.
7. The dispute between the parties in the present case revolves around disputed questions, which cannot possibly be decided in the present summary proceedings. Such questions can be appropriately decided in a properly framed suit.
8. The first question raised by the respondent-company is as to the competency of Shri Mahesh Kumar, Director of the petitio
