Winding-up petitions under the Companies Act cannot be used to enforce payment of disputed debts, reflecting legal safeguards against abuse of court process in insolvency claims.

ORDER :

MOUSHUMI BHATTACHARYA, J.

The Company Petition is filed under sections 433(e), 434(1)(a) and 439(1)(b) of The Companies Act, 1956, (the 1956 Act) for winding-up of the respondent Company on the grounds provided under the aforesaid sections, including by a creditor to who the company is indebted for a sum exceeding Rs.1,00,000/-. The petitioner has also filed applications for a direction on the Official Liquidator to take charge of the assets of the Company.

2. The Company Petition was filed on 28.07.2016. Sri N.Seshidhar intended to represent the petitioner Company on 14.10.2024 but has not appeared on the returnable date. The Company is also not represented today when the order is pronounced in the Court.

3. Learned Senior Counsel appearing for the respondent has taken the Court through the relevant facts and has made his submissions in opposing the Company Petition.

4. The relevant facts brought to the notice of the Court are as follows.

(i) The respondent engaged the petitioner for advertising the services offered by the respondent at the Rajiv Gandhi International Airport, Hyderabad (RGIA) for a period of 3 months i.e., 05.05.2013 – 04.08.2013 through a work order dated 04.05.2013. The respondent paid an amount of Rs.5,35,320/- and sought for extension of advertising the services provided by the petitioner for a further period of 1 month from 05.08.2013 to 04.09.2013. The extension was made through a work order dated 03.08.2013.

(ii) After expiry of the extended period, the petitioner raised an invoice for Rs.5,00,000/-, which was provided in the work order dated 03.08.2013. The respondent however came to know that the petitioner had not advertised its services for the second agreement period i.e., from 05.08.2013 to 04.09.2013 and had instead mounted advertisements for a third party. The respondent accordingly did not pay the amount stated in the work order dated 03.08.2013 i.e., Rs.5,00,000/-.

5. Learned Senior Counsel appearing for the respondent further places Clause 3 of the work order dated 03.08.2013 which is one of the terms for payment and requires the petitioner to raise invoice/bill accompanied by display pictures. Counsel submits that the petitioner did not furnish any display pictures along with the invoice.

6. The petitioner’s case, as would appear from the records is that the respondent should be wound-up as the respondent failed to pay Rs.5,00,000/- raised by way of the invoice dated 03.08.2013 despite multiple reminders including a statutory notice dated 20.05.2016. The petitioner has accordingly filed the Company Petition for winding-up of the respondent Company under sections 433(e), 434(1)(a) and 439(1)(b) of the 1956 Act.

7. It is relevant to first deal with the facts before the law on the subject, is discussed.

8. The petitioner does not have any answer in the statements made and the documents furnished in the Company Petition as to the compliance of Clause 3 of the work order dated 03.08.2013 whereby the petitioner was to raise the invoice/bill together with display pictures of the advertisements mounted by the petitioner on behalf of the respondent, i.e., work done by the petitioner in respect of the work order dated 03.08.2013.

9. It is relevant that the Company Petition was filed in 2016 and the petitioner has not brought any display pictures of the work done by the petitioner in respect of the work order dated 03.08.2013 till date. The failure on the part of the petitioner to comply with Clause 3 of the work order dated 03.08.2013 amounts to a material breach and one that the p