Bona fide disputes on debts prevent winding-up orders despite acknowledgments of liabilities in affidavits.

JUDGEMENT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEAL No. 65 of 2011 In COMPANY PETITION No. 25 of 2011 With O.J.APPEAL No. 67 of 2011 In COMPANY PETITION No. 25 of 2011 With CIVIL APPLICATION No. 541 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE A.J. DESAI =============================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO =============================================== ROSEBYS INTERIORS INDIA LTD - Appellant(s) Versus SAATCHI & SAATCHI PVT LTD & 2 - Opponent(s) =============================================== Appearance : MR RS SANJANWALA ASSISTED BY MR MAULIK G NANAVATI for Appellant(s) : 1, MR SHALIN MEHTA ASSISTED BY MS VIDHI J BHATT for Opponent(s) : 1, MR JS YADAV for Opponent(s) : 2, MR DIPEN DESAI for Opponent(s) : 3, =============================================== CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE A.J. DESAI Date : 18/04/2012 2/5 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI)

1. We have heard learned counsel Mr.R.S.Sanjanwala assisted by learned advocate Mr.Maulik Nanavati for the appellant, learned counsel Mr.Shalin Mehta assisted by learned advocate Ms.Vidhi J.Bhatt for the respondent No.1, learned counsel Mr.J.S.Yadav for the respondent No.2 and learned counsel Mr.Dipen Desai for the respondent No.3.

2. The O.J.Appeals have been filed challenging the orders dated 5.9.2011 and 15.11.2011 passed in Company Petition No.25 of 2011 by which the learned Single Judge has admitted the company petition and directed for publication of notice.

The learned Single Judge has stayed the order of one month and that time has been expired.

3. Learned counsel for the appellant has urged that under a mistake, though, the company admitted it's liability in the affidavit filed by Mr.Alok Banerjee, Chief Executive Officer, in para 3 and 4 that an amount of Rs.38.99 lacs is due to the respondent No.1 company. However, this mistake was corrected in the subsequent affidavit dated 4.4.2012 which has been filed in O.J.Appeal No.65 of 2011 subsequent to orders passed by learned Single Judge. On page 44 the letter of the Chief Executive Officer who also acknowledged that there is an outstanding of about Rs.90.00 lacs. The statement of account at page 48 also demonstrate this position. In the second affidavit filed by Mr.Shashi Kant Gupta, who is an authorised representative of the appellant has filed affidavit to the effect that no amount is due.

3/5 JUDGMENT

4. Prima facie, we are of the opinion that, once the Chief Executive Officer has filed affidavit that an amount is due to be paid to the respondent No.1 company, the effect of second affidavit filed by Mr.Shashi Kant Gupta may be considered at the time of hearing of Company Petition. However, at this stage, in view of the decision of the Apex Court in the case of Vijay Industries Vs. Natl Technologies Limited reported in (2009) 3 SCC 527, in para 33 and 34 it has been observed as under:

“33. Yet again in M/s. Madhusudan Gordhandas & Co. v. Madhu Woollen Industries Pvt. Ltd. [(1971) 3 SCC 632], this Court upon considering Amalgamated Commercial Traders (P.) Ltd. (supra) and various other English cases opined as under:

"20. Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial o