JUDGMENT A.K. Banerji, J.
1. By means of the above noted company petition filed under Sections 433 and 434 of the Companies Act, 1956 (the Act, in short) the petitioner M/s. N. N. Consultants Private Limited (the petitioner, in short) have sought the winding up of the company M/s. Khatema Fibres Limited (formerly known as Khatema Paper and Board Mills Limited) (the respondent-company, in short) on the ground that the respondent-company is indebted to the petitioner and has not paid its dues despite service of statutory notice ; hence the respondent-company is unable to pay its debt and should be ordered to be wound up.
2. Briefly stated, the case of the petitioner as set out in the petition is that on the request of the respondent-company the petitioner gave a short-term loan of Rs. 4,75,000 in the month of April, 1989, which was payable on February 28, 1990, along with interest. The respondent did not pay the said amount or the interest due, hence the petitioner was constrained to serve a statutory notice on September 22, 1995, which was duly served on the respondent-company. Another notice was sent on January 4, 1996, with a copy of the same to the Delhi office of the respondent and to the managing director claiming the principal amount of Rs. 4,75,000 along with interest at the rate of 17 per cent. per annum, the total being Rs. 14,16,176. Despite the said notices being duly served upon the respondent no amount was paid, neither any reply was given, hence the present petition.
3. On notice being issued to the respondent-company to show cause why this petition may not be admitted and advertised, the respondent-company put in appeapance and has filed a counter affidavit controverting the allegations made in the petition. The respondent has not only challenged the maintainability of the present petition but has also denied that there was any debt which was payable by the respondent-company to the petitioner. It has been stated that a sum of Rs. 4.50 lakhs was paid by a cheque dated March 29, 1996, in favour of the petitioner in full and final settlement as per the settlement entered into between the parties and the said amount has been credited to the account of the petitioner-company. A certificate from the bank has also been annexed in support of the said statement. It has been further alleged that the present petition has been engineered by the chartered accountants of the company ; namely, Mr. Rajesh Kumar and Ramesh Kumar and even the address of the petitioner is also the address of the residence of Rajesh Kumar, the chartered accountant of the company. The said chartered accountant was a relation of one Babu Lal Rastogi who was a shareholder in the respondent-company and was removed as a director of the respondent-company. The said Babu Lal Rastogi had preferred a petition under Sections 397 and 398 of the Act before the Company Law Board. The said proceedings were dismissed after the respondent-company purchased the shareholding of the said minority shareholder. Apart from the same, in the counter affidavit allegations of forgery and fabrication of the records of the petitioner-company have also been made. Inter alia, on the said allegations a prayer has been made for the company petition being dismissed at the admission stage itself. A rejoinder affidavit has been filed to the said counter affidavit in which the allegations of the petition have been reiterated and those made in the counter affidavit have been denied.
4. I have heard Shri R.K. Agarwal, learned counsel for the petitioner and Shri Jagjit Singh, learned counsel appearing for the respondent-company on the question whether this petition should be admitted and advertised. I have also perused the affidavits filed by the parties.
5. Learned counsel for the petitioner has strongly contended that the respondent was not denying the fact that a term loan of Rs. 4,75,000 was given to the respondent-company in the month of April, 1989. However, the defence taken is that a sum of Rs. 4.50 lakhs was paid to the petitioner in full and final settlement and the same was accepted by one A.P. Rastogi on behalf of the petitioner. It was contended that the said defence was palpably false as the said A.P. Rastogi and his wife Smt. Manju Rastogi had resigned from the directorships of the petitioner-company and consequently they had no locus standi to accept the amount or give any valid discharge for the same to the respondent. Further the respondent-company in collusion with A.P. Rastogi and the bank manager of the Bank of Baroda had got a certificate issued from the bank whereas the petitioner-company did not have any account in the Bank of Baroda, Khatema branch. It was also contended that the respondent-company had not given any reply, hence the defence set up for the first time before this court in the counter-affidavit was mala fide. A prima facie case, according to learned counsel, was made out for admitting and advertising the petition under Rule 24 of the Companies (Court) Rules, 1959.
6. On the other hand, learned counsel for the respondent has placed various paragraphs of the counter affidavit and the annexures filed therewith and contended that the filing of the present petition is mala fide. It was urged that the alleged debt of Rs. 4.75 lakhs stands repaid in full and final settlement vide the cheque dated March 29, 1996, issued by the respondent-company in the name of the petitioner which has duly credited to the account of the petitioner-company. The said fact stands corroborated by the certificate issued by the concerned bank copy of which has been annexed as annexure 1 to the counter affidavit. It has been contended further that the present petition was engineered by the firm of chartered accountants of which Mr. Rajesh Kumar and Ramesh Kumar were the partners. The said chartered accountants were the statutory auditors of both the petitioner as well as the respondent-company. Taking advantage of the same the said chartered accountants in collusion with the ex-director of the respondent-company, namely, B.L. Rastogi, have manipulated the papers and the accounts and have connived with the petitioner to file the present petition. It has been further urged that such disputed questions as raised in the present petition cannot be decided in summary proceedings and the petitioner, if so advised, may approach the civil court for getting the dispute adjudicated.
7. I have carefully considered the respective submissions made by learned counsel for the parties and I have also perused the affidavits filed by the parties. It is well settled that under Section 433(e) of the Act, the debt must be undisputed, sure and ascertained. It is not for the company court to inquire into the existence of the debt or its quality or quantity. The debt must be one which does not require to be investigated by the court. It must be free from doubt or controversy. It is only after the creditor establishes that a debt owed by the company is clearly valid in law, unimpeachable and undisputed that the creditor will be entitled to a winding up order ex debito justitiae. It is equally well settled that the machinery for winding up will not be allowed to be used as a means for realising a debt from a company which is being disputed. A petition presented ostensibly for a winding up order but really to exercise pressure to recover the money pertaining to some commercial establishment can be stigmatized as an abuse of the process of the court (see : Amalgamated Commercial Traders (P) Limited v. A.C.K. Krishnaswami [1965] 35 Comp Cas 456 (SC).
8. That apart, for invoking Section 433 of the Act it must be proved by the petitioner that the debt exists and the company is unable to pay its debt. A debt under this section must be a determined or a definite sum of money payable immediately or on a future date and not a sum of money which is being disputed. Therefore, primarily in a company petition the court has to see only to the prima facie case as put up by the parties and if it finds that intricate issues pertaining to the liability have to be examined by evidence and documents then it would not exercise this discretion of ordering" the winding up of the company. In view of the aforesaid settled principles the defence set up by the respondent-company in its reply/ counter affidavit to the petition may be broadly examined.
9. In the counter affidavit filed by the respondent-company it has been stated firstly ; that the alleged debt of Rs. 4.75 lakhs stands repaid vide cheque dated March 29, 1996, issued by the respondent-company in favour of the petitioner for Rs. 4.50 lakhs in full and final settlement of the said debt. In support of the said allegation the respondent has annexed a certificate issued by the Bank of Baroda, Khatema branch which, inter alia, states that the payment of the said amount has been debited to the account of the respondent-company and credited to the account of the petitioner-company. A letter of one of the alleged directors of the petitioner namely, Shri A.P. Rastogi acknowledging the said fact has been annexed to the counter affidavit as annexure 2. Similarly the respondent has also annexed as annexure 3 to the counter affidavit an alleged settlement between the petitioner and the respondent-company accepting a sum of Rs. 4.50 lakhs as one time settlement. On the said basis it has been urged that there was, in fact, no debt payable by the respondent-company and the petition deserves to be dismissed on the said grounds. In the rejoinder affidavit the petitioner has denied the said allegation and alleged that no such payment was made and, in fact, the petitioner did not have any account in the Bank of Baroda at Khatema and the only bank account of the petitioner was with the Oriental Bank of Commerce at Delhi. It has been further alleged that initially the promoter directors of the petitioner-company were Shri Rakesh Chand Rastogi and Smt. Manju Rastogi. Subsequently Shri A.P. Rastogi was also inducted as a director. However, all the three directors resigned with effect from February 1, 1987. Consequently the alleged acknowledgment issued by Shri A.P. Rastogi and the alleged settlement also signed by Shri A.P. Rastogi on behalf of the petitioner-company were fraudulent and waste papers. Further, as the petitioner did not have any account in the Bank of Baroda at Khatema, the alleged transfer of the sum of Rs. 4.50 lakhs in the account of the petitioner was fraudulent and of no consequence, and the debt was not extinguished. In support of the said allegations the petitioner has along with the rejoinder affidavit filed photocopy of Form No. 32 submitted to, the Registrar of Companies by Rajesh Kumar on behalf of the petitioner showing that Rakesh Chand Rastogi, Smt. Manju Rastogi and Anand Prakash Rastogi had resigned with effect from February 1, 1987 and Puneet Rastogi, Rakesh Kumar and K.A. Pai were appointed additional directors with effect from the same date i.e., February 1, 1987. On the other hand, in the counter affidavit the respondent has averred that the said three directors namely, Shri Rakesh Chand Rastogi, Smt. Manju Rastogi and Shri A.P. Rastogi were still the directors of the petitioner-company and, in fact, Shri Rajesh Kumar and Ramesh Kumar, partners of the firm of chartered accountants, who were the statutory auditors of the petitioner as well as respondent-company, taking advantage of their position and having in possession of the letter heads and blank signed papers of the respondent-company, have engineered a conspiracy by which Rajesh Kumar has falsely represented himself as director of the petitioner and has manipulated the resignation of the three aforesaid directors. It was pointed out that from the memorandum and articles of association of the petitioner-company, which have been annexed to the counter affidavit, it would be evident that the promoter directors of the petitioner were Shri Rakesh Chand Rastogi and Smt. Manju Rastogi and Rajesh Kumar had signed the said memorandum as a witness. It was further pointed out that the address of the registered office of the petitioner was at the residence of Shri Rajesh Kumar at C-45, Naraina Vihar, New Delhi, and the said Rajesh Kumar who was a partner of the firm of chartered accountants and was the statutory auditor of the petitioner as well as the respondent-company, has played a fraud upon the respondent-company and has forged and manipulated the papers. It was further stated that Shri Rajesh Kumar was the cousin of one Babu Lal Rastogi, who was a shareholder and ex-director of the respondent-company and who had been removed on account of manipulation of accounts with the help of the statutory auditors. Babu Lal Rastogi had filed a suit against the respondent-company at Delhi and had obtained an ex parte injunction during the summer vacations. However, on contest the said injunction was vacated and subsequently the suit was withdrawn and thereafter Company Petition No. 8 of 1992 was filed before the Company Law Board, Principal Bench, at Delhi. In the said proceedings Rajesh Kumar filed an application for intervention and also filed an affidavit supporting Babu Lal Rastogi and making all sorts of allegations against the respondent-company. The said Rajesh Kumar had also filed a complaint before the Registrar of Companies stating that the audit report submitted by the respondent-company for the period ending June 30, 1988 was neither signed by the said Rajesh Kumar as the statutory auditor nor the returns submitted bear the seal of the firm of the said chartered accountants. Along with the counter affidavit the respondent has filed the papers for the purpose of indicating the involvement of Rajesh Kumar, partner of the firm of chartered accountants. The said documents mainly are the affidavit filed before the Company Law Board, the complaint filed before the Registrar of Companies and certain other documents. The respondent has also invited the attention of the court to the letter dated March 23, 1990 (annexure 11 to the counter affidavit) written by Ramesh Chand Rastogi, managing director of the respondent-company to Rajesh Kumar wherein it had been alleged that he had made use of the blank letter heads as well as blank signed papers of the said managing director for the purpose of filing forged papers before the Registrar of Companies and also opened a current account of the petitioner in the Oriental Bank of Commerce, New Delhi, whereas the current account of the petitioner-company was in the Bank of Baroda, Parliament Street, New Delhi. Though in the rejoinder affidavit filed by Shri Vikas Rai as director of the petitioner-company these allegations have been denied but the fact that Rakesh Chand Rastogi and his wife Smt. Manju Rastogi were the promoter directors of the petitioner and the registered office of the petitioner was at C-45, Naraina Vihar, New Delhi, which was also the residential address of Rajesh Kumar, statutory auditor of the respondent-company as well as the petitioner has not been denied and, in fact, admitted. The allegations made in the counter affidavit that Rajesh Kumar had filed an affidavit supporting Babu Lal Rastogi or his relationship with Babu Lal Rastogi and the complaint made to the Registrar of Companies against the respondent-company have not been denied. Though Form No. 32 has been filed by the petitioner along with the rejoinder affidavit to show that Rakesh Chand Rastogi and Smt. Manju Rastogi and A.P. Rastogi had resigned with effect from February 1, 1987, but the resignation letters or the resolution passed by the shareholders and the board of directors of the petitioner-company have not been filed in support of the allegation. The statutory records of the company are supposed to be kept in the registered office of the company which admittedly was the residence of Rajesh Kumar, the chartered accountant. Therefore, it can be presumed that the records must be in the control of the petitioner. From the perusal of the petition, counter affidavit and rejoinder affidavit it would be evident that allegations and counter allegations have been made by both the parties alleging fraud, forgery and manipulation of documents. It is evident that the directors of both the companies were relations but they have now fallen out and serious disputes have emerged resulting in filing of a suit and a company petition. The allegations made by the parties, as already indicated above, are highly disputed questions which require investigation and cannot be decided by means of affidavits. For instance, whether the amount of Rs. 4.50 lakhs was genuinely paid and transferred to the account of the petitioner ; whether the petitioner had any bank account at Khatema and if so, who had opened that account and was operating the same on behalf of the petitioner ; whether the petitioner-company had initially a bank account in the Bank of Baroda, Parliament Street, New Delhi, and the account in the Oriental Bank of Commerce had been opened subsequently and whether the certificate given by the branch manager of Bank of Baroda at Khatema was genuine and valid or was given in collusion with the managing director of the respondent-company are such questions which cannot be decided by means of affidavits. Similarly the questions whether Rakesh Chand Rastogi, his wife Smt. Manju Rastogi and A.P. Rastogi continue to be the directors of the petitioner and had not resigned ; whether Form No. 32 submitted by Shri Rajesh Kumar, chartered accountant, was a fraudulent and forged document; whether new directors including Vikas Rai, who has filed this petition as a director of the petitioner-company were really inducted as directors and whether the said persons were shareholders of the petitioner-company are all such questions which cannot be decided by means of affidavits. Along with the petition the petitioner has filed as annexure 1 a letter dated May 10, 1989, alleged to have been signed by Rakesh Chand Rastogi, managing director of the respondent-company acknowledging the receipt of the amount of Rs. 4.75 lakhs as loan with an undertaking to repay the same on February 28, 1990. The respondent was alleging that the said paper was a forged paper and was not issued by the managing director. This again is a disputed question of fact which cannot be decided by means of affidavits. Thirdly, again the question whether Rajesh Kumar had misused his position and had forged papers on blank letter heads and blank signed papers of the managing director is such a question which cannot be decided by means of affidavits especially when allegation has been made that the letter acknowledging the debt does not bear any reference number or despatch number and the letter was addressed in personal capacity and not in official capacity. Fourthly, the allegation whether the person who is alleged to have signed the statutory notice was authorised and competent to sign the notice on behalf of the petitioner-company is again a disputed question in view of the allegations made in the counter affidavit.
10. In view of what has been stated above, this court is of the view that as highly disputed questions have been raised which require thorough investigation, the present winding up proceedings, which are in the nature of summary proceedings, cannot be decided only on the basis of affidavits and consequently, this winding up petition should fail solely on the said ground.
11. That apart, as already stated above, under Section 433(e) the petitioner has to establish that the respondent-company is unable to pay its debt and consequently it should be wound up. There is no allegation in the petition that the respondent has become insolvent or its substratum is lost. All that has been stated is that the respondent-company has neglected to pay its debt despite the service of statutory notice and hence, the company should be wound up. In the counter affidavit it has been stated that the respondent-company is a profitable concern and is flourishing and the winding up petition and the proceedings instituted by Babu Lal Rastogi with the help of Rajesh Kumar, chartered accountant, is on account of jealousy. However, so far as the submission with regards to neglect to pay the debt is concerned, it is equally well settled that the word "neglected" is not necessarily equivalent to the word "omitted". Mere omission in itself does not amount to negligence. Therefore, where a debt is bona fide disputed by a debtor then in that case he has not neglected to pay and it is not within the scope of Section 433(e) of the Act. As already seen above, in the facts of the present case, on the basis of affidavit it cannot be decided whether there is an alleged debt and whether the company is unable to pay its debt. The court is, therefore, of the view that the disputed questions raised in the present petition can only be decided on the basis of oral and documentary evidence in a regular trial before the competent court.
12. As a result of the aforesaid discussion, the court is of the view that the present winding up petition ought not to be admitted and advertised. However, it is made clear that if any of the parties decide that the dispute be adjudicated by the competent civil court or before any appropriate forum, any observation made in this order by this court shall not affect the merits of the suit or the proceedings initiated and the same shall be tried irrespective of any observation made on merits in this order.
13. With these observations, this petition is dismissed but in the facts and circumstances of the case, the parties shall bear their own costs of this petition.