1. Heard Mr. Damani, learned Advocate for the petitioner.
2. The petitioner has taken out present petition under Sections 433 and 434 of the Companies Act, 1956 and has prayed for order of winding up against the respondent company.
3. It is claimed that the petitioner company had, at the request of the respondent company, supplied certain products viz. SS316 Reactors, SS304 Receiver, SS316/SS304 Storage Tank and other allied products. It is claimed that the respondent company has, after receiving the goods, made only part payment of the invoices and a sum of about Rs.11.60 lakhs towards principal and about Rs.7.10 lakhs towards interest have not been paid. The petitioner has claimed that it had executed the contract to the satisfaction of the respondent company and yet the amounts have not been paid.
4. It appears that on such ground the petitioner company issued statutory demand/notice dated 16.12.2011, as required and contemplated under Section 433 read with Section 434 of the Act and demanded the payment and also put the respondent company to notice that if the amounts are not paid, the company may, if so advised, take steps of presenting petition under Section 433 and 434 of the Act.
5. It appears that immediately on receipt of the notice from the petitioner company, the respondent company forwarded its reply dated 5th January 2012.
6. It is pertinent to note that the respondent company in its said reply dated 5th January 2012 has categorically mentioned that as against the petitioner’s invoices for Rs.5,81,26,576/-, the respondent company has already paid 98% of the said invoices amount i.e. it has already paid a sum of Rs.5,69,56,752/-.
7. In this context, it is necessary and pertinent to note that the petitioner company has not disputed or denied the said payment of Rs. 5,69,56,752/-.
8. Thus, it is a fact that the respondent company has already made substantial payment (out of the total invoice amount of Rs.5,81,26,576/-) payment of the aforesaid amount of Rs. 5,69,56,752/- to the petitioner against its invoices.
9. Now, in this context, it appears, from the reply of the respondent company that there appears to be some serious, genuine and bonafide commercial dispute between the respondent company and the petitioner company, inasmuch as according to the respondent company, the items supplied by the petitioner and/or the services supplied by the petitioner in connection with those goods, have turned out to be defective and the respondent company seems to have made complaints to that effect.
10. However, the petitioner company seems to have not attended the said complaints.
11. The aforesaid aspect emerges from the reply forwarded by the respondent company in response to the statutory notice.
12. In aforesaid view of the matter it is appropriate and necessary to take into account some of the factual aspects mentioned and narrated by the respondent company in its reply to the notice issued by the petitioner company. The respondent company has, in para 3 of the reply, mentioned that:
“Thereafter also for supply of various items to run factory were given to you and same were also required to be delivered and after complete erection satisfactory trial was required to be given. With great regret my client would like to inform you that after supplying ordered goods you have always failed and neglected to install it properly and you have fail to give satisfactory trial after installation.(emphasis supplied).”
13. After having mentioned aforesaid aspect in its reply, the respondent company also proceeded to mention that:
“Moreover till the date the goods supplied by you is not properly working. Time again you were requested to solve the genuine complaints about your supplied goods but you have not given any heed to any of the complaint of my client. The material ordered to supply was for the purpose of functioning plant smoothly and for better production, however the material supplied by you was not proper to meet with the requirement of my client and all the hopes for better production have not been fulfilled by you and till the date my client is suffering recurring loss of production.” (emphasis supplied)”
14. Besides mentioning the aforesaid details and grievances the respondent company has also mentioned the details about the payments made by it and then i.e. after mentioning the details regarding the payments made by it the respondent company has further mentioned in the reply to the notice that:
“Time again you were informed by client to solve all the complaints regarding defective material and defective erection, and to collect your balance payment, however receiving major portion i.e.98% of the billed amount you have failed and neglected to do so.”
15. Now, at this stage, the most important aspects which emerge from the respondent’s reply to the statutory notice is that the respondent company has in its aforesaid reply dated 05.01.2012, after mentioning above quoted details, also expressly and categorically stated that:
“List of complaints is attached herewith for your perusal and to recollect your memory about complaint made to you by my client. Lastly you visited the office of my client on 05.03.2011 and on that day also you were informed to solve the problem of vessels. Instead of giving positive approach you behaved in abusive manner with my client and insulted my client and therefore my client was constrained to file criminal complaint vide G.R.No.3062/2011 on 06.03.2011 with Odhav Police Station.”
16. It is, thus, pertinent that the said reply expressly reflects that the list of complaints made by the respondent company were annexed to reply, however the petitioner company has not placed on record the copies of the said complaints but has only placed a tabular statement along with the respondent’s reply (and the copies of the complaints are not placed on record).
17. It, therefore, prima facie appears that the complete annexure i.e. the reply to the notice in its complete format is not available on record of present petition.
18. Another important aspect which also appears from the record that there were and there are some genuine and bonafide commercial disputes between the petitioner and the respondent. The fact that the respondent company has made reference of complaints in its reply, consequently translates into the position that there are genuine and bonafide dispute between the parties on commercial side regarding the claim of the petitioner company and the alleged debt is disputed by the respondent company on the ground and for the reasons mentioned in the reply to the notice. The said reference of complaints in the reply also brings out that the complaints/dispute were raised contemporaneously and prima facie do not appear to be raised as afterthought only after the service of statutory notice.
19. Thus, in view of the legal position as regards the ‘disputed debt’, which is clarified by the Apex Court in several judgments including the recent judgment in case of IBA Health (India) Private Limited v. Info-Drive Systems SDN.BHD. [(2010) 10 Supreme Court Cases 553] wherein the Hon'ble Apex Court has observed that:
“20............A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor’s debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt.”
23.......if the debt is bona fide disputed, there cannot be “neglect to pay” within the meaning of Section 433(1) (a) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts is not substantiated and non-payment of the amount of such a bona fide disputed debt cannot be termed as “neglect to pay” so as to incur the liability under Section 433(e) read with Section 434(1)(a) of the Companies Act, 1956.
31. Where the company has a bona fide dispute, the petitioner cannot be regarded as a creditor of the company for the purposes of winding up. “Bona fide dispute” implies the existence of a substantial ground for the dispute raised. Where the Company Court is satisfied that a debt upon which a petition is founded is a hotly contested debt and also doubtful, the Company Court should not entertain such a petition. The Company Court is expected to go into the causes of refusal by the company to pay before coming to that conclusion. The Company Court is expected to ascertain that the company’s refusal is supported by a reasonable cause or a bona fide dispute in which the dispute can only be adjudicated by a trial in a civil court.”
20. The present petition involves and raises disputed questions of facts and it also emerges that there are genuine and bonafide contemporaneous disputes between the parties and that therefore the dispute would warrant regular trial.
21. The conjoint effect of the above mentioned details also give out that the petitioner has filed present petition for enforcing the disputed debt and for recovery of amount.
22. Under the circumstances, the petition does not deserve to be entertained and hence it is disposed of.
23. It is, however, clarified that the aforesaid observations have been made only for the purpose of deciding the issue regarding maintainability of present petition at this stage under Section 433 and 434 of the Act and they are only prima facie observations made for the said purpose and that therefore the same will not be taken into account or they will not stand in way of the petitioner if appropriate suit remedy or other remedy is taken out by the petitioner, as may be advised to it, in respect of the subject matter of present petition.
jani (K.M.THAKER, J.)