Hindustan Ciba Geigy Limited vs Bharat Woodworks Private Limited

Manisana, J.—The Petitioner company filed the petition for winding up of the Respondent company on the ground that the Respondent company neglected to pay its debt and has failed to comply with the statutory notice as provided under the law. It is not disputed that the Petitioner company supplied the Respondent company with resin in June 1976. But the Respondent company has disputed the liability to pay the price, and it has also been argued that on the date of filing the petition for winding up order the alleged debt was barred by limitation and, therefore, the question of negligence to pay the debt does not arise.

The question which arises for consideration is whether the Respondent company neglected to pay the alleged debt. It is stated in the petition for winding up of the company that the Petitioner company raised its bill dated 23.6.76 and presented for payment within 90 days. The petition was filed on 26.11.79, that is, after three years of the supply and the presentation of the bill. The period of limitation for a suit for the price of goods delivered on credit, for which payment is to be made on presentation of bill is three years from the date of the accrual of the cause of action. Therefore, the debt was prima facie barred by limitation on the date of the presentation of the petition for winding up of the company.

It is well settled that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed. I found debt is bona fide disputed there cannot be "neglect to pay" within the meaning of Section 434(1)(a) of the Companies Act. If there is so neglect, the dooming provision does not come into play, and the ground of winding up, namely that the company is unable to pay its debt, will not be sustained.

The word ''neglect'' may mean to omit or fail to do some duty that can be done. It may also import an absence of care or attention in the doing or omission of a given act. On a reading of Section 434(1)(a) of the Companies Act, it appears that the word ''neglected'' used in Section 431(1)(a) is not necessarily equivalent to the word ''omitted''. Negligence in paying a debt on demand in the context, is omitting to pay without reasonable excuse. Limitation, as I understand it, bars the remedy. If the debt is barred, or prima facie barred, by limitation, then omission to pay the debt is not without reasonable excuse and, therefore the debtor has not neglected to pay the debt. In such a situation. I should hold that the debt is bona fide disputed by the Respondent company. For these reasons, the petition is to be dismissed in view of the conclusion above. I am dealing with the other contentions of the learned Counsel for the parties.

For the foregoing reasons, the petition is dismissed.