M/s. Rapid Radio Solutions Private Limited vs M/s. Ecole Solutions Private Limited

Dr. Vineet Kothari, J.—The petitioner-company-M/s. Rapid Radio Solutions Private Limited, has filed the present winding up petition under Sections 433(e) and 439 of the Companies Act, 1956 against the respondent-M/s. Ecole Solutions Private Limited, claiming that the respondent-company has failed to pay its admitted liability to the extent of Rs. 3,30,957/- and despite a notice under Section 434 of the Companies Act was served upon them through the Advocate of the petitioner-company vide Annexure-F on 25-7-2013, since the respondent-company has failed to pay the said admitted liability, therefore, the respondent-company deserves to be wound up and the present winding up petition deserves to be admitted in accordance with the provisions of the Act and Rules.

Counsel for the respondent-Mrs. Lakshmi Iyengar, however, submitted that the liability of the petitioner-company as claimed in the said statement of objections is seriously disputed and denied by the respondent-company and it has already sent a reply to the said notice vide Annexure-G, dated 20-8-2013 addressed to the Advocate of the petitioner-company, in which, on the contrary, the respondent-company demanded a sum of Rs. 3,65,779/- from the petitioner-company, since several of the services were not delivered by the petitioner''s company in terms of the agreement between the parties and, the respondent-company had to incur additional expenses to fulfil their obligation to their consumer namely, Dr. Ambedkar Law University, Chennai.

Paras 1, 7, 8 and last para of the reply of respondent-company Annexure-G, dated 20-8-2013 are quoted below for ready reference:

"1. Client informs me that the legal notice sent by your client is bereft of any merit and has been done only to avoid making payment to my client to a tune of Rs. 3,15,779/- (Rupees Three Lakhs Fifteen Thousand Seven Hundred and Seventy-nine only) as several of the services were not delivered by your client as a result of which my client had to incur additional expenses to fulfil their obligations to the end customer.

Whey my client requested your client to complete the implementation of the products and fulfil their obligations as per the scope of work, your client informed our client vide email dated 21st March, 2011 informing my client that they were not interested in working with my client and they would explore the option of approaching the end-customer TNDALU directly, which violated the letter and spirit of the NDA signed and the authorisation letter issued to TNDALU.

It is pertinent to mention that TNDALU finally proceeded with my client and chose to ignore your client''s attempts at going solo. TNDALU clearly saw the integrity and capacity of my client in delivering what was promised, aspects in which your client did not measure up.

Wherefore, I have been instructed to issue this reply to you, which I hereby do, calling upon you to instruct your client to return the amount of Rs. 3,65,779/- to my client, within 15 days from the date of receipt of this notice with interest at 18% p.a. and withdraw his false claims and demands as against my client, failing which client shall be constrained to initiate appropriate legal proceedings against your client, at his risk, cost and consequence."

In view of the aforesaid, it appears that, prima facie, there is a bona fide dispute between these two parties about the claim made by the petitioner''s Counsel for the alleged service rendered to the respondent-company under the service contract. This Court is of the considered opinion that if the liability of the creditor is bona fide disputed by the respondent-company, which is sought to be wound up under the provisions of Section 433(e) read with Section 439 of the Act, the winding up petition is a ill suited remedy and it cannot substitute a regular trial or suit. Questions of facts about the execution of the contract and implementation thereof, do arise in such cases and winding up petition cannot be converted into a trial of such claims and rival claims between the parties. Only the civil suit between the parties can be said to be a proper remedy, where the relevant evidence can be led by the parties and the facts alleged can be proved by them. If the parties have any alternative disputed resolution forum agreed between them like arbitration or otherwise, they can definitely resolve such dispute also between them through such alternative dispute redressal mechanism.

In view of the aforesaid, this winding up petition is not found to be maintainable and the same is liable to be dismissed and is dismissed accordingly. No costs.