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Judgment
Sangeet Lodha, J—This Company Petition under Section 433 read with Sections 434 and 439 of Companies Act, 1956 (for short "the Act") has been filed by the petitioner Company, seeking winding up of the respondent Company-Hindustan Zinc Limited (for short "HZL"), on the ground of its inability to pay the debts.
The facts relevant are that the petitioner Company, was awarded various contracts by the respondent-HZL for supply of grinding media balls. It is averred that the petitioner Company has executed successfully the various purchase orders issued by the respondent-HZL for supply of grinding media balls during the year 2006 to 2012. The present company petition relates to the purchase orders for supply of; (i) 125mm Hyper grinding media balls (ii) 20/90mm Hi-Chrome steel grinding media balls, the details whereof as set out in the company petition, reads as under:
According to the petitioner Company, the goods supplied as per purchases orders, were duly inspected by the agent of the respondent-HZL and after being fully satisfied about the quality, quantity and other conditions of the consignments, the Goods Receipts Number (for short "GRN") were generated by the respondent-HZL, which are placed on record collectively marked as Annexure 3. It is averred that on 29.6.13, the respondent-HZL raised concern about mixing up of different size of grinding media balls in 20 mm, in two bags, approximately 2 MT. The petitioner Company clarified that these two bags were intended to be dispatched to some other buyer but by mistake the same were dispatched to respondent-HZL. The petitioner Company offered to replace the bags. According to the petitioner Company, the respondent-HZL without any reason and just cause and without extending an opportunity of hearing, put the petitioner''s payment to hold. Later, without issuing any show cause notice, the contract awarded was terminated and the petitioner Company was black listed. That apart, the bank guarantee furnished by the petitioner Company for performance of the contract was also forfeited. On the petitioner Company invoking the arbitration clause, the dispute stands referred to arbitration and the petitioner Company has already submitted its statement of claim before the Arbitral Tribunal, which is being contested by the respondent-HZL by filing a counter thereto.
Precisely, the case of the petitioner Company in the present company petition is that the respondent-HZL having received the goods and agreed to make payment towards the goods purchased worth Rs. 34,71,005/-, was liable to make payment thereof. It is claimed that the respondent-HZL is also liable to pay the interest on outstanding dues @ 24% quantified at Rs. 40,95,786/-. According to the petitioner Company, there are two parts of recovery sought for by the petitioner Company, the part-I is an acknowledged debt and other claims like non payment of goods as per purchase order, losses, bank guarantee invocation, costs etc. are the claims in respect whereof the company has already invoked legal remedies. In other words, according to the petitioner Company, it is entitled to maintain the company petition seeking winding up of the respondent-HZL in terms of Section 433 (e) of the Act inasmuch as, it has failed/neglected to pay the outstanding dues towards the petitioner Company.
Learned counsel for the petitioner Company reiterating the stand taken in the company petition, contended that the goods supplied pursuant to purchase orders in question were duly inspected by the agent of the respondent-HZL and it is only after the satisfaction about the quality, quantity and other conditions of the consignment that GRN were generated and therefore, the value of the goods already supplied as aforesaid, must be treated as acknowledged debt and the respondent-HZL could not have withheld the payment thereof. Learned counsel would submit that notwithstanding the arbitration proceedings pending before the Arbitral Tribunal, the respondent-HZL was under an obligation to discharge the liability of acknowledged debt. Learned counsel would submit that the respondent-HZL having failed to pay the sum due despite a demand being raised by the petitioner Company by way of legal notice duly served by registered post, by virtue of provisions of Section 434, it will be deemed that the respondent-HZL is unable to pay debts and therefore, deserves to be wound up. Learned counsel submitted that the defence sought to be taken by the respondent-HZL vide reply dated 19.5.14 (Annex.14) in response to the notice issued by the petitioner Company raising the demand for payment of outstanding dues is only a moonshine defence, which is absolutely false, vague, baseless and no defence in the eyes of law.
I have considered the submissions of the learned counsel appearing for the petitioner Company and also perused the material on record.
Indisputably, the jurisdiction of the Company Court under Section 433 of the Act is discretionary and nobody can seek an order for winding up of a company as a matter of right. It is true that by virtue of provisions of Section 433(e) read with Section 434 (a) of the Act, if a creditor to whom the company is indebted in sum exceeding one lakh rupees, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, under his hand requiring the company to pay the sum so due and company has for three weeks thereafter, neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, would raise presumption regarding inability of the company to pay the debt. But then, such a presumption is a rebuttable presumption which may be rebutted on the basis of existing material. That apart, in order to raise presumption of inability of a company to pay its debt, it is not sufficient to show that the company has failed to discharge the liability despite service of statutory notice. The creditor seeking winding up is under an obligation to place on record all necessary particulars regarding the financial status of the company, indicating that the winding up is inevitable. Further, it must also be established that the company has omitted to pay the debts without reasonable cause.
It is also well settled that winding up petition is not alternative form of resolving the debt dispute and the remedy provided for, cannot be permitted to be used for enforcement of the payment of debt, which is disputed by company bona fide. In other words, where the winding up of a company is sought on the ground that the company is unable to pay its debts and there exists substantial and bona fide dispute as to liability of the company to pay the debt as alleged, the petition preferred seeking winding up under Section 433(e), may be rejected at the threshold.
Adverting to the facts of the present case, precisely, the case set out by the petitioner Company in the petition is that though the petitioner Company has invoked arbitration clause in the contract and has submitted its claim before the Arbitral Tribunal for a sum of Rs. 1,81,28,071/-, the respondent-HZL is liable to pay a sum of Rs. 34,71,005/-, towards the value of the goods supplied pursuant to the purchase orders, which were duly inspected by the agent of the respondent-HZL and only after the satisfaction about the quality, quantity and other conditions of the consignment, GRN were generated. According to the petitioner Company, the value of the goods supplied as aforesaid, must be treated to be an acknowledged/admitted debt.
A perusal of the Statement of Claim submitted by the petitioner Company before the Arbitral Tribunal placed on record as Annexure-10, reveals that the claim pending adjudication before the Arbitral Tribunal, includes the claim for price of the goods supplied vide purchase orders in question. In this regard, the ''CLAIM-I'' as set out in the Statement of Claim submitted before the Arbitral Tribunal is self explanatory, which may be reproduced hereunder:
"CLAIM-I: Claim towards outstanding invoiced payment:
It is respectfully submitted, that the Claimant duly supplied the goods to respondent as per PO No. HZL/HO/HS/4100058174 DATE 03/07/2012 & Vide PO No. HZL/HO/GM/4100059274 DATE 23/10/2012.
Outstanding payment for the goods 25.025 MT against Po No. HZL/HO/HS/4100058174 DATE 03/07/2012 & 32.800 MT against PO No. HZL/HO/GM/4100059274 DATE 23.10.2012 were first duly inspected by the agent of the respondent and thereafter the delivery with quality was duly received and acknowledged at the site of the respondent. The respondent also acknowledged the quality and quantity as per Terms. The goods have never been returned back, and all the rights to the claimant has accrued as per terms to claim the amount of the goods supplied.
It is respectfully submitted that, Claimant is a SSI Company, raw material is procured at credit and financed from Bank, several workers work on the raw material, using the resources of the claimant company, resources get depreciated and need to be replaced and their hard labour, time, energy and resources are consumed, they get paid several benefits and salaries, several families are dependent on the work of those workers and the entire cost of production is consumed well in advance, even without taking or receiving a single penny from the buyer, over and above the said goods are dispatched through transportation, duly packed and sealed, which also got paid by the claimant company. So much months of intensive work to produce the final output was transferred to respondent and in such a case, if the said legitimate dues are not paid, they can bring situations of debt traps for the claimant company and its workers.
The Claimant Total Basic Amount Outstanding towards this head, as explained above is Rs. 34,71,005/-.
The said amount became due as per details below:
Thus Total amount recoverable under this head is as under: Rs. 3,881,995.00 till date of statement of claims i.e. 20.03.2014. Further interest levied @ 18% pa from the date of statement of claim to date of realization of said amount."
It is pertinent to note that the Claim set out by the petitioner Company in the Statement of Claim as aforesaid, is being contested by the respondent-HZL by filing a counter thereto, taking the stand that the goods supplied were sub standard and not consistent with the prescribed quality norms and chemical compositions. The respondent-HZL has taken the stand that it is holding unused stock of 118.23 metric balls covered under purchase orders in question and has prayed for appointment/nomination of independent Technical Expert and/or TPI and/or Commissioner under Section 17 of Arbitration & Conciliation Act and/or the Manual of ADR with such directions as to videography and/or photography and/or for such technical expert information as may be deemed just and fit and necessary in the facts and circumstances of the case under adjudication. The respondent-HZL has submitted the Counter Claim/set off amounting to Rs. 5,76,10,690/-. For the parity of the reasons, the respondent-HZL has denied the liability vide reply dated 19.5.14 sent in response to the statutory demand notice dated 20.4.14 sent by the petitioner Company.
In this view of the matter, this court is of considered opinion that there exists a bona fide dispute between the petitioner Company and respondent-HZL, which is pending adjudication before the Arbitral Tribunal and thus, the debt as claimed by the petitioner Company cannot be said to be an acknowledged/admitted debt so as to make out a case for winding up in terms of provisions of Section 433 (e) of the Act.
In the result, the petition fails, it is hereby dismissed in limine.