V.S. AGGARWAL, J.
1. The present petition has been filed M/s Compact Packers Pvt. Limited, hereinafter described as "the petitioner company" under Section 433 read with Section 434 of the Companies Act, 1956 (for short 'the Act') seeking winding up of M/s Arksan Limited, hereinafter described as "the respondent Company. "
2. It has been asserted that the respondent-company carries on the business of manufacturing of all kinds of sanitary wares, fittings and fixtures and also carries on the business of importers and exporters and deals in all kinds of industrial, personal and household goods. The petitioner-company has been supplying the corrugated boxes to the respondent-Company. The respondent-company could not maintain the schedule of payment. Payment was to be made within 30 days of the despatch of the goods failing which interest at the rate of 24% per annum was to be charged. The material as mentioned in the invoices and received by the respondent-company and utilised in its business pursuits. The petitioner-company has given details of the supplies made to the respondent-company on different dates which is as under:"
Bill No. Date. Amount (in Rs.)
754 25. 03. 1997 1,29,476. 00 816 13. 06. 1997 1,09,591. 00 852 22. 07. 1997 59,845. 00, Total Rs. 2,98,812. 00 "
3. Bill No. 852 is stated to be originally for higher value i. e. Rs. 77,463/- but for the rest debit note was raised as one particular challan was not received. It is the case of the petitioner-company that against the above said bills payments have been received, namely, Rs.
25,000/- on 12. 3. 1998; another Rs. 25,000/- on 1. 7. 1998 and again on 26. 9. 1998 Rs. 25,000/ -.
All these payments were made against Bill No. 754. No payment has been received against the other bills.
4. The respondent-company is stated to be indebted to the petitioner-company and is under obligation to pay Rs. 3,12,087. 00 (Rs. 2,23,912/- + Rs. 88,175/-as interest) up to 30. 9. 1998 plus interest at the rate of 24% per annum. The orders were executed and had been received on telephone. The petitioner-company alleged that in the purchase order it was mentioned that the supplier shall be responsible for lifting the rejected goods within seven days otherwise the same shall be despatched and expenses shall be debited to the supplier account. The amount is stated to have not been paid despite the notices having been received. Thus, it was asserted that the respondent-company has failed to pay the amount and discharge the liability and, therefore, is unable to pay the debt.
5. In the written statement filed, the petition has been contested. It is asserted that there is a serious dispute regarding the corrugated boxes supplied. The material supplied was defective and not as per the specification. The petitioner-company had been informed time and again to pick up the boxes but it failed to do so. The printing on the outer side of the corrugated boxes was not uniform as a result of which the corrugated boxes could not be used by the respondent-company for packing its products. Otherwise also, the corrugated boxes were folded. They cracked and box could not be made out of it. Lastly, it is claimed that the corrugated boxes supplied were not of the weight and thickness as per order of the respondent-company. The respondent-company had written letters dated 26. 4. 1997, 20. 6. 1997, 30. 7. 1997, 26. 9. 1997 and 22. 5. 1998. These were sent under postal certificate. The petitioner-company was informed about the defective articles.
It did not remove the same.
6. Learned counsel for the petitioner-company on basis of these facts alleged that the goods had been accepted and at no time it was pointed out that the supply was not as per specifications. The petitioner-company has not received any letter purported to have been sent by the respondent-company nor the goods were returned.
7. On the contrary, learned counsel for the respondent-company, as is apparent from the written statement, urged that the goods supplied were defective. The petitioner-company had been informed about it. Therefore, no amount is due. The defence is bona fide and worth a trial.
According to him, the Company petition deserves to fail.
8. On 11. 12. 1998, this Court had directed that the petitioner can visit the factory of the respondent and file an affidavit whether the averments made in paragraph 7 of the reply of the notice are correct or incorrect. The petitioner-company's case was that the goods that were shown were not supplied by the petitioner-company or in other words, the defective goods were not that of the petitioner-company. The respondent-company has also filed an affidavit of one Shri R. K. Khanna, Chairman-cum-Managing Director of the respondent-company, that the respondent-company has only been purchasing cardboard boxes/carton from the petitioner-company and there is no other supplier of cardboard boxes to the respondent-company. As already mentioned above, it is asserted that the goods supplied were defective.
9. So far as the contention that the respondent-company had never objected that the goods were defective, the same for the purposes of the present order will not cut much ice. Annexures R-1 to R-5 are the letters written by the respondent-company to the petitioner-company. The said letters indicated to the petitioner-company that the goods were of poor quality and were rejected vide Annexure R-5. The respondent-company informed the petitioner-Company vide Annexure R-5 as under:"
Dear Sirs, As already requested vide our letters dated 20. 6. 1997, 30. 7. 1997 and 26. 9. 1997, please arrange to collect the material lying rejected with us against your following invoices :
Inv. No. Date Amount 754 25. 03. 1997 54,476. 00 816 14. 06. 1997 1,09,591. 00 852 22. 07. 1997 77,463. 00"
10. It was pointed out that these letters were not received by the petitioner-company. But suffice to say that in the ordinary course the correctly addressed letters will be delivered to the addressee. There is no reason why the events that happen in the ordinary course would not follow. No such extraordinary happening has been shown. In reply to the notice also, copy of which is Annexure P-15, the respondent-company informed the petitioner-company about the goods being defective. It is patent from the aforesaid that there is a controversy as to whether the goods were defective or not. Supreme Court in the case of Madhusudan Gordhandas and Company v. Madhu Woollen Industries Private Limited, A. I. R. 1971 Supreme Court 2600 enunciated the principle as to when the company petition under section 433 of the Companies Act has to be admitted. It was held as under: "
Where the debt is undisputed the Court will not act upon a defence that the company has the ability to pay the debt but the Company chooses not to pay that particular debt (See Re. a Company 94 S. J. 369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the Court will make a winding up order without requiring the creditor to qualify the debt precisely. (See Re. Tweeds Garages Limited. , 1962 Ch. 406). The principles on which the court acts are first that the defence of the Company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. "
11. Karnataka High Court in the case of Kamadenu Enterprises v. Vivek Textile Mills Pvt.
Limited, (1984)55 Company Cases 68, also held that the jurisdiction of the Court under Section 433 of the Companies Act, 1956, is not that of a court which is essentially meant for setting money disputes between the parties. It is to sub serve the purpose of winding up the companies which have not paid their dues. When a claim or debt is disputed and there is a genuine dispute, the matter shall be left to be adjudicated by the civil Court.
12. Similarly, in the case of T. Srinivasa v. Flemming (India) Apotheke Private Limited, (1990)68 Company Cases 506, the Karnataka High Court enunciated the same principle in the following words:". . . .
In summary procedure which this Court, as a company court must follow, these things cannot be investigated in depth. The court is satisfied that the defence raised in the circumstances of the case is bona fide and likely to succeed in a civil court. If that prima face case is found, that would constitute sufficient reasons for this Court to reject the petition relegating the parties to the civil court. . . . . "
13. Himachal Pradesh High Court in the case of Ram Kishan and Ors. v. Kanwar Papers Private Limited, (1990)69 Company Cases 209, took the same view.
14. What is the position herein? The pe
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titioner-company has averred that the respondent-company has failed to pay and clear their debt despite supply of the material. The defence offered by the respondent-company is that the goods were defective. According to the respondent-company, they do not accept goods of any other company and the petitioner-company is only the company supplying the said goods. Further, the respondent-company has informed the petitioner-company that the goods were defective. Once it is so, it is obvious that there is a bona fide dispute about the goods having been supplied to which the payment is stated to have not been made. It requires consideration. In summary procedure, it will not be appropriate to do so. The petitioner company can well claim the amount, if so advised, in the civil suit. 15. For these reasons, the company petition fails and is accordingly dismissed. By way of abundant caution, it is added that nothing said herein shall be taken as an expression of opinion as to if the amount is due or not.