Madhya Pradesh High Court
Premlal Birla vs Gilt Pack Ltd. on 28 January, 2003
Equivalent citations: III(2003)BC350, [2003]46SCL173(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
ORDER A.M. Sapre, J.
1. This is a company petition filed by petitioner under Section 433(e) of the Companies Act seeking winding up of the respondent Company by name M/s. Gilt Pack Ltd. herein after referred to as "Company" essentially on the ground covered under Section 433(e) of the Companies Act.
2. The Company is having its place of business and registered office at Indore. It is the case of petitioner that they being the transporter and engaged in the said business, have on several occasions transported companies H.D.P.E. Bages. According to petitioner, a sum of Rs. 1,02,440 remains outstanding on the respondent towards payment of petitioner's unpaid bills which they had sent for doing transportation work. It is alleged that though several reminders were sent by the petitioner to the respondent but they were of no avail. Lastly, notice under Section 434 of the Act was also served demanding outstanding but the same was also not paid and hence, this petition for winding up of Company on the ground of deemed unable to pay the debt of petitioner. The case of the Company in the return is that of denial. In other words, the Company has denied their liability to pay the alleged amount. According respondent, they have to recover a sum of Rs. 16,800 from the petitioner after finalizing the accounts between them. The respondent Company has then in detail pleaded their case explaining the manner in which one consignment of respondent was dealt with by the petitioner resulting in huge losses to respondent-Company. The Company has also filed entire correspondence exchanged between the parties in relation to the transaction to show that due to petitioner's bad handling, the loss was occasioned to Company.
3. Heard Shri V. Dalai, learned counsel for the petitioner and Shri B.K. Dubey, learned counsel for the respondent.
4. Having heard the learned counsel for the parties and having perused the record of the case, I find no merit in the petition and hence, it deserves to be dismissed.
5. A petition for winding up is not a remedy which can be resorted to as of right. In other words, it is always regarded as a discretionary remedy. The Company Court is not bound to entertain the petition for winding up once filed, nor it is bound to allow winding up even if a case to that effect on facts is made out, it being a settled principle of law relating to winding up that winding up is in the nature of death of a Company and puts an end to all its activity for all time to come in future , the Court is under legal obligation to see that no running company be pushed into a winding up for one or two defaults. In other words, the efforts must be to save the company from being wound up, if the case to that effect is made out on facts. It is for this purpose and keeping in view this objective, the Legislature has enacted sub-section 2 of Section 443 which empowers the Company Court to exercise powers while hearing a petition for winding up. Sub-section 2 does empower the Company Court to refuse to make an order of winding up, if it is of an opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.
6. In normal circumstances, the remedy of petitioner for recovery of Rs. 1,02,440 lies in filing civil suit under the general law on establishing his claim. It is essentially a commercial transaction in relation to transportation of certain goods of the respondent company in its day to day working and running of company where some dispute has arisen. When the company has bona fide defence to raise as to why they declined to pay the money to petitioner and the same having been disclosed in the return, this Court would not entertain the petition for winding up of a running company. Indeed, this is a fit case where this Court relying upon Section 443(2) ibid decline to entertain the petition and leave the petitioner to recover his dues by resorting to any other remedy as they may have in law, rather than to pursue a winding up of a running company. This Court cannot convert the proceedings of winding up in the proceedings alike the civil suit to decide, whether respondent company is liable to pay a sum of Rs. 1,02,440 and/or if so on what basis. Such issues are not required to be gone into in winding up proceedings but are necessarily required to be gone into in civil suits. Merely because the respondent happens to be a company within the meaning of Companies Act by itself does not give any right to any person dealing with the company to apply for its winding up on the ground of non-payment of their certain dues. The object and scope of winding up of a company under the Companies Act is entirely different. It cannot be confined to the claim of petitioner only but has to be seen, judged and tested in its entirety such as nature of claim laid by the petitioner, the defence taken by the company in relation to claim, in question, the financial position of a company, its viability, commercial sustainability in the market, whether the debt is admitted by the respondent company or not etc. It is always regarded as a petition not at the instance of one creditor but is regarded as petition in its representative capacity once admitted. It is essentially for these reasons, a rule of caution is provided by judicial pronouncement not to entertain the petitioners for winding up unless a very strong prima facie case is made out on facts else, it affects the very existence of company in commercial market.
7. Learned counsel for the petitioner contended that a case for winding up on the facts pleaded is made out. I do not agree to what is urged. I have gone through the facts carefully, relied on by the learned counsel and find no merit in it. Once, I come to a conclusion that on the facts pleaded by the petitioner in the petition for seeking winding up of company, the respondent company has come out with a bona fide and plausible defence having even a counter claim against the petitioner, the issue must end here so far as entertaining of winding up petition is concerned. It will be too disastrous for any running company to suffer an order of winding up for alleged non-payment of Rs. 1,02,440 and that too when it was certain reasons not to pay and secondly the alleged debt is not a debt admitted by the respondent.
8. In view of aforesaid discussion, I do not find this petition to have any merit. It fails and is accordingly dismissed.
No costs.