Punjab-Haryana High Court
United Construction Company vs Piccadily Agro Industries Ltd. on 9 July, 1998
Equivalent citations: [2000]101COMPCAS33(P&H), (1998)120PLR688
Author: Swantanter Kumar
Bench: Swatanter Kumar
JUDGMENT Swantanter Kumar, J.
1. The petitioner, a partnership concern through its partner Shri Gurnam Singh Mauji, has filed this petition under sections 433 and 434 of the Companies Act, 1956, praying that Piccadily Agro Industries Ltd. (hereinafter referred to as "the respondent-company") be wound up for its inability to pay debts.
2. In order to support this petition, the facts, as stated in the petitioner, are that the new managing director-cum-chairman of the respondent-company held a meeting and negotiations for construction of the boundary wall of the company, namely, Indri. The petitioner claims to have done various works for and on behalf of the respondent-company and had a long standing business relationship. The petitioner after constructing the boundary wall submitted the first and final bill dated April 20, 1995, for a sum of Rs. 5,66,624.12 out of which only a sum of Rs. 4,60,017 was paid. However, as the respondent-company failed to clear the balance payment of Rs. 1,06,607.12, the petitioner served a notice upon the respondent-company through its lawyer on June 9, 1997, which was received by the respondents but they did not give any reply to the said notice resulting in the filing of the present company petition.
3. Upon notice to show cause why the petition be not admitted, the respondent appeared before this court and filed the reply. In reply it was stated that the petition is based upon false averments and fraud and concocted documents have been attached to the petition. The alleged chart of details of payment, etc., is not made by the respondents and is the own creation of the petitioner. In this regard at this juncture, it may be appropriate to reproduce the relevant paragraph of the reply on behalf of the respondents :
"Preliminary objections 2. - That the above noted petition is liable to be dismissed on the short ground of being an abuse of the process of the court. The petitioner, apart from making false averments in the above noted petition, has also attached forged and concocted documents therewith. The petitioner has described annexure P-1 as a bill allegedly submitted by it whereas this document is actually only some sort of a chart prepared by the petitioner itself."
4. Replication was filed to this written statement on behalf of the respondent where it was sought to be clarified that an annexure P-1 to the main petition is not a document executed by the respondent but a document giving the summary of accounts simpliciter. In paragraphs 5-7 of the replication, still another version was sought to be introduced as would be clear from the said paragraphs which read as under :
"5-7. That paras. 5, 6 and 7 as stated are wrong and hence denied. In reply thereto it is submitted that the contract for construction of the building of the sugar mill was not awarded by the respondent. It may however be mentioned here that in September, 1995, the petitioner abruptly abandoned the project at Patran. The petitioner did not even bother to complete the contract awarded to it by the respondent for construction of the building in village Bhadson. In February, 1995, the petitioner abruptly abandoned the project after constructing only part of the boundary wall. The respondent has suffered huge losses due to the petitioner not completing the project in terms of the contract awarded to it. The petitioner did not even bother to pay the wages of its labour which were at the project site. The respondent ended up paying the wages of the labour. This fact is even borne out in annexure P-2 attached with the above noted petition. The boundary wall was never completed by the petitioner and till date is lying incomplete. No bill was ever submitted to the respondent by the petitioner. The respondent itself released ad hoc payments to the petitioner. The petitioner has described annexure P-1 as a bill allegedly submitted by it whereas this document is only some sort of a chart prepared by the petitioner itself. The respondent denies the correctness and veracity of the annexures attached with the above noted petition."
5. From the above pleadings of the parties it is clear that the parties are not ad idem in regard to any factum, right from the execution of the alleged agreement/understanding till its completion. According to the petitioner he had completed the work and demanded money, while according to the respondent, the petitioner had abandoned the work causing great loss and damage to the respondent-company. There are no written documents placed on record or agreements which could throw light on this controversy. At this stage of admission of the petition, the court is concerned to see whether the respondent-company has been unable to pay its debts. The amount claimed must be one which is legally due and recoverable debt. The debt must be payable prima facie. The onus to a great extent is placed upon the petitioner to satisfy the court prima facie. In this regard, to my mind the petitioner has not been able to discharge its primary onus to show that the above debt is rightly due to the petitioner much less that it was an admitted liability. The court would refuse to admit a petition where there is a bona fide dispute raised by the respondent-company.
6. In the present case, the dispute raised by the respondent to the claim of the petitioner appears to be bona fide and the respondent has also challenged the very correctness of the documents which have been filed by the petitioner on record as non-existent ones. This position, as explained, was not even disputed. No document executed by the respondent-company has been placed on record which the said company could be called upon to answer in its pleadings. Once the stand of the respondent-company prima facie is bona fide and is of substance then it would be difficult for the court to direct admission of such a petition. Improper motive on the part of the petitioner cannot be ruled out and the stand of the respondent-company cannot be rejected for want of bona fides or substance (refer to Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd., AIR 1971 SC 2600; [1972] 42 Comp Cas 125). The respondent-company has admittedly made payment of substantial amount and as already noticed one lakh and odd remains due to the petitioner-company. Keeping in mind the nature of factual controversy raised in this petition and the fact that they would require detailed evidence, I am of the considered view that the present dispute is incapable of being settled, particularly in view of the fact that in a winding up petition the jurisdiction of the company court is limited one. It is also a settled principle of law that winding up proceedings cannot be treated as a simpliciter or normal process for recovery of money. Learned counsel for the respondent also placed reliance upon a judgment of this court in Tata Davy Ltd. v. Steel Strips Ltd., AIR 1995 P&H 1, to argue that the stand of the respondent-company cannot be treated to be unjustifiable because they have already made payments and are claiming adjustments and recovery of amount for abandonment of the work as well as on the ground that they have suffered damages. I am of the view that the reliance placed upon this judgment is well founded. It must be noticed that the petition as framed is vague, indefinite and lacks material particulars. It is the obligation of a petitioner to approach the court with a definite case and to place on record all the documents which he relies upon for the purposes of proving his case. Absence of either of them would have to be construed to the disadvantage of the petitioner. The provisions of sections 433 and 434 of the Companies Act must be construed not so lightly as to divert the very purpose underlying these provisions. The company would not be unable to pay its debts if it fails to pay the debt alleged to be due which itself is not founded on any cogent pleadings and is not supported by any document. It has also come on record that the notice issued to the respondent-company was returned with the remarks of refusal. This has been stated in paragraph 8 of the petition which has been specifically denied in the corresponding paragraph of the reply filed. In the present petition, the respondent-company is again stated to have refused the notice but appearance was put on the very first date of hearing. Probably the other notices were served in the normal course.
7. In these circumstances, the court is of the considered view that neither any presumption can be drawn against the respondent-company nor can it be held that the respondent-company failed to reply to the statutory notice, as the same was never served upon the company, as such it cannot be held that the company was unable to pay its debts within the scope of section 433 of the Companies Act. Even in the notice, which was sent to the respondent-company but remained unserved, no proper details were given, no reference was made to any agreement. Copies of the bills which are alleged to have been executed without variation by the respondent-company were not filed along with the petition. Furthermore, no efforts were made during the pendency of the petition to require the respondent-company to produce the said documents in court.
8. In view of the aforestated discussion I am unable to see any merit in the present case, which could permit this court to admit the petition for regular trial. The present petition certainly falls beyond the limit and scope of the well settled principles of law governing the subject-matter of the present case.
9. Consequently, the winding up petition is dismissed. However, there shall be no order as to costs.