1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH NAGPUR. COMPANY PETITION NO.12 OF 2006. M/S CHETNA TRADERS THROUGH ITS PROPRIETOR SHRI RAJU LOKHANDE VS. M/S VIDARBHA BOTTLERS PVT. LTD. AND 6 OTHERS. -OO- COMPANY PETITION NO.13 OF 2006. M/S SHARDA GUM TAPES NAGPUR THROUGH ITS PROPRIETOR SHRI GYANESHWAR HIWSE VS. M/S VIDARBHA BOTTLERS PVT. LTD. AND 6 OTHERS. -OO- COMPANY PETITION NO.14 OF 2006. M/S SHARDA SEALS WORK, NAGPUR THROUGH ITS PARTNER SHRI DNYANESHWAR HIWSE VS. M/S VIDARBHA BOTTLERS PVT. LTD. AND 6 OTHERS. -OO- COMPANY PETITION NO.16 OF 2006. M/S R.K.METALS, NAGPUR THROUGH ITS PROPRIETOR SHRI D. N. ROY. VS. M/S VIDARBHA BOTTLERS PVT. LTD. AND 6 OTHERS. Office Notes, Office Memoranda of Coram appearances, Court's orders or directions Court's or Judge's Orders and Registrar's orders. Shri Nitin Lalwani, Advocate for the petitioner in all above matters. Shri S. S. Voditel, Advocate for Respondents no.1 to 4 in all above matters. Shri D. V. Chavan, Advocate for Respondents no.5 to 7 in all above matters. Coram : A.H. Joshi, J. Dated : July, 2009. 1. These Company Petitions are filed by different creditors against the Respondent - M/s Vidarbha Bottlers 2 Pvt. Ltd., and its directors. 2. All these petitions were fixed for admission hearing simultaneously from time to time. 3. Scrutiny of facts of each case reveal are as in para herein after:- A. COMPANY PETITION NO. 12 of 2006 . (1) Name of Petitioner :- M/s. Chetna Traders, (2) Nature of Transaction :- relating to which debt is claimed. Amounts due towards bill of the goods supplied. (3) Material if any :- supporting the claim. Copy of statement of account ending by 10-5-2005 showing payment by the Respondent No.1 is placed on record. (4) Amount claimed as due :- Rs. 6,15,966/-. (5) Notice of Demand and :- of Liquidation if served and its date. Registered notice through Advocate dated 30-5-2006 has been served. (6) Reply if any :- 3 Reply is not given by the respondent No.1 though qualified admission is given by the respondents No.5 to 7. (7) Defence taken in the : (a) Respondents no.5 to 7 have disputed the claim, however,accepted the transaction. (b) The Respondent No.1 has alleged that there is a dispute about the quality of material supplied, and that the debt is time barred. (c) No documentary evidence is placed on record in support of the defence. B. COMPANY PETITION No. 13 of 2006 . (1) Name of Petitioner :- M/s Sharda Gum Tapes. (2) Nature of Transaction :- relating to which debt is claimed. Amount due towards bill of goods supplied. (3) Material if any :- supporting the claim. Copies of bills and copy of statement of accounts Statement pertaining to the financial year ending by 11-11-2004, showing payments by Respondent No.1 (4) Amount claimed as due :- Rs.2,74,911.86/- (5) Notice of Demand and :- 4 of Liquidation if served and its date. Registered notice through Advocate dt.30-5-2006 has been served. (6) Reply if any : Notice is replied on 14-6-06 by Respondent no.5 to 7. (7) Defence taken in the :- petition for winding up. (a) Respondents no.2 to 4 have disputed the claim, however,accepted the transaction. (b) The Respondent No.1 has alleged that there is a dispute about the quality of material supplied, and that the debt is time barred and the Respondent no.1 has a claim of set off. (c) No documentary evidence is placed on record in support of the defence. C. COMPANY PETITION NO.: 14 of 2006. (1) Name of Petitioner :- M/s Sharda Seals Work (2) Nature of Transaction :- relating to which debt is claimed. Amount due towards bill/ invoices of the goods supplied. (3) Material if any :- supporting the claim. Copies of bills & copy of 5 statement of accounts ending by 15/4/03, showing payments by Respondent No.1. (4) Amount claimed as due :- Rs.4,13,095/-. (5) Notice of Demand and :- of Liquidation if served and its date. 02-06-2005. (6) Reply if any :- Notice not replied, same being false and frivolous. (7) Defence taken in the :- petition for winding up. (a) Respondents no.2 to 4 have disputed the claim, however,accepted the transaction. (b) The Respondent No.1 has alleged that there is a dispute about the quality of material supplied, and that the debt is time barred. (c) No documentary evidence is placed on record in support of the defence. D. COMPANY PETITION NO. 16 of 2006. (1) Name of Petitioner: M/s R. K. Metals. (2) Nature of Transaction :- relating to which debt is claimed. Amount due towards bill/invoice 6 of the goods supplied. (3) Material if any :- supporting the claim. Copies of Bills and copy of statement of accounts is placed on record, showing payments etc., by Respondent No.1. (4) Amount claimed as due :- Rs.4,63,330/- (5) Notice of Demand and :- of Liquidation if served and its date. 30-05-2006. (6) Reply if any : Notice not replied, same being false and frivolous. (7) Defence taken in the : petition for winding up. (a) Respondents no.5 to 7 have disputed the claim, however,accepted the transaction. (b) The Respondent No.1 has alleged that there is a dispute about the quality of material supplied, and that the debt is time barred. (c) No documentary evidence is placed on record in support of the defence. 5. In the midst of hearing, it had prima facie transpired that :- (a) There existed the transaction of supply of goods 7 by the petitioner to the Respondent no.1. (b) The transaction was in an open and current account. (c) Bills were raised towards goods supplied by the petitioner. (d) Payment towards dues on account were made by the Respondent No.1 from time to time so made were entered in the account maintained by petitioner as well as the Respondent NO.1. (e) Delivery and receipt of goods and raising of bills etc. is not in dispute. (f) Correctness of copy of statement of account annexed to the petition is not disputed. The denial of liability is done with an evasive denial. (g) The plea of bar of limitation too is vaguely raised. (h) The Respondent no.1 has claimed as defence that the goods which were supplied were defective and in one case by way of set off, of the amount against the dues claimed by the petitioner. (i) This defence is raised, however, even single document in support is not filed. 6. In the afore described background this Court called upon the Respondent No.1 Company to state whether it would like to settle the dues. 8 7. In response to the query by the Court, learned Advocate Mr. Voditel for the Respondent no.1 sought time to take instructions. 8. Response to the query is as to settlement through the various applications as follows:- (a) CAL No.78 of 2009, in Comp. Pet. No. 12 of 2006. (b) CAL No.75 of 2009 in Comp. Pet. No.13 of 2006. (c) CAL No.77 of 2009 in Comp. Pet. No.14 of 2006. (d) CAL No.76 of 2009 in Comp. Pet. No.16 of 2006. 9. By these similar applications filed on 19/6/2009, the Respondent No.1 Company has prayed for dismissal of the petition for compulsory winding up and in the alternative for stay of further proceedings of the said petition until the petitioner approaches the Civil Court and obtains a decree. Answer to query by this Court is thus in negative, but in a very sophisticated format. 10. For opposing the petition, Learned Advocate Mr. Voditel for the petitioner placed reliance on the following Judgments:- 9 [1] 1999 (KAR) 349, Hariom Firestock Limited v. Sunjal Engineering Pvt. Ltd., Proposition: As the debt is barred by limitation, the winding up of petition is not maintainable and deserves dismissal. [2] 1999 (P & H) 399, Sham Lal Gupta V. Hamco Industries. Proposition: As there exists a bona fide dispute as to the debt, the petition being compulsory winds up should not be entertained; [3] (1983) 4 Supreme Court Cases 625, Cotton Corporation of India Limited. versus United Industrial Bank Limited and others. Proposition: That the petition being frivolous should not be entertained. [4] Un-reported judgment in case of 2000 Ficom Organics Ltd. V. Laffans Petrochemicals (Guj.) 471 AND [5] 2005 Vol. 127 Company Cases 188, Ambika Trading Co., v/s Shree Banshidhar P. Ltd. Proposition: When Debt is proved, defence is not bonafide, however, prima facie the Company s solvency is not in doubt, and therefore, it would not be in the interest of either of the Company other creditors and various other interested parties to wind up the Company, nor the petitioner be denied legitimate remedy for no fault on its part, an order for deposit and payment be made against the Company sought to be wound up. Observations and Reasons 11. The analysis of the facts of present cases as noted in the foregoing paras reveals that these are the cases where a transaction of supply of goods existed, and is an admitted fact. It is also admitted that from said transaction of supply, a debt had arisen, however, but liability to pay is disputed by the respondent NO.1, urging 10 that the company has a set off against the dues, in one case, and with a plea that goods are defective in all other cases. 12. What this Court had mentally noted as what prima facie appears as is noted in foregoing para No.5 is now duly proved, and ex facie demonstrated. 13. The respondent no.1 has not shown that at any point of time any dispute or controversy relating to the liability to pay was raised. It is seen that even the notice of demand is not replied by the Company respondent no.1. 14. Any document on the basis of which it could be prima facie inferred that a claim of set off against the dues is emerging, against said admitted transactions, is not produced. Any other documents on the basis of which raising of dispute is demonstrable, too are not produced. 15. Respondent No.1 considers the debt subject mater in each petition to be beyond limitation without specifying as to how would the bar of limitation operates. 16. Nothing is shown by the respondent No.1 as to what has precluded the Respondent from raising the dispute punctually at least when the statutory notice prior to 11 filing of winding up petition was given by respective petitioners. The version that the demand of dues being untenable, the respondent no.1 Company considered it unnecessary to reply is rather with no substance, and exhibits lack of respect to commercial obligation and etiquettes of replying the petitions before the Court. 17. It cannot be said that the notice by a Creditor informing the information to file petition for winding is a non-serious, casual or trivial matter, to be simply ignored as a demand without substance. Silence would infer failure or refusal to pay rather than denial of liability, being falsely raised or otherwise not due. 18. Failure to reply the notice cannot be regarded as innocuous silence, but would be liable to be denoted as suicidal silence. 19. It has to be borne in mind that the existence or non existence of a debt recoverable by the creditor against the Company can't be regarded to be contingent upon sweet choice of respondent s easy recourse of denial. Existence of a bona fide dispute is a matter to be borne out from the record and conduct of parties, which the respondent Company has failed to demonstrate. 20. It is vivid that sheerly in order to oppose the 12 winding up petition, the totally vexatious pleas have been raised namely :- (a) Debt is not in existence; (b) There exists a bona fide dispute. Bare denial of liability is not equivalent to raising bonafide and reasonable dispute as to liability. 21. It is alleged by the Respondent No.1 that the petitions are propelled by rival group amongst the share holders of the Respondent No.1 Company. It is also alleged that this collusion is evident from the fact that other Respondents who are the Directors of the Respondent No.1 Company have supported the demand. This statement of fact as to collusion etc. however, does not appear to be full truth. While it is a fact that these Directors have admitted the transaction and the debt as a fact, but did not concede to the figure of liability. Therefore, it cannot be said that the petition is collusive or is propelled by other respondents. 22. In these premises, it emerges to be a clear cut case where there exists debt, however, any bonafide and reasonable dispute in relation to liability was not raised by the respondent No.1 any time in past, and even it is not so raised now. What is done is an act of throwing a bald denial which is abusive in tenor. 13 23. In the present case, it is borne on record that:- (a) Present is a case where the transactions were admitted. (b) The fact of arisal of debt is also admitted. (c) What is claimed is a set off in one case dispute as to quality of goods in remaining cases. (d) For the said claim of set off, or adjustment or waiver, any explanation or evidence of prima facie worth too, is not offered. (e) Even single piece of evidence is not tendered by Respondent NO.1 to demonstrate the plea. 24. The existence of a bona fide dispute as regards the debt is a matter which has to be so satisfied from the material or evidence which has or ought to be in possession of the respondent No.1. This satisfaction is objective and not subjective, and has to be shown to be objectively supported. 25. In the present case, the Respondent who is supposed to be in possession of the best evidence of dispute regarding debt, has for its own undisclosed reasons, withheld from the Court the valid information, yet the Respondent No.1 wants this Court trust and believe its version that there exists genuine and bona fide dispute as regards the existence of debt in relation to which the 14 winding up petition is filed. 26. At this stage, a question arises is whether the case for winding up is made out? or alternatively for stay of proceedings. 27. These aspects need to be dealt with and answered by adopting the practical approach. 28. It is a common ground that :- (a) The Respondent no.1 is a running Company (b) It is having on going manufacturing activity. (c) Who shall suffer if Respondent No.1 is ordered to be wound up would be the large number of those persons whose bread winning and activity of trade and commerce may be depending on the Respondent No.1. (d) Such large number of persons are not before this Court. 29. This Court has also to see whether the Company Petition is being used as a device of arm twisting. On what is discussed herein before, this Court has reached a conclusion that act of arm twisting is being done at the behest of the Respondent No.1 Company, rather than by the petitioner creditor. 30. Result that has to follow is that the petitioner 15 has made out a case for a direction for winding of the Respondent No.1 Company. As its corollary there are no grounds what soever, to stay the proceedings. However, instead of taking the recourse to the course of a direction to wind up, it would be in the fitness of things to direct the Respondent Company to deposit part of dues, on the lines of the course adopted as done by Courts as is seen in the reported judgments referred to at item No.4 and 5 of foregoing para No.10. In the facts of the case, namely existence of debt is demonstrated, and bonafide dispute is not at all raised, interest of justice shall be met if this Court directs the respondent no.1 Company to deposit in this Court 75% of the amount of the debt subject matter. 31. 75% of the claim shown as dues would with reference to each petition shall when rounded to nearer thousand shall be as follows :- Petition NO. Amount (1) Company Petition No.12 of 2006. Rs.4,62,000.00 (2) Company Petition No.13 of 2006. Rs.2,06,000.00 (3) Company Petition No.14 of 2006. Rs.3,10,000.00 (4) Company Petition No.16 of 2006. Rs.3,47,000.00 32. This Court, hereby makes a conditional order directing the Respondent Company to deposit in that Court on or before 21st September 2009 the amount as indicated in 16 para No.30 foregoing. The petitioners concerned are permitted to withdraw the amount if deposited in this Court. The petitioners are free to file the suit for recovery of remaining dues. 33. Failing to make the deposit and failing in reporting it by furnishing appropriate precepie, the petition shall stand admitted, and the winding of proceeding shall automatically commence and the Official Liquidator shall take up the matter for compulsory winding up of the Respondent Company. 34. Costs of this petition shall be the cost in cause, if money is deposited, the petitions shall stand disposed. If deposit is not made, this Court would decide upon costs at appropriate stage. JUDGE /Muley/ 17