1 cp349-10.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.349 OF 2010 Mega Plast Packaging Pvt Ltd .. Petitioner versus M/s.Donear Industries Ltd .. Respondent Mr.Anil Agarwal for the petitioner. Mr.S.L.Shah i/by Shah Legal for the respondent. CORAM : S.C.DHARMADHIKARI, J. 20th August 2011. P.C.: . The petition is filed seeking winding up of the respondent- company on the ground that it has failed and neglected to pay the dues of the petitioner. 2 It is stated that pursuant to an order dated 22nd November 2008, the petitioners in its regular course of business supplied, delivered and sold goods being HDPE carry-bags to the respondent. They raised various invoices during the period 11th December 2008 to 30th September 2009. 2 cp349-10.doc 3 It is stated that the goods were duly dispatched and delivered. They have been accepted without raising any dispute or objection with regard to their quality and quantity. The goods have been utilized, but, in terms of the invoices, payment has not been made within the period provided and agreed. The payment with overdue interest has also not been made. The details of the bills are set out in para 11 of the petition and copies thereof are annexed as Annexure C-1 to C-8 of the petition. 4 In para 12 of the petition, it is stated that on 20th July 2010, the respondent-company requested the petitioner to prepare the debit note for interest amount for the overdue payment and even the debit note of Rs.4,77,420.59/- was forwarded, but, upon receipt of the debit note as well, false disputes have been raised and the dues were not paid. 5 Therefore, the statutory notice, a copy of which is at Annexure E to the petition, has been addressed and delivered , but, even after its receipt there has been no response or reply. That is how 3 cp349-10.doc the presumption under section 433(e) read with section 434(1)(a) of the Companies Act, 1956 be raised in favour of the petitioner. 6 An affidavit in reply has been filed on behalf of the respondent in which it is stated that the company petition is not the remedy of the petitioner inasmuch as the company is a commercially solvent on-going concern with sound financial capacity. It has disputed the claim of the petitioner and in this behalf, my attention is invited to para 3 of the affidavit in reply. It is stated that the goods were of sub-standard quality and that a reference is made to the order dated 22nd November 2008 in this behalf. It is stated that the dispute with regard to the quality of goods was immediately raised, but, the petitioner did not take necessary action. 7 In the rejoinder affidavit, what has been stated is that pursuant to order dated 22nd November 2008, the petitioner first supplied the goods to the respondent on 11th December 2008 under their invoice No.1002 for Rs.2,73,092/- Under the invoice No.1011 dated 15th December 2008 further goods were supplied worth Rs.3,01,768/-. Then, invoice No.1045 dated 27th December 2008 for Rs.53,500/-, 4 cp349-10.doc invoice No.1083 dated 9th January 2009 for Rs.1,11,421/- and invoice No.1113 dated 16th January 2009 for Rs.1,31,287/- has been referred to and it is stated that no objection was raised regarding the quality and quantity, rates and terms of the invoices. The petitioners have stated that instead of making payment under the invoices, a new condition was imposed requiring the petitioner to continue supplying the goods and it was stated by the respondent that they will make payment of the five invoices alongwith accrued interest. Thus, contending that the petitioner had no option, but to continue and supply goods which were supplied under the invoices dated 27th March 2007 to 14th July 2009 and the payment thereof was made from time to time and last of such payment being made on 23rd July 2009 that it is contended that the further supplies were effected and in paras 14 and 17 of the rejoinder, this is what is stated: “14 The petitioner thereafter supplied goods under their invoice No.767 dated 27.7.2009 for Rs.1,67,567/-, invoice No.930 dated 17.8.2009 for Rs.2,52,456/- and invoice No.1282 dated 30.9.2009 for Rs.2,75,035/-. In this way the petitioner completed the subject purchase order. However, the respondent did not release payment of the earlier five bills as well as these three bills, which 5 cp349-10.doc total eight bills are the subject matter of the present petition. 17 I say that after receipt of the last supply on 30.9.2009 the petitioner requested the respondent to release the payment of all bills including the earlier five bills alongwith accrued interest. The respondent assured the petitioner that soon the payment of all eight bills with accrued interest will be made by the respondent.” 8 Thus, the events leading up to debit note have been set out in the rejoinder. It is also alleged that the petitioner is not the only supplier of these bags and the respondents have been acquiring the same from other parties as well. 9 In the sur rejoinder which is filed, it has been clarified by the respondents that the respondents have raised disputes and particularly that the supply was of inferior quality. The defective goods were supplied and reliance is placed upon e-mails, copies of which are annexed at Annexures B and C to this affidavit in rejoinder. It is in such circumstances that the respondents enquired as to whether the balance supplies would be effected or not. Further the payments have not been made according to them, of 6 cp349-10.doc the goods which were not in terms of the specifications and were of defective quality. The petitioners have supplied goods which were defective and had caused loss of good-will and embarrassment to the respondents. There are sur rejoinders and sur sur rejoinders placed on record. 10 During the course of arguments, Mr.Agarwal appearing on behalf of the petitioner sought to place reliance upon an Annexure being Exhibit 1 to the affidavit in sur rejoinder of the petitioner dated 15th April 2011. Mr.Agarwal submitted that this annexure would show that the petitioners claim to the extent of Rs.15,00,000/- has been admitted and, therefore, the company petition is maintainable. This is not a case where the claim is in any way denied and bonafide dispute is raised thereto. There is a clear case where having obtained the goods which are required, the payments were not made in terms of the invoices. As an afterthought now, all the disputes have been raised. 11 On the other hand, it is contended on behalf of the respondent that the claim of the petitioner has been bonafide 7 cp349-10.doc disputed throughout. The Annexure Exhibit 1 to the affidavit in sur rejoinder was never relied upon. There is no reference thereto even in the statutory notice. Further, in the affidavits filed in sur sur rejoinder, it has been pointed out as to how the claims are not bonafide. The matter according to the respondents with regard to defective goods was an issue and that was known to the petitioner throughout. Therefore, they have maintained silence with regard to the e-mails, copies of which are annexed to the sur rejoinder filed in this Court. 12 Having perused this entire material with the assistance of the counsel appearing for both sides, I am of the opinion that the present petition cannot be entertained. The company petition for winding up as is well settled, cannot be entertained if there is a bonafide dispute raised to the claim. The foundation is failure and neglect to pay the dues. In the statutory notice, a copy of which is annexed to the petition, it has been clearly stated on behalf of the petitioner that the goods were supplied under the various invoices during the period 11th December 2008 to 30th September 2009 and in terms of the invoices, the payment was to be made within the 8 cp349-10.doc time stipulated. The bills that are referred to in this statutory notice are the same which are tabulated in the petition at page 4. There is also reference to the debit note therein. The debit note is stated to be of 20th July 2010. A sum of Rs.23,43,546.59/-, with interest has been demanded. As is clear from reading of the affidavit filed in reply, the respondent had raised a dispute with regard to the quality of the goods. There is absolutely no comment made by the petitioners as to in what context the e-mails have been exchanged and when the subject of the same is “Rejected, H.M.Bags (5 Lakhs) mega plast”. There is also reference to personal visits. It is in such circumstances that, I am of the opinion that it is not as if for the first time in answer to the petition that the respondent has raised a plea that the goods were defective. The annexures to the affidavits that have been filed in this petition would go to show that the claim was throughout disputed. Ultimately, an Account was maintained by parties of the supplies effected. This is more of a claim of a sum payable at the foot of this account. That amount is also not admitted to be payable. There are disputes raised with regard to quality of goods and which issues remained outstanding between the parties. This is not a case where the company petition can be entertained 9 cp349-10.doc on the basis of the settled principles. On the other hand, considering the nature of the pleas raised, it is apparent that company petition for winding up is not a remedy for the petitioner. 13 The statements that have been made in the affidavit in sur rejoinder find support also from the earlier stand taken in the affidavit in reply of the respondent-company. On the other hand, reliance is placed upon some e-mails by the petitioner for the first time in the affidavit in rejoinder, and that is not stated to be an admitted document. In such circumstances, this is a case where the petitioner will have to prove its claim by leading oral and documentary evidence. This is not a case where a company petition for winding up can be entertained and allowed. 14 As a result of the above discussion, the company petition fails and is dismissed, but, without any order as to costs. 15 Needless to state that at one stage during the course of the correspondence, the respondent had stated that as regards the claim in relation to the supply of the instant goods and particularly 10 cp349-10.doc arising out of the various invoices that have been mentioned in the pleadings, they are ready and willing to go for Arbitration. Mr.Agarwal appearing for the petitioner states that this order should not be construed as prohibiting resolution of the disputes by recourse to arbitration. As is well settled, the company petition for winding up is decided on the parameters and on the touchstone of sections 433 and 434 of the Companies Act, 1956, and the principles as enshrined in several decisions interpreting these provisions. This Court is not concerned with the other remedies that the parties may have recourse to. It is only with a view to emphasise that claim is not an admitted claim, but, is disputed and which dispute is bonafide that I have made the above observations. Therefore, the petitioner can take recourse to such remedies including arbitration as are available to them in law. (S.C.DHARMADHIKARI, J)