THE HON’BLE SRI JUSTICE B. PRAKASH RAO AND THE HON’BLE SRI JUSTICE G.BHAVANI PRASAD O.S.A.No.23 of 2009 JUDGMENT: (Per Hon'ble Sri Justice B.Prakash Rao) Heard Sri B.Chandrasen Reddy, learned counsel appearing for the appellant and Sri Anil Kumar, learned counsel appearing for the respondents, and at their request, the main appeal itself is taken up for disposal at the admission stage. The appellant is the respondent before the learned Single Judge against whom a petition has been filed under Section 433(e), 434(1) (a) and 439 (1) (b) of the Companies Act, 1956 read with Rule 95 of the Companies (Court) Rules 1959 for ordering winding up. After a notice and appearance by the appellant and taking into consideration the respective submissions, the said petition was admitted and a direction was given to advertise in Form No.48 in ‘The New Indian Express’ English Daily and ‘Andhra Bhoomi’ Telugu daily. Aggrieved by these orders, the appellant files this appeal. The main contention urged on behalf of the appellant is to the effect that such course of admitting the petition and ordering for publication in local newspapers will have a serious impact on its reputation in the business world and market and there is no justification therefor. Further, it was contended that there exists a serious dispute between the parties in respect of payment of bills, and therefore, there is no warrant for any such order. That apart, it was further contended that the breach is on the part of the respondent alone and therefore without deciding the responsibility therefor, the application could not have been entertained. With the aforesaid principal submission made on behalf of the appellant, the facts, which gave rise to the present proceedings are that the respondent herein is a partnership firm and doing the advertisement business. Accordingly, as per the purchase order dated 9-8-2007 given by the appellant for display of advertisement on buses belonging to Andhra Pradesh State Road Transport Corporation in twin cities of Hyderabad and Secunderabad from 12-9-2007 to 11-12- 2007, the bills were raised on 21-9-2007 and on 12-12-2007. However, the amounts have not been paid for the invoices during the year 12-9-2007 to 11-12-2007 and 12-12-2007 to 11-4-2007 amounting to Rs.21,28,860/- . Accordingly, a letter was sent on 25-5-2008 for discussion, but amount was not paid. Thereupon, the respondent has got issued a statutory notice on 12-7-2008 demanding payment, which was received by the appellant on 14-7-2008. In spite of that there was no payment, therefore, the petition by the respondent for winding up the appellant herein. Contesting the aforesaid allegations in the said petition, there is a denial on the part of the appellant raising several disputes including as to the failure to discharge obligations on its part and even denying the factum of putting forth the advertisement on the buses. Considering these and other allegations made in the respective pleadings, the learned Single Judge while considering petition proceeded that even though notice as such is not necessary to the appellant company before the sale is admitted and advertisement is ordered, however, in view of the principles laid down in Cotton Corporation of India Ltd v. United Industrial Bank Ltd[1] such an exercise is held to be a necessity to find out the genuine claims and bona fide disputes. Therefore, after ordering notice, it was found that prima facie the pleas raised by the appellant herein do not constitute any valid defense, especially, when any such objection is sought to be raised in the counter were ever raised any time earlier and there is inconsistency in the stand. It was also held that except raising objection with regard to condition of business and putting up of safety triangles, no objection whatsoever was raised by the appellant with regard to the less number of buses or LOTUS advertisement with disturbed visibility due to display by other companies. Even the plea that the payment was postponed due to financial difficulty was also not denied, and therefore, the learned Single Judge has ordered for admission and for issuance of publication. We have once again considered the detailed submissions made from both sides and also perused the entire material. As rightly held by the learned Single Judge the scope of enquiry at this stage is quite narrow and only with a view to see that there is a plausible sustainable defense, since in the present case, it has been found that there has been a failure to discharge a liability and the plea raised being not a sustainable one and there being no other justification for such avoidance of payment or delayed payments, the matter was directed to be proceeded with the winding up proceedings. Even in this appeal, on behalf of the appellant nothing else has been pointed out to show or buttress any such valid or sustainable defense so as to seek any such indulgence. We are afraid that the appellant has to contest the proceedings on merits. In the aforesaid circumstances, keeping in view the restricted arena within the matter has to be considered, we do not wish to go into the merits of the claim or the defense raised and express any opinion. These are all matters,, which require to be considered in the regular enquiry. Therefore, in the circumstances, we do not find any merits in the above appeal and the same is dismissed. No costs. __________________ B. PRAKASH RAO, J ____________________ G.BHAVANI PRASAD,J November, 2009. Grk THE HONOURABLE SRI JUSTICE B.PRAKASH RAO AND THE HONOURABLE SRI JUSTICE G.BHAVANI PRASAD ( Judgment of the Bench delivered by Hon’ble Sri Jutice B.Prakash Rao) O.S.A.No.23 of 2009 Dated: November, 2009 THE HON’BLE SRI JUSTICE B. PRAKASH RAO AND THE HON’BLE SRI JUSTICE G.BHAVANI PRASAD P.D. Judgment O.S.A.No.23 of 2009 Prepared by Hon’ble Sri Justice B.prakash Rao For perusal of His Lordship Hon’ble Sri Justice G.Bhavani Prasad. [1] (1984) 55 Comp Cas 423 (SC)