THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.122 of 2004 ORDER:- This Company Petition has been taken out under Section 433(E) & (F), 434 (1) and 439 (B) of the Companies Act, 1956 by M/s.Gujarat Glass (P) Limited, seeking an order of winding up of M/s.Bio Vaccines Pvt.Ltd., - respondent. Both the petitioner and respondent are private limited companies. The petitioner Company is engaged in the manufacture of injection viols/medicines, glass containers and whereas the respondent Company is engaged in the business of various types of surgical and other allied instruments generally used in hospitals, laboratory, chemical, electrical, photographic and scientific instruments, equipments etc. The petitioner Company claims to have supplied injection viols/medicines glass containers vide invoice Nos.04940 dt.31-7-2000 for Rs.3,82,911/-, No.00710 dt.25-4-2001 for Rs.1,91,456/-, No.01058 dt.7-5-2001 for Rs.3,82,911/-, aggregating to Rs.9,57,278/-. The respondent made a part payment and sought for time to pay the balance amount. The petitioner claims that as per the terms of invoice, the respondent is liable to pay interest @ 24% per annum on delayed payments. Pursuasions made by the petitioner to get the payment proved to be futile and thereupon the petitioner issued a statutory notice under Section 433 and 435 of the Companies Act, 1956 demanding the respondent to pay the amount within twenty one days. The notice returned with postal endorsement as “left”. Hence, the Company Petition filed for winding up of the respondent-Company. This Court by order dated 21-7-2004 issued notice to respondent. The notice sent to the respondent returned unserved with postal endorsement “party left”. The petitioner was permitted to take out notice by way of publication in the newspaper. Accordingly, the petitioner took out publication and filed proof of publication on 13-11- 2004. The Company Petition came to be admitted on 29-10-2004. The respondent entered appearance and filed counter. Mr.C.S.Ravi, Managing Director of the respondent-Company has sworn to the counter affidavit. It is stated in the counter affidavit that the statutory notice allegedly sent by the petitioner-Company has not been received by the respondent. The respondent has not admitted the amount allegedly due to the petitioner. The value of the goods supplied under Invoice No.0004940 dated 31-7-2000 is Rs.2,65,822/-. The respondent-Company has cleared the dues to the Bank of Baroda under one-time settlement. The respondent Company is providing employment to 116 workers who are on the rolls and for whom all statutory payments inter alia Provident Fund are being paid. The respondent-Company has paid the value of the material supplied by the petitioner-Company and no amount is due to the petitioner- Company for the year 2000-2001. The petitioner filed reply affidavit. It is stated in the reply affidavit that the statutory notice was sent to the address mentioned in the Invoice but the same was returned, and it would suggest that respondent had been closed. On behalf of the petitioner, one witness was examined as P.W.1 and 12 documents were marked as Ex.P.1 to Ex.P.12. On behalf of the respondent, C.S.Ravi was examined as R.W.1 and six documents were marked as Exs.B.1 to B.6. Heard learned Counsel appearing for the parties. Learned Counsel appearing for the petitioner submits that the respondent-Company having admitted the liability neglected to liquidate the same and therefore it is to be construed that the respondent-Company has become commercially insolvent, in which case the respondent-Company is liable to be wound up. Learned Counsel also would submit that filing of the civil suit is not a bar for continuing proceedings for winding up of the Company. In support of her submissions, reliance has been placed on the decision of Delhi High Court in V.K.JAIN v. RICHA LABORATORIES (P) LTD.[1] and The decision of the Madras High Court in RAMAKRISHNA INDUSTRIES (P) LTD. AND OTHERS v. P.R.RAMAKRISHNAN AND OTHERS[2]. Learned Counsel appearing for the respondent submits that the suit filed by the petitioner-Company against respondent-Company ended in dismissal on 12-9-2007 and when the suit of the petitioner Company is dismissed, there is no liability which the respondent- Company is required to discharge and therefore the petition is liable to be dismissed. Filing of suit for recovery of the amount does not bar the petitioner from filing petition for winding up of the respondent- Company. Section 433 of the Companies Act, 1956 deals with Circumstances in which Company may be wound up by the Court which reads as hereunder:- “A Company may be wound up by the Tribunal,- (a) if the Company has, by special resolution, resolved that the Company be wound up by the Tribunal; (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting; (c)if the Company does not commence its business within a year from its incorporation, or suspends its business for a whole year; (d) if the number of members is reduced, in the case of a public Company, below seven, and in the case of a private Company, below two; (e) if the Company is unable to pay its debts; (f) if the Tribunal is of the opinion that it is just and equitable that the Company should be wound up; (g) if the Company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years; (h) if the Company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality; (i) if the Tribunal is of the opinion that the Company should be wound up under the circumstances specificed in Section 424G. Provided that the Tribunal shall make an order for winding up of a Company under clause (h) on application made by the Central Government or a State Government.” It is well settled that the procedure under Section 433 of the Indian Companies Act is summary. When the Company produces prima facie proof of facts on which the defence depends and which is probable and there is likelihood to succeed on point of law, it cannot be said that the Company has neglected to pay within the meaning of Section 434 (1)(a) of the Companies Act. Bona fide dispute implies substantial ground for the dispute raised. It is the contention of the respondent that no amount is due to the petitioner-Company. R.W.1 stated in the chief-examination that the petitioner-Company filed O.S.No.943 of 2004 on the file of the II- Additional Senior Civil Judge, Ranga Reddy District, for recovery of the amount and the said suit ended in dismissal on 12-9-2007. Nothing is suggested in cross-examination disputing the fact of dismissal of the suit being O.S.No.943 of 2004. She did not even suggest to R.W.1 that any steps have been taken to get the above suit restored to file. As on this day, the suit filed by the petitioner-Company for recovery of the amount, for which a statutory notice has been issued under Section 433 of the Companies Act, 1956, ended in dismissal. There is no liability on the part of the respondent-Company which is required to be discharged towards the petitioner-Company. When there is no liability, the question of examining whether the respondent is unable to pay the debt which is claimed by the petitioner-Company does not arise. Therefore, I find that the petitioner failed to make out any valid ground to pass an order for winding up of the respondent-Company. Accordingly, the Company Petition is dismissed. No order as to costs. _________________________ B.Seshasayana Reddy, J 15th July, 2011 smr THE HON'BLE SRI JUSTICE B.SESHASAYANA REDDY Company Petition No.122 of 2004 15th July, 2011 [1] 1993 Company Cases 283 [2] 1988 Company Cases, 425