1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.140 OF 2008 Global Trade Finance Ltd. .. Petitioner Versus Asian Electronics Ltd. .. Respondent Mr.T.N. Subramaniam, Senior Advocate with Ms.Sujata Saha i/b. i/b.Paras Kuhad & Associates for petitioner Mr.Janak Dwarkadas, Senior Advocate with Mr.Niranjan Waghela i/b. Pandya & Co. for respondent CORAM : S.C.DHARMADHIKARI, J. DATE : 2nd May 2008 P.C. . Heard Mr.Subramaniam, learned Senior Counsel for petitioner and Mr.Dwarkadas, learned Senior Counsel for respondents. Perused the petition and the annexures thereto so also the reply and rejoinder. 2 2. My attention is invited by Mr.Subramaniam to the clauses in agreement and the definition of the term "debtor", "receivables" and "recourse" appearing therein. The submission is that irrespective of whether the debtor honours his commitment to the client, the petitioner can proceed against the respondent as the reference to the term "client" therein is nothing but to the respondent. The liability of the respondent is not depending upon whether the debtor pays the amount to it and that does not affect the right of the petitioner to take recourse against the respondent. In his submission, even if the arbitration has been invoked that is no bar to institute and prosecute winding up proceedings and the law is well settled in that behalf. 3. Mr.Dwarkadas, learned Senior Counsel appearing for respondent company submits that the petition is malafide attempt to pressurise the respondent to succumb to a demand which itself is 3 in dispute. It is not as if that the respondent has invoked arbitration. The letter of 24th January 2008 would indicate that the petitioner itself terms the claim as dispute and requiring interpretation of the agreement and various clauses therein. In such circumstances, winding up petition is not maintainable. Further, there is suppression of material facts, inasmuch as, there is reply which has been forwarded to the notice. There is bonafide dispute to the claim. He submits that the Insurance has been taken at the instance of petitioner itself and that is how, some sort of privity is established between the debtor and creditor. That apart these are matters which must be resolved by the forum chosen by the parties. In such circumstances, the winding up petition is not maintainable. 4. It is not necessary to refer to the settled principles. The claim in this winding up petition proceeds on the basis that the 4 respondent is indebted to the petitioner in the sum of Rs.2,07,98,118/-. 5. Petitioners sanctioned a trade finance facility to the company with a limit and that is subject to the sanction letter and the terms and conditions therein. Thereafter, the agreement dated 28th March 2006 has been executed. The petitioner urges that the respondent duly accepted petitioners right to require it to pay an equal amount to the amount remaining unpaid by any debtor and the amount becomes due and payable upon notice being issued by the petitioner in that behalf. 6. There is a debtor in U.S.A. to whom the respondent was required to export goods which is bought on credit. There are invoices raised, a reference to which is made in the petition. The arrangement was that the petitioner on the basis of these invoices would provide required finance 5 to respondent and in turn the debtor in U.S.A. would pay to the petitioner for the export received by it at the end of credit period or earlier. Under the ordinary circumstances, in transaction of this kind, the petitioner would then recover monies from the debtor but the terms of the agreement would provide that recourse could be had against the respondent and my attention is invited to clauses 9.1 and 9.1.2 of the same. 7. I have perused the subject agreement and the letter dated 24th January 2008. From the averments in the petition and more particularly paras 11 to 14 thereof, it is apparent to me that this is not a fit case for exercising this Court’s jurisdiction under section 434 of the Companies Act, 1956. Upon the own showing of parties and considering the contents of the letter dated 24th January 2008 the dispute has arisen with regard to liability of the 6 respondent. That dispute has to be adjudicated by interpreting the terms of agreement and going into the arrangements between the petitioner, respondent and third party. Once the petitioner itself is in doubt and has invoked the arbitration on the basis that a dispute has occurred which would take in its import interpretation of the terms and clauses of the agreement, then, recourse to section 434 is not permissible. Even otherwise, from a reading of the affidavit and annexures, I am satisfied that there is bonafide dispute raised by the respondent with regard to the claim raised by the petitioner. In such circumstances, winding up petition is not maintainable and dismissed as such. However, this does not mean that any opinion is expressed on merits of the claim and the Arbitral Tribunal shall proceed without being influenced by the observations made herein. Petition dismissed. No costs. 7 (S.C.Dharmadhikari, J)