Case: Hitechi Jewellery Industries Limited Vs. Choksi Arvind Jewellers

4. We shall refer to the Respondent herein as the Petitioner and the Appellant herein as the Company. According to the Petitioner, it sold, supplied and delivered to the Company gold bars for the period from 14th August, 1999 to 30th August, 2000 under different invoices aggregating to Rs.The said goods were received by the Company without any demur as regards the price, quality and/or quantity thereof. The Company issued seven cheques dated 7th April, 2001 for aggregating Rs.When the said cheques were deposited for realization all the cheques were dishonoured. The Petitioner made many requests for payment of the due amount but the Company negated to discharge its liability. The Petitioner then gave a statutory notice dated 15th January, 2002 calling upon the Company to pay to the Petitioner the amount of Rs.31,36,200/within 21 days from the date of receipt of the notice, failing which the Company was noticed that winding up petition may be filed by the Petitioner. The Company, did not respond to the statutory notice necessitating the filing of winding up petition by the Petitioner.5. In response to the Company petition, reply affidavit was filed by the Company and claim of the Petitioner was denied by setting up a defence that Petitioner s claim was false and/or frivolous, concocted and untenable and that on the contrary the Company had a counter claim against the Petitioner arising out of the supply of impure gold. The Company set out a case that the goods supplied by the petitioner during the period from 29th June, 1999 and 21st August, 1999 under various invoices contained between 30% to 35% impurities. Thereafter also in the month of September, 1999 the Petitioner supplied impure gold. The company called upon the Petitioner to settle the accounts but the Petitioner failed to comply with the same. Explaining issuance of cheques, the Company set up a defence that considering the cordial relationship between the parties and at the request of the Petitioner, the Company from time to time and lastly on 2nd March, 2001 replaced postdated cheques which were not to be deposited by the Petitioner in view of the agreement between the parties. The said cheques were issued by the Company and accepted by the Petitioner on express condition that the said cheques shall not be deposited without written intimation from the Company. The Petitioner failed to settle the accounts and threatened to deposit the said cheques given by the Company and therefore the Company issued instructions to the bankers to stop payment of cheques.6. The Company Judge vide impugned order admitted the Company Petition apparently for two reasons: (1) that Company Petition No. 540 of 2000 was already admitted against the Company and (2) that in the opinion of the Company Judge the Petition deserved to be admitted.

Reasoning:
8. The question before the Apex Court was whether the Court while hearing the writ petition is under an obligation to pass a speakingorder recording in brief at least the reasons which weighed with the court in determining the salient questions raised by the parties to the action while dismissing or rejecting the petition. The observation made by the Apex Court in paragraph 14 of the report with reference to the question afore noted, we are afraid, cannot be made applicable as it is to a case such as this where a Company Judge admits the Company Petition. Needless to say a writ Court or for that matter any other Court while disposing of the writ petition or proceeding, at the final stage or threshold, needs to state reasons, briefly or elaborately, in support of the order, so that aggrieved party knows the basis on which the Court determined the matter. The determination of any question of facts or law has to be supported by reasons. The order admitting the company petition does not determine the facts and/or law. In the widest connotation of the term decision , an order admitting the company petition may be deemed to be decision to the extent that on prima facie consideration of the matter, the Company Judge forms the opinion that the matter requires consideration and is not liable to be summarily dismissed but that does not mean that by admission of Company Petition, the rights of the parties on facts or law are determined. An order admitting the company petition for winding up is not an order determining the rights of the parties, Prima facie, or finally.The issue before the Division Bench in the Western India Theatres was whether an order directing advertisement of company petition is appealable. The arguments was that even though the order of advertisement of company petition could affect the company and to which the company can be legitimately aggrieved, but for making such order appealable, the order must be a decision and the order advertising the company petition is not a decision. Not accepting this contention, the Division Bench, through Chagla, C.J., held that when the Company Judge order advertisement, it has decided that the petition should not be dismissed, and that the petition discloses prima facie case and that the case should be tried. When the Division Bench of this Court observed that while admitting the company petition the Company Judge has decided something that the petition should not be dismissed, the expression decision has been used in its widest sense but that does not mean in our view that such decision determines the rights of the parties. As already noted by us above, the company petition if admitted may be a decision in the widest sense but surely it is not determination of the rights of the parties. By admitting winding up petition what follows is that the matter is worth consideration on further material and that it is not liable to be dismissed summarily, We accordingly,the first contention of the learned Counsel for the Appellant.11. Having considered the available material, we are satisfied that, prima facie, it cannot be said that the company has been able to raise bonafide dispute. It is not in dispute that the seven cheques aggregating sum of Rs.31,36,200/were issued by the Company. It is also not in dispute that the said cheques were dishonoured. It is also a matter of record that Company Petition No. 540 of 2000 has been admitted against the Company. We are informed that few other winding up petitions against the company have also been admitted. In the backdrop of these facts, prima facie, it may be inferred that the Company is unable to pay its debts.