P. Jyothimani, J.@mdashThis petition is filed under Sections 433(e), 434 and 439 of the Companies Act, 1956 (for brevity "the Act") for a direction to wind up the respondent-company.
2. This Court, by an order dated 16-8-2002, having satisfied of the prima facie Case had directed issue of notice to the Registrar of Companies, affixture of notice at the premises of the registered office of the respondent-company and also permitted advertisement in the English daily News Today and the Tamil daily Makkal Kural. However, by a subsequent order dated 26-9-2003, this Court, having found from the records of the Registrar, Board for Industrial and Financial Reconstruction ("BIFR"), New Delhi, that in respect of the respondent-company under liquidation a case was pending before the BIFR in Case No. 283 of 2002, closed the company petition in view of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, with liberty to file application as and when finality is arrived in the case before the BIFR.
3. It appears that, subsequently, the respondent-company under liquidation has been discharged by the BIFR by an order dated 9-5-2006, and in C.A. No. 1410 of 2008, this Court, by order dated 25-4-2008, has directed revival of C.P. No. 115 of 2002 at the stage where it was left and notice was directed to be served on the respondent returnable in six weeks time. In spite of the notice having been served on 26-6-2008, there was no representation and consequently, this Court, by an order dated 22-7-2008, has passed an order reviving the company petition, admitting the same and ordering notice to the Registrar of Companies and affixture of notice at the premises of the registered office of the respondent-company, apart from publication in the Tamil daily Daily Thanthi and English daily Hindu Business Line. In the said order, the official liquidator, High Court, was appointed as the provisional liquidator of the respondent-company, directing the ex-directors to file a statement of affairs before the official liquidator within twenty-one days.
4. On an application filed by the respondent in C.A. Nos. 2253 and 2254 of 2008 in C.A. No. 1410 of 2008 in C.P. No. 115 of 2002, for the purpose of condoning the delay in filing an application and also to set aside the order dated 22-7-2008, this Court, by an order dated 19-9-2008, allowed the applications by setting aside the order dated 22-7-2008 and posted the company petition for arguments. Thereafter, the matter got adjourned on various occasions, including on one occasion for reporting settlement.
5. The company petition has been filed by the petitioner which is a management consultancy company providing services to Indian companies. One such service provided by the petitioner is syndication of funds for Indian companies from both Indian and foreign sources. The respondent-company, having authorised share capital of Rs. 75 lakhs, divided into 5,000 equity shares of Rs. 500 each, issued, subscribed and fully paid-up 10,767 equity shares of Rs. 500 each. The main object of the respondent-company is to carry on the business of spinning and weaving cotton textiles and to construct, establish, purchase or otherwise acquire spinning mills, waste cotton spinning mills, weaving mills, etc.
6. The respondent-company has approached the petitioner for procuring loan to the extent of 8 million US dollars to improve its business. There was a contract entered into, on 4-2-2000, under which the respondent has paid Rs. 2 lakhs to the petitioner as an initial payment. It is stated that, as per the contract, the said amount of Rs. 2 lakhs is non-refundable and is to be treated as advance fees; for preparation of detailed business plans for short-term and long-term funds. The contract provides for payment of 2 per cent of the total loan arranged as professional fees for the services of the petitioner.
7. It is the case of the petitioner that, as per the contract, the petitioner acted as a financial intermediate and by contacting various sources they arranged ECB borrowings for 8 million US dollars through BHF Bank of Germany: The respondent has agreed and thereafter, a letter of sanction was handed over to the respondent. As per the procedures, it was for the respondent-company to be responsible to comply with various conditions like furnishing of bank guarantee and getting clearance of the Reserve Bank of India, etc. It is stated that the project report prepared was forwarded by the petitioner to their counter part to obtain the financial sanction from BHF Bank. It is the case of the petitioner that it was based on the agreement the petitioner has prepared the project reports, etc., for getting order for sanctioning loan and ultimately the BHF Bank has sanctioned loan on 15-6-2000 and the respondent was directed to furnish the bank guarantee and was also directed to get the Reserve Bank of India''s clearance.
8. It is the case of the petitioner that as per the subsequent terms of contract, the respondent had to pay 1 per cent of the value of the term loan sanctioned by the foreign bank. It is the case of the petitioner that the respondent has requested the petitioner to wait till the formalities regarding bank guarantee and clearance from the Reserve Bank of India are obtained and such assurance was given by letter dated 28-4-2000. It is the case of the petitioner that the petitioner has fulfilled all the obligations as per the terms of the contact and therefore, the respondent-company is liable to pay 1 per cent of the loan amount sanctioned and the said amount comes to Rs. 37 lakhs. In spite of several reminders, there was no reply and ultimately, the petitioner has issued a statutory notice on 22-3-2001, calling upon the respondent-company to pay Rs. 37 lakhs. In these circumstances, the present application is filed for the purpose of an order of winding up.
9. In the counter affidavit filed by the respondent-company, it is the case of the respondent that there was no enforceable debt payable by the respondent to the petitioner. The respondent wanted to retrieve their high cost funds availed from other financial institutions, by availing of loan facilities from a foreign bank. It is stated that since the petitioner was having necessary expertise they have offered to render the said service to the respondent. It is stated that there was no contract, much less the contract dated 4-2-2000 and the respondent has never subscribed itself to the conditions of contract. It is stated that it is the petitioner who has written a letter on 4-2-2000, with certain stipulations and there was no concluded contract. There was an arrangement, even though there was no contract, that on successfully arranging the funds for the respondent, the petitioner would be paid 1 per cent of the total funds arranged for the respondent, provided the respondent draws the first instalment and therefore, the arrangement was a conditional one, subject to the respondent availing the loan.
10. It is also stated in the counter affidavit that the petitioner has not performed any obligation to justify even the advance payment of Rs. 2 lakhs and it was at the instance of the respondent, ultimately, the bank, in the letter dated 15-6-2000, gave a revised indicative of the financing proposal for a loan. Therefore, the bank itself has given a proposal and according to the respondent, the petitioner is not entitled to the claim of Rs. 37 lakhs. The respondent is a public limited company, which has to act in the interest of its shareholders and customers. It is also stated that the letter of the respondent dated 20-4-2000, is very clear that the fee will be paid only after the respondent avails the loan. There was no obligation on the part of the respondent to give willingness for availing the loan and the petitioner has already been paid Rs. 2 lakhs, which itself, according to the respondent, is excessive. Therefore, according to the respondent, this petition for winding up is not maintainable.
11. It is the contention of Mr. Ravi, learned Counsel for the petitioner that as per the terms of the agreement between the parties, even though all the terms have not been specifically put in writing, the respondent-company, by its letter, has clearly accepted its obligation to pay 1 per cent of the total loan towards the charges to the petitioner for arranging the loan and in such circumstances, when it is admitted that such loan has been arranged from a foreign bank and the further requirement was only on the part of the respondent-company in fulfilling certain requirements like that of furnishing bank guarantee and obtaining clearance from the Reserve Bank of India, it is for the respondent to fulfil such requirements and when once the arrangement for loan has been fixed by the petitioner, the petitioner''s duty comes to an end and the obligation on the part of the respondent to pay the amount becomes outstanding. He would submit that, in such circumstances, in spite of repeated demands amount due has not been paid and therefore, it is a case which is covered u/s 433(e) of the Act.
12. On the other hand, Mr. M.S. Krishnan, learned senior counsel appearing for the respondent-company has submitted that there was no concluded contract between the petitioner and the respondent and there was no obligation on the part of the respondent to pay the amount. It is his submission that even if the conduct of the parties is taken into consideration, the amount of 1 per cent was accepted as an arrangement to be paid only after the loan has been availed and inasmuch as the loan is not availed there is no obligation on the part of the respondent to pay 1 per cent of the loan amount. He would submit that even the initial amount of Rs. 2 lakhs paid to the petitioner is only a service charge and as far as the percentage payable on arrangement of loan, it shall be only on the quantum of loan availed and in the present circumstances, when, admittedly, the respondent has not availed the loan, there is no obligation on the part of the respondent to pay the amount. In any event, there is a bona fide dispute regarding the claim made as a debt by the petitioner and in such circumstances, it cannot be a ground for winding up the respondent-company. He would further submit that there is no admission, whether express or implied, by the respondent to pay the amount even before availing the loan and therefore, there was no consensus ad idem between the parties. He submits that the claim made by the petitioner is disputable and therefore, it cannot be said to be a debt due and to substantiate the said contention, he would rely upon the following judgments:
(i)
(ii)
(iii)
(v) United Bank of India v. Rarndas Mahadeo Prashad [2003] 48 SCL 625 (SC); and
(vi)
13. u/s 433 of the Act, which deals with the circumstances in which a company can be wound up by the court, Sub-clause (e) is as follows:
Section 433. Circumstances in which company maybe wound up by Tribunal.- A company may be wound up by the court,-...
(e) if the company is unable to pay its debts.
[Emphasis supplied]
14. Section 434 of the Act explains the circumstances when a company is deemed unable to pay its debts. The said section is as follows:
Section 434. Company when deemed unable to pay its debts.-A company shall be deemed to be unable to pay its debts:
(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one lakh rupees then due, has served on the company, by causing it to be delivered as its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor;
(b) if execution or other process issued on a decree or order of any court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part ; or
(c) if it is proved to the satisfaction of the Court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Court shall take into account the contingent and prospective liabilities of the company.
(2) The demand referred to in Clause (a) of Sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf, or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm.
15. In the present case, the company petition is filed by the petitioner for winding up u/s 439 of the Act as a creditor of the company. Therefore, to decide about the maintainability of winding up petition u/s 433(e) of the Act, it is necessary that there must be a debt in existence, which means that such debt is legally enforceable. A creditor, who is entitled to recover an amount, must make a demand, and if such demand is not fulfilled within a period of three weeks, the same is a ground for approaching this Court, by treating the conduct of the respondent as unable to pay its debts.
16. On a reference to the various documents filed on behalf of the parries, it is clear that the petitioner, who is carrying on business as a consultancy company, serving Indian companies, by providing financial assistance, etc., either from Indian or foreign sources, by its letter dated 4-2-2000, addressed to Mr. Subramaniam, managing director of the respondent-company, by referring to some discussions with one Mr. R. Ganpathy, general manager of the respondent-company, that the respondent-company requires a term loan for 8 million US dollars, apart from certain working facilities, stated that the petitioner will be happy to take up the assignment. In the said letter, the fees payable is stated as follows:
(a) Rs. 1 (one) lakh in advance, as non-refundable retainer fee towards communication and other costs to be incurred by us for the assignment.
(b) Rs. 1 (one) lakh in advance, towards the preparation of the detailed business plan. In addition, expenses incurred in preparing the plan, such as travel, boarding and lodging, taxi fares incurred on our consultants for visits to Tirupur will be to your account.
(c) Professional fee payable to us, on successful completion of the assignment, is 2 per cent of the total funds arranged by us. This is payable on your drawing the first instalment.
(Emphasis supplied)
17. In fact, in the said letter, the petitioner-company has informed the managing director of the respondent-company that "if the above terms are acceptable to you, please confirm your acceptance to these terms in writing along with your cheque/demand draft for Rs. 2 lakhs (towards the advance) payable in favour of our company at Chenoai."
18. It is true that based on the said letter the respondent-company, by its communication dated 5-2-2000, has enclosed a cheque for Rs. 2 lakhs drawn on the Canara Bank in favour of the petitioner towards non-refundable retainer fee payable in advance. In the said letter, the respondent has stated that the professional fees payable to the petitioner is 1 per cent of the total loan funds to be organised. The contents of the letter are as follows:
We enclose a Canara Bank cheque No. 453945 of date for Rs. 2,00,000 (rupees two lakhs only) towards non-refundable retainer fee payable in advance and towards the preparation of detailed business plan for our short-term and long-term funds.
As per our personal discussion and also re-confirmed through telecom the professional fee payable is 1 per cent of the total loan funds to be organised by your goodselves.
19. While it is not difficult to appreciate that the respondent, as per the proposal made by the petitioner dated 4-2-2000, has sent non-refundable retainer fees of Rs. 2 lakhs, by the letter of the respondent dated 5-2-2000, the respondent has, in fact, made a counter offer to pay 1 per cent of the total loan organised as a professional fee to the petitioner. Therefore, there is a dispute as to whether the contract between the petitioner and the respondent has come into existence at all. Even assuming that such contract has come into effect by the conduct of the parties as a tacit contract, it is stated in the letter of the respondent dated 28-4-2000, as under:
...As we are in urgent need of funds to liquidate the high cost term loans, it will be our endeavour to avail the loan as soon as the letter of sanction is received from the funding agency. We will avail the loan and immediately settle your fee.
and it is not in dispute that, as on date, the respondent has not ''availed the loan, which has been sanctioned by the foreign bank, no doubt at the instance of the petitioner-company.
20. It is also true that by subsequent letter dated 5-5-2000, as pointed out by learned Counsel for the petitioner, the respondent has again reiterated that the respondent is on its commitment and would settle the fees to the petitioner when the loan is availed. The operative portion of the said letter of the respondent dated 5-5-2000, is as follows:
3. As we have already mentioned we will initiate all the necessary steps for availing the loan once the loan is sanctioned, since the funds are required urgently for liquidating the high cost term loans. Hence, as already committed by us we will settle the fees once the loan is availed. We request you to kindly convince your associate in this regard.
21. As it is seen in the letter of the petitioner, the sanction has been obtained from BHF Bank, Germany subject to two conditions, namely, (i) obtaining approval of the Reserve Bank of India ; and (ii) obtaining bank guarantee in the acceptable format. It is not the case of the petitioner that the respondent has fulfilled the abovesaid requirements, for it is not in dispute that the abovesaid two requirements are to be performed only by the respondent. In fact, in the approval letter of BHF Bank dated 15-6-2000, approving the loan of 8 million US dollars, there is a condition that "unconditional irrevocable payment guarantee from an acceptable prime bank in India" has to be furnished by the respondent and subsequently, it is seen that the respondent has not shown any interest in availing the loan, since the clearance from the Reserve Bank of India has not been obtained and the bank guarantee has not been furnished.
22. For a legal notice issued on behalf of the petitioner dated 26-12-2000, demanding the amount of Rs. 37 lakhs, in the reply notice issued on behalf of the respondent dated 16-1 -2001, it was the stand of the respondent that the letter dated 4-2-2000, was not a concluded contract and even if it is accepted that the respondent is liable to pay 1 per cent towards the professional fees, the same is subject to the availing of first instalment of loan and therefore, in the reply, the respondent has raised an issue that the petitioner has not performed its obligation. It is the case of the respondent that there has been no formal contract and equally there is no obligation on the part of the respondent to avail the loan.
23. The question whether the petitioner is entitled to receive the amount of Rs. 37 lakhs from the respondent as per law is different from the respondent''s liability or indebtedness to the petitioner so as to enable the petitioner to invoke Section 433(e) of the Act to wind up the respondent-company, on the basis of inability to pay debts.
24. In the circumstances that the respondent has denied its obligation to pay the amount to the petitioner, not only on the basis that there was no concluded contract and also on the basis that, even assuming that there has been a contract, by the conduct of the parties, viz., as per the letter of the petitioner itself dated 4-2-2000, the professional fees was payable only on the respondent drawing the first instalment of loan, it is not possible to accept the contention of learned Counsel for the petitioner that there is a debt due to the petitioner so as to enable it to approach this Court for winding up of the respondent-company. As stated above, the petitioner may have a valid legal right to recover the amount in the manner known to law, either by going to the civil court or otherwise. But, in a petition for winding up of the existing company, which is stated to be the last resort, certainly in cases where the liability or debts are disputed and such dispute is based on merit, it is not possible for this Court to hold that the respondent-company was unable to pay a debt so as to order the extreme step of winding up the respondent-company.
25. It is also relevant to point out that while it is true that there has been an implied promise on the part of the respondent to pay 1 per cent of the total loan amount and, in fact, the respondent has paid the non-refundable amount of Rs. 2 lakhs to the petitioner, which is admitted, as far as the professional fee, which alone is the subject-matter in this petition for winding up, the same has not been paid by the respondent. The said letter of the petitioner itself states that professional fee is payable only on the respondent drawing the first instalment of the loan. Whether the respondent has taken any steps for the purpose of availing the loan or not, is not a cause of action for the petitioner for recovery of the professional fees. In any event, this is an issue which cannot be decided by this Court u/s 433 of the Act. May be the petitioner has a good case before the civil court for recover of the amount, but that itself is not a ground to hold that the respondent is unable to pay debt. There is no debt according to the records in my view and it is not the case of the respondent that the respondent is unable to payoff its debts and in such circumstances, to decide about the winding up of the company on those facts is not possible.
26. Law is well-settled in the field of contract that mere making an offer, by which the offeror signifies his desire to do something or not to do something with an intention that the person to whom such desire is intimated should accept, itself is not sufficient unless such offer is accepted by the offeree in full form, without making any counter offer. In the present case, when once the petitioner has made an offer in his letter dated 4-2-2000, offering to arrange a loan for the respondent on certain conditions, including the payment of 2 per cent as its professional fees, that offer is deemed to have been accepted only if the entire terms are agreed upon by the respondent so as to give rise to an agreement which is enforceable at law. In the present case, while the respondent has paid the initial non-refundable amount of Rs. 2 lakhs pursuant to the offer made by the petitioner dated 4-1-2000, in respect of the payment of the professional fee, which is the crux of the issue, the respondent has not accepted to pay 2 per cent of the loan amount as the professional fee and on the other hand, they have made a counter proposal to pay 1 per cent of the loan amount.
27. In Bhagwandas Goverdhandas Kedia''s case (supra), three judge Bench of the apex court has held that mere making of an offer by a party would not be a cause of action for enforcing the contract. The Apex Court has held as follows:
(4) Making of an offer at a place which has been accepted elsewhere does not form part of the cause of action in a suit for damages for breach of contract. Ordinarily, it is the acceptance of offer and intimation of that acceptance which result in a contract. By intimating an offer, when the parties are not in the presence of each other, the offeror is deemed to be making the offer continuously till the offer reaches the offeree. The offeror thereby merely intimates his intention to enter into a contract on the terms of the offer. The offeror cannot impose upon the offeree an obligation to accept, nor proclaim that silence of the offeree shall be deemed consent. A contract being the result of an offer made by one party and acceptance of that very offer by the other, acceptance of the offer and intimation of acceptance by some external manifestation which the law regards as sufficient is necessary.
28. The law is equally well-settled in the field of contract that a contract is concluded based on the offer made by the offeror, which is accepted by the offeree in full terms by means of consensus ad idem, viz., identity of mind. In U.P. Rajkiya Nirman Nigam Ltd.''s case (supra) the Apex Court held that in the absence of consensus ad idem in respect of the material terms of the contract, it cannot be said that the contract has emerged. The Apex Court has held as follows:
(9) Shri R.F. Nariman, learned Counsel for the respondent therefore, contended that the counter offer made by the respondent amounts to acceptance by conduct of the appellant and he placed reliance on paragraph 53 (acceptance by conduct) and 99 (agreement in principle only) of the Chitty on Contract. Paragraph 53 provides that ''an offer may be accepted by conduct. For example, an offer to buy goods can be accepted by supplying them; and an offer to sell goods, made by sending them to the offeree, can be accepted by using them''. The substance of paragraph 99 is that parties may reach agreement in principle but the details may be worked out at a later date. There is no dispute to the proposition of law but two factors have to be kept in mind, viz., when the counter-offer was made by the respondent and whether the unilateral offer amounts to acceptance by submitting the tenders by the appellant to the board. We find that it does not amount to acceptance of counter proposal. It is seen that admittedly, Clause (10) which thrusts responsibility on the first respondent was deleted in the counter-proposal. In clause 12, for joint responsibility unilateral liability was incorporated. In other words, the respondent disowned its material responsibilities. Unless there is acceptance by the appellant to those conditions no concluded contract can be said to have emerged. It is seen that the appellant is a Government undertaking and unless contract is duly executed in accordance with the articles of association, the appellant is not bound by any such contract. Shri Nariman sought to rely on the passage from Palmer on Companies Law containing that it is an indoor management between the appellant and its officers. When the negotiations were undertaken on behalf of the appellant, the respondent was led to believe that the officer was competent to enter into the contract on behalf of the appellant. When the counter-proposal was sent, the appellant had not returned the proposal. Therefore, it amounts to acceptance and thus a concluded contract came into existence. We fail to appreciate the contention. As seen, the material alterations in the contract make world of difference to draw an inference of a concluded contract. The joint liability of the parties was made unilateral liability of the appellant. Thereby, the respondent sought to absolve itself from the liability of further performance of the contract with the board. Similarly, Clause (10) which contains material part of the terms for the performance of the contract with the board was deleted. Thereby, there is no consensus ad idem on the material terms of the contract which contains several clauses. In the absence of any consensus ad idem on the material terms of the contract to be entered into between the parties, there emerged no concluded contract. Apart from the draft agreement and the counterproposal, there is no independent contract for reference to arbitration. Clause (14) which is an integral part of the draft agreement proposed by the appellant and the counter-proposal is the foundation for reference to the arbitration.
29. It is no doubt true that on a reference to the correspondence exchanged between the parties and taking note of the conduct of the respondent in immediately paying the non-refundable amount of Rs. 2 lakhs, pursuant to the letter dated 4-2-2000, a contractual obligation on the part of the respondent can be inferred, but as to whether such obligation of the respondent could be enforced even when the respondent has not actually availed the loan, which is the crux of the issue involved, is a matter to be decided in a competent forum and in a properly instituted proceedings and not in a proceeding u/s 433 of the Act, wherein the court decides the inability to pay off the debt. In the case on hand, the obligation of the respondent-company itself is disputed not only on the ground that there was no concluded contract, but also on the ground that even in a tacit contract, an obligation arises only on availing the loan. The non-availing of loan by the respondent from the foreign bank, in spite of the efforts taken by the petitioner under the agreement, itself cannot be a ground to decide that there has been inability on the part of the respondent-company to pay the amount due to the petitioner.
30. It is also well-settled that a winding up petition cannot be used as a method for the purpose of making recovery of any amount due, which is otherwise enforceable as per the due process of law. In Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 Comp. Cas. 456, the three-judge Bench of the Apex Court has held as follows:
It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court.
31. In Pradeshiya Industrial and Investment Corporation of Uttar Pradesh''s case (supra), the Apex Court has again reiterated that the winding up petition is not a step taken to enforce payment of debts in respect of which bona fide dispute has been raised by a company, by referring to the judgment in Amalgamated Commercial Traders (P.)Ltd. scase (supra). The Apex Court has held as under:
It is beyond dispute that the machinery for winding up will not be allowed to be utilised merely as a means for realising its debts due from a company. In Amalgamated Commercial Traders (P.) Ltd. (supra), this Court quoted with approval the following passage from Buckley on the Companies Acts, 13th edition, page 451:
It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court.
32. A Division Bench of this Court in Narsey Brother''s case (supra) has held as follows:
...Further, in a given case, where winding up proceedings is initiated u/s 433 of the Companies Act, 1956, it becomes necessary that there must be a debt and the liability should be definite. If there is any substantial defence put forth by the respondent''s side, it has got to be decided by the court only on appreciation of evidence and hence no question of winding up to be ordered would arise. The petition filed by the petitioner, though ostensibly looks like a winding up petition, it is not so. This device, in the opinion of the court, is to pressurise the respondent for payment even before thrashing out the liability to be decided by the court of civil law. Under these circumstances, it is well-settled that winding up petition cannot be made as a device to pressurise the respondent to make payment as per the demand made by the petitioner. Hence the learned single judge was perfectly correct in rejecting the petition...
33. While examining the entire case law on the issue, especially with reference to the word "debt" in Section 433(e) of the Act, another Division Bench of this Court in Neg Micon v. NEPC India Ltd. [2004] 120 Comp. Cas. 784, presided over by A.S. Venkatachalamoorthy and K.G. Gnanaprakasam JJ., as they then were, has held as under:
If the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. In determining whether a debt is disputed bona fide or mala fide, the conduct of the parties, the character of the pleas and the circumstances which will be peculiar to each case will be the contributing factors. The test is whether the dispute is raised only to avoid payment of the debt and not based on the substantial ground.
34. On the established legal position and applying the same to the facts of the present case, I am of the considered view that the grounds raised by the petitioner against the respondent cannot be presumed to be an inability to pay off the debts by the respondent-company u/s 433(e) of the Act and therefore, the petition is not maintainable and the same is dismissed. No costs.
