VIJAYALAKSHMI Vs. HARI HARA GINNING AND PRESSING NANDIGAON

JUDGEMENT

(1.) This appeal arises out of an order declining to admit the Company Petition filed for winding up of the respondent-Company under Sections 433 (e) & (f) and 439 of the Companies Act, 1956. Narration of the following material facts is necessary so as to determine whether or not the company petition has to be admitted.

(2.) It is not in dispute that on 6-2-1994 an agreement was entered intobetween Ch. Savithri, S. Padma and Muralidhar on the one part (hereinafter referred to as the first party) and Sampat and V. Vijayalakshmi on the other part (hereinafter referred to as the second party) as regards payment of Rs. 3,53,330/-. In pursuance of the same, the first party paid Rs.1,50,000/- to the second party and agreed to pay the balance amount of Rs. 2,03,330/-. Manner and mode of payment was also agreed upon between them and the first party had undertaken the pressing work and the amount due to the first party towards charges of pressing work done in the past was also to be taken into account in arriving at the value of Rs. 2,03,330/-. There are various other terms of contract. Clause 15 of the contract provides that in order to legalise the contract Board meeting shall be called and the contract will be ratified and intimated to the Registrar of Companies within one week thereof. It is not in dispute that the Board of Directors never ratified the contract. The appellant preferred a civil suit for recovery of Rs. 7,89,575/- which includes the amount of Rs. 82,500/- being the admitted amount shown by the respondent-Company in the balance sheet. In the impugned judgment reference has been made by the learned single Judge to the second clause of the agreement dated 6-2-1994 wherein it is provided that for the value of Rs. 2,03,330/- the first party shall undertake the pressing work and the amount due to the first party towards the charges of pressing done in the past shall also be taken into account in arriving at the value of Rs. 1,03,330/- and that the first party was entitled to obtain receipt for the same from the second party.

(3.) The respondent contended that the respondent-Company had adjustedRs. 82,500/- against past pressing work done by the respondent-Company. Be that as it is, there is a bona fide civil dispute pending between the parties in the civil Court. The company is a running company. Mere showing of the part of the amount claimed in a civil suit in the balance sheet by itself is not a sufficient ground for admitting the company petition for liquidation. There is no gainsaying that the object of Section 433 of the Companies Act is to provide a summary remedy and save the shareholders or creditors of a company where the company is unable to meet its admitted liability. It has been umpteen number of times observed that proceeding under Section 433 of the Companies Act is not a substitute for a civil suit by a creditor against the Company. No doubt, mere filing of a civil suit need not be an impediment to proceed with the company petition for winding up. Yet, it is a circumstance to be taken into consideration while arriving at the conclusion that the debt is admitted or there is a bona fide dispute with respect to the same and it has to be determined in an appropriate civil forum.