HIND SYNTEX LTD Vs. DEWAS TEXTILE MILLS

JUDGEMENT

(1.) THIS is a company petition filed by petitioner under Section 433 (e) of the Companies Act, seeking winding up of the respondent-company essentially on the ground covered under Section 433 (e) of Companies Act.

(2.) THE respondent is a company having its manufacturing Unit at Dewas. It is engaged in the business of manufacture and sale of suiting and shirtings. In the course of its manufacturing activities, the respondent-company claimed to have purchased certain yarn from the petitioner who is engaged in the business of manufacture of yarn needed for the manufacture of suiting/shirting, pursuant to contracts entered into between the parties on 18-4-1984 to 26-3-1985, valuing Rs. 6,11,715. 65 paise. It is alleged by the petitioner that respondent was to make the payment against Hundies which they failed to retire. It is this action of the respondents which gave rise to serve a demand notice for paying a sum of Rs. 6,11,715. 65 paise by the petitioner to respondent. It is complained that respondent failed to make the payment and hence, this company petition for winding up of the respondent-company on the ground of inability to pay the debt within the meaning of Section 433 (e) of the Companies Act read with Section 434 ibid.

(3.) THE respondent has denied their liability to pay the money demanded by the petitioner by seeking winding up of the company. According to them, it is not a case where they are unable to pay the money or that they ever neglected to pay the money/price of the goods alleged to be supplied to them by the petitioner. It is alleged inter alia that transaction in question took place somewhere in 1985 April. It is pointed out that company was made to believe that the supplies of the synthetic yarns was according to contracted quality, standard, length, breadth, warp and weft. It was on this basis, the respondent made a part payment of Rs. 17 lakhs. It is alleged that later on, it was discovered that the goods (yarn) which were supplied by the petitioner did not confirm to the standard, they were of inferior quality, resulting in losses to respondent. The respondent has then relied upon the letter correspondence which was exchanged between the parties on this issue and alleged that on account of the losses which the respondent has suffered, to the tune of Rs. 8 lakhs, a case for counter claim is well founded. It is further alleged that parties have lodged criminal cases, complaints against each other for misrepresentation, fraud etc. The respondent has thus, in substance denied the liability and has also denied that they have become insolvent or that they are unable to pay the alleged debt which according to them do not even fall within the meaning of the word "debt". It is further alleged that they having raised a bona fide dispute in relation to one isolated commercial transaction, the remedy of the petitioner lies in filing suit rather than to seek winding up of a running company.