Dismissed

M/S. Mahavir Traders v. M/S. Poona Construction Machinery and Product Private Limited - U26922PN2002PTC01699

Bombay HC3 Oct 2013CP/270/2012

Case brief

AI extract

What is this about?

The petitioner filed a winding-up petition for non-payment of dues. The court observed a bonafide dispute arising from the supply of fake goods, held that such disputed debts do not justify winding up proceedings, and consequently rejected the petition.

What did the court decide?

The winding-up petition was rejected; no case for admission was made out.

M/S. Mahavir Traders Vs M/S. Poona Construction… — Company and Corporate | Bombay HC (2013)

¶1

cp-270.12.doc

¶2

ppn 1

¶3

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

¶4

COMPANY PETITION NO.270 OF 2012

¶5

M/s. Mahavir Traders .. Petitioner Vs. M/s. Poona Construction Machinery & Product Private Limited .. Respondent

¶6

Mr. Parag Shah i/by M/s. M. Shah & Co. for the petitioner. Mr. Avinash Avhad for the respondent.

¶7

CORAM : N.M. JAMDAR, J. DATE : 3 October 2013

¶8

P.C. :

¶9

. By this petition, the petitioner seeks winding up of the respondent-M/s.Poona Construction Machinery & Product Private Limited.

¶10

The respondent-company is registered under the provisions of the Companies Act, 1956. The authorised and issued capital of the company is Rs.2 crores. The main object of the company is to carry on business of manufacturing various types of building materials and allied activities. The petitioner is in the business of suppling various kinds of ball bearings and allied products.

¶11

It is the case of the petitioner that the respondent-company made an enquiry with the petitioner as regards supply of ball bearings. The representatives of the respondent-company Mr. D.P. Sawant and Mr. Kulkarni represented to the petitioner that they are interested in purchasing ball bearings from open market from the various traders.

¶12

ppn 2 cp-270.12.doc

¶13

Accordingly, the petitioner supplied the goods from time to time and raised bills and invoices. The goods have been received by the respondent-company. An amount of Rs.9,60,413/- was due and payable by the respondent. According to the petitioner, in the month of September 2010, the petitioner and the representative of the respondent Mr. Kulkarni had a meeting. In that meeting, it was decided that the ball bearings would be supplied without providing Test Certificate and e-mail to that effect was issued by Mr. Kulkarni on 8 September 2010. According to the petitioner, on the basis of the said confirmation e-mail dated 8 September 2010, the goods were supplied to the respondent.

¶14

According to the petitioner, thereafter a meeting took place on 27 December 2010 at the respondent's factory premises where various representatives of the respondent i.e. Works Manager, Quality Control Officer were present. It is the case of the petitioner that the respondent agreed that the amount of Rs.9,60,413/- is due, however, since the ball bearings supplied were faulty, the respondent suffered a loss of Rs.2 lacs and it was agreed that after deducting the amount of Rs. 2 lacs, Rs.7,60,413/- will be returned. The petitioner issued a statutory notice on 15 January 2011 demanding an amount of Rs.7,60,413/-. Thereafter, an amount of Rs.1,00,483/- was received by the petitioner after giving credit to the same. The petitioner had issued another statutory notice on 21 March 2012. Since there was no reply to the notices and the amount was not paid, the present petition came to be filed.

¶15

Reply affidavit has been filed on behalf of the respondent.

¶16

ppn 3 cp-270.12.doc

¶17

It is averred that the petitioner supplied 2294 number of bearings under the name of a company known as FAG and the respondent used these FAG bearings for manufacturing its products. It is averred that the respondent-company received a number of complaints in respect of the machines and it was found out that the machines which were sold during the period from May 2010 to March 2011 had experienced problems when FAG bearings were used. Thereupon, the respondent called upon the petitioner to give Test Certificates in respect of the bearing, which the petitioner refused. It is averred that in view of this position, the accounts department of the company stopped the payment to the petitioner and there is a bonafide dispute.

¶18

I have heard Mr.Shah, learned counsel for the petitioner and Mr.Avhad, learned counsel for the respondent.

¶19

It appears from the arguments advanced that certain factual position is admitted. Firstly that ball bearings were supplied by the petitioner to the respondent. There was a problem regarding quality of ball bearings. A meeting took place between the representatives of the petitioner and the respondent on 27 December 2010. In the meeting, it was agreed that ball bearings which had supplied were not up to the mark. Once the document dated 27 December 2010 i.e. Minutes of meeting is admitted, then question arises what is the implication thereof. According to the petitioner, the petitioner agreed to give set off of Rs.2 lacs and the balance amount is payable. According to the respondent, once the goods were rejected, there was no question of giving any set off of only Rs.2 lacs and the accounts department has rightly stopped the

cp-270.12.doc

ppn 4

payment.

Once it is established that the products supplied by the petitioner were not genuine, then the stand taken by the respondent that it is entitled to withhold the payment cannot be said to be a unreasonable stand. The set off which is assured was by the Works Manager and not by the Accounts Department. From the documents which are placed on record, it is clear that the goods supplied were not genuine products. In the Minutes of Meeting, the word “Chinese” is scored of and the word “rejected” has been inserted in its place.

¶24

The learned counsel for the petitioner submitted that the petitioner is not at fault as the petitioner has purchased the goods from the open market. It appears from the stand of the petitioner that it was deceived in purchasing the goods which were counterfeit. The petitioner, who is in the business of sourcing and supply of such goods, would undoubtedly be aware where it had purchased the goods. If the petitioner received fake goods, then the petitioner can proceeded against the supplier of such goods and the respondent cannot be wound up on that count. The respondent cannot be wound up for not making payments when admittedly the goods supplied were faulty and fake. It cannot be said that the respondent had failed and neglected to pay the amount.

¶25

The learned counsel for the petitioner submitted that the FAG bearings supplied were only for Rs.3,76,901/- and even assuming that they were fake, the remaining amount is liable to be paid to the petitioner. The learned counsel for the respondent is right in contending

¶26

ppn 5 cp-270.12.doc

¶27

that such distinction is not made in the petition or in the notice of winding up. The petitioner has not come out with the case that the bearings supplied by FAG company were fake and they should be kept aside and an amount of Rs.5,83,512/- should be paid. The petition and the notice for winding up have been filed for an amount of Rs. 9,60,413/-. The petitioner was clearly aware, as is borne out from the meeting that the goods supplied under the name FAG were not genuine, then the petitioner ought to have come out with such case and claim in the petition. This conduct of the petitioner is not bona fide to permit it to contend that at this stage that the remaining amount is due and payable. As stated earlier, the payment to the petitioner is seriously disputed and, therefore, cannot be the basis for winding up of the respondent-company.

¶28

Therefore, the stand taken by the respondent cannot be considered as without any bona fides. It cannot be said that the respondent has neglected to pay the amounts. It is settled law that the proceedings for winding up are not for recovering the debts which are disputed. The petitioner's remedy lies elsewhere. No case is made out for winding up of the respondent-company on the allegations made in this petition. Consequently, no case is made out for admission of this petition. The petition is accordingly rejected.

¶29

N.M. JAMDAR, J.

M/S. Mahavir Traders v. M/S. Poona Construction Machinery and Product Private Limited - U26922PN2002PTC01699

Case brief

What is this about?

What did the court decide?

M/S. Mahavir Traders v. M/S. Poona Construction Machinery and Product Private Limited - U26922PN2002PTC01699

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

Case details

Similar cases

M/S.Robinsons Cargo Andlogistics Pvt.Ltd.through Its Director Mr.Shourabh Sharma Vs Livewel Beauty Services Pvt.Ltd.

Trizetto Services India Private Limited. Vs -----------------------------------------------

M/S. C.D. Security Services Network Ltd. Vs the Official Liquidaor of M/S. Trident Steels Limited and 6 Others

M/S.Labdhi Enterprise Vs M/S.Trio-Chem Sucroctech Engineering and Projects Pvt.Ltd., Cin NO.U74999PN1994PTC084060

M/S Millstores Corporation Vs Sun Earth Ceramics Ltd.

Aricent Commercial Services Pvt.Ltd. Vs --