Dismissed

M/S Nanda Knitwears Pvt. Ltd. v. M/S C & a Agencies Pvt. Ltd.

Punjab & Haryana HC21 Sept 2012CP/71/2012

Case brief

AI extract

What is this about?

The Company Court dismissed a winding up petition instituted by the petitioner against the respondent-company, holding that serious disputes over account reconciliation require civil court intervention rather than winding up proceedings.

What did the court decide?

The winding up petition was dismissed with liberty; the petitioner was directed to approach the Civil Court for resolution of account disputes.

M/S Nanda Knitwears Pvt. Ltd. Vs M/S C & a… — Company and Corporate | Punjab & Haryana HC (2012)

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CP-71-2012 (O&M)

Date of Decision: 21.09.2012

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M/s. Nanda Knitwears Pvt. Ltd. . . . . Petitioner

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Vs.

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M/s. C&A Agencies Pvt. Ltd. . . . . Respondent

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1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not?

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3. Whether the judgment should be reported in the Digest?

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Present: Mr. Vipin Jain, Advocate for Mr. Piyush Kant Jain, Advocate for the petitioner

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(1). This winding up petition has been instituted, inter alia, alleging that the respondent-Company is unable to discharge its debt liability in respect of three bills/invoices referred to in para 5 of the petition regarding purchase of goods by the respondent-Company. In addition to above, a sum of Rs.62,370/- is also payable by the respondent-Company towards tax deductible at source for payment received by it vide cheque No.068051.

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(2). For the formation of prima facie opinion whether the respondent-Company is unable to discharge its admitted debt or it has falsely disputed the petitioner’s claim to avoid the consequences like its winding up, the documents on record or material averments made by the petitioner have been perused. Suffice it would be to reproduce the following plea taken by the respondent-Company in its reply dated

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24.04.2012 to the statutory notice served by the petitioner under Section 434 of the Companies Act:-

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“That the fabric bills as mentioned by you in para No.2 of your notice were kept pending as a security measure by my client against the pending commission to be paid by your client to my client and after your client have made the entire payment of the commission, the payment against the fabric bills either was to paid or adjusted against the outstanding commission, as the case may be, by my client as per the settlement between your client and my client. A sum of Rs.18 lacs was paid by your client through two cheques i.e. cheque bearing No.544680 dated 07.09.2011 for a sum of Rs.10 lacs and cheque No.287333 dated 27.02.2012 for a sum of Rs.8 lacs both drawn on State Bank of India, SCB, Civil Lines, to my client towards the outstanding commission amount, which has been duly accounted for and adjusted by my client. My client have earlier sent your client debit notes for their commission vide Debit Notes dated 01.9.2011 for a sum of Rs.7,08,435.89, 13.01.2012 for a sum of Rs.3,34,859.15 and Debit Note dated 27.03.2012 for a sum of Rs.,11,03,000.00 totaling to Rs.21,46,295.04.

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Apart from aforesaid three debit notes, there are two other unpaid commission debit notes amounting to Rs.20,25,891.69 are outstanding. It is pertinent to mention here that these debit notes include 10.3 service charges which has been duly deposited by my client with the authority concerned in due time. Thus, there are Debit Notes raised by my client towards the commission amount payable by your client to my client which totally amounts to Rs.41,72,186.73 and after adjusting sum of Rs.18 lacs paid by your client as referred above, still a sum of Rs.23,72,186.73 remained unpaid and outstanding.”

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(3). The petitioner, on the other hand, relies upon its Statement of Accounts for the financial year 01.04.2011 to 31.03.2012 counter-signed by the authorized signatory of the respondent-company acknowledging credit entry of Rs.25,62,619/-. The above-cited entry if

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viewed against the plea taken by the respondent in its reply reproduced above, it is difficult to re-concile as to why the petitioner paid over Rs.18 lacs or supplied material to the respondent-company who was already in default. The respondent’s allegations in its reply to statutory notice thus cannot be overlooked lightly.

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(4). The admission of a winding up petition has its own adverse implications on the financial status and reputation of the company in

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alleged debt. The Company Court, therefore, has to tread carefully in issuing show cause notice unless it is satisfied from the documents on record the Company was not in a position to liquidate its debt liability.

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(5). This however does not mean that the claim petition is unfounded. From the claim and counter-claim of the parties through correspondence, there appears to be a serious dispute regarding reconciliation of accounts. Hence, the appropriate remedy for the petitioner would be to approach the Civil Court.

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(6). The petition is accordingly dismissed with liberty aforementioned.

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M/S Nanda Knitwears Pvt. Ltd. v. M/S C & a Agencies Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

M/S Nanda Knitwears Pvt. Ltd. v. M/S C & a Agencies Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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