Active Enterprises Private ... vs Radhika Fibres (I) Ltd.
2010 Latest Caselaw 4157 Del

            IN THE HIGH COURT OF DELHI AT NEW DELHI
                    (COMPANY JURISDICTION)

                        COMPANY PETITION NO. 253/2007

                                 Date of pronouncement : September 8, 2010

       ACTIVE ENTERPRISES PRIVATE LIMITED    ..... Petitioner
            Through                  Mr. Amar Khera, Adv.

                        versus


       RADHIKA FIBRES (I) LTD.                         ..... Respondent
           Through                             Mr. Asit Tewari, Adv.


CORAM :

HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA

1.     Whether Reporters of local papers may be allowed to see the
       judgment? Yes
2.     To be referred to the Reporter or not? Yes
3.     Whether the judgment should be reported in the Digest? Yes


SUDERSHAN KUMAR MISRA, J. (ORAL)

1. This petition for winding up of M/s Radhika Fibres (India) Ltd. is

predicated on the non-payment of an amount of Rs.10,86,858/-,

allegedly owed by the respondent to the petitioner in respect of

services supplied by the petitioner to the respondent.

2. Active Enterprises Pvt. Ltd, i.e. the petitioner herein, is in the

business of repair and maintenance of diesel sets of various

makes/models. The respondent, Radhika Fibres (India) Ltd., is in the

business of spinning, weaving, knitting, manufacturing and otherwise

dealing in fabric and fabric items.

3. It is the petitioner's case that the respondent availed of its

services for repair of the respondent's Diesel Generator Set (DG Set)

of 1250 KVA. The petitioner says that it executed the said repair work

and duly installed the DG Set in working condition, on 6th June, 2006

at the respondent's work site, in the presence of its engineer, its

foreman and its Vice-President.

4. In respect of this service, the petitioner raised Invoice No.27

dated 12th June, 2006 for an amount of Rs.15,86,858/- , against which

the respondent had admittedly paid an amount of Rs.5,00,000/- as

advance payment, leaving a net balance of Rs.10,86,858/- due and

payable by the respondent to the petitioner.

5. However, the petitioner received a letter dated 29 th July, 2006

from the respondent, saying that the aforesaid DG Set seized and

broke down after 73 hours of functioning. By the same letter, the

petitioner was also informed that the respondent was arranging a

meeting on 4th August, 2006 with a representative of the

manufacturer, Cummins Diesel Sales & Service India Ltd., to examine

the fault in the machine, and inviting the petitioner to attend the

meeting. This meeting did not fructify. The respondent then sent

another letter dated 8th September, 2006, again informing the

petitioner that a similar meeting had been fixed for 13th September,

2006, and that the petitioner was again invited to attend the aforesaid

meeting. In its reply dated 12th September, 2006, the petitioner

expressed its inability to attend the meeting and requested the

respondent to postpone the same. However, the respondent is stated

to have gone ahead with the meeting.

6. At the meeting, M/s Gulati Diesels, an authorized agent of

Cummins Diesel Sales & Service India Ltd., concluded that the

breakdown in the DG Set occurred because of improper repairs carried

out by the petitioner, as well as lack of proper care whilst overhauling

the DG Set.

7. The respondent intimated this to the petitioner by the a letter

dated 26th September, 2006, and also took the position that since it

had suffered losses on account of the DG Set's breakdown, which, as

per M/s Gulati Diesel's report, was due to the laxity of the petitioner,

therefore, it also had a valid claim for compensation in this regard. To

this, the petitioner responded by a letter dated 10th October, 2006,

stating, inter alia, that it did not agree with the aforesaid report of M/s

Gulati Diesel, because its representatives were not present at the

meeting held on 13th September, 2006.

8. Thereafter, the petitioner served the respondent with a statutory

notice of winding up dated 7th August, 2007, claiming the balance

amount of Rs.10,86,858/- in respect of the cost of repair of the DG

Set. Proof of service of the aforesaid notice at the registered office of

the respondent has been placed on record.

9. The respondent replied to the aforesaid notice of winding up by a

letter dated 13th August, 2007. In essence, the respondent's stand is

that it had approached the manufacturer, Cummins Diesel Sales &

Service India Ltd., who thereafter deputed its own authorized agent,

namely, M/s Gulati Diesels, to inspect the equipment and the latter

had concluded that the seizure of the machine had occurred due to a

fault of the petitioner in its repair and maintenance work, entailing

consequential losses also, and that, therefore, the respondent's

liability to make any payment in respect of the repair work done by

the petitioner is disputed.

10. Admittedly, the DG Set was installed on 6th June, 2006 after the

repairs in question and by 29th July, 2006, the respondent had written

to the petitioner stating that the DG Set had broken down. Clearly,

the DG Set had stopped functioning very shortly after the petitioner

installed the same at the respondent's work site. I notice that, in

paragraph 3 of the winding up notice dated 7th August, 2007, as well

as in paragraph 4 of the winding up petition; and in paragraph 5 of CA

No.1123/2007 which prays for the appointment of a provisional

liquidator, the petitioner repeatedly alleges that no complaint was

received by the petitioner "till the 3 rd week of June, 2006". This

indicates that after the third week of June 2006 itself, the petitioner

may have been aware of the breakdown of the DG Set.

11. Be that as it may, the fact remains that the said DG Set of 1250

KVA had clearly required extensive repairs, at a cost of approximately

Rs.16 lakh. The expected life of the set after such extensive and

expensive repairs must necessarily have been substantial. Normally,

one does not expect it to stop functioning within 73 hours. The fact

that it did so is certainly a matter which requires a trial to determine

who is responsible for the seizure and break down of the machine.

Other issues such as, refund, damages, compensation etc. are also

bound to arise. Under the circumstances, I am not convinced that this

is a matter for the exercise of the Company Court's jurisdiction under

S.433 and 434 of the Companies Act, 1956. To my mind, there is a

genuine dispute about the debt claimed.

12. Keeping in view, inter alia, the decision of the Supreme Court in

Madhusudan Gordhandas & Co. v Madhu Woollen Industries

Pvt. Ltd., (1971) 3 SCC 632, wherein it has been held that a company

will not be wound up in respect of a debt that is bona fide disputed and

the defence raised by the company is substantial, the petition is

dismissed.

Co. Appln. No. 1123/2007

13. In view of the orders passed in the main petition, this application

is rendered infructuous and the same is disposed of as such.

SUDERSHAN KUMAR MISRA, J.

SEPTEMBER 08, 2010 dr