Revell Gmbh & Co. Kg vs M/S Fore Square Retail Private ...
2014 Latest Caselaw 970 Del

             THE HIGH COURT OF DELHI AT NEW DELHI
%                               Judgment delivered on: 21.02.2014

+       CO.PET.95/2011
REVELL GMBH & CO. KG                                       ..... Petitioner

                                   versus

M/s FORE SQUARE RETAIL PRIVATE LTD.                        ..... Respondent
Advocates who appeared in this case:
For the Petitioner   : Ms Rekha Palli and Ms Punam Singh.
For the Respondent   : Mr Manik Dogra.

CORAM:-
HON'BLE MR JUSTICE VIBHU BAKHRU

                               JUDGMENT

VIBHU BAKHRU, J

1. The present petition has been filed by the petitioner company under Sections 433(e) and 434 of the Companies Act, 1956, inter alia, praying for winding up of the respondent company on the ground that the respondent company has failed and neglected to pay a sum of USD 534,696.20, due and payable by the respondent to the petitioner on account of supply of goods (Model Kits products, Paints Accessories, Airbrush, Metal and Slot Cars). The respondent disputes that any amount is due and payable to the petitioner. The respondent alleges that goods supplied by the petitioner were defective, hazardous and substandard and the petitioner is not entitled to any payment in respect thereof. It is further contended that the petitioner is also liable for customs duty and other charges for storing the said goods and the respondent is entitled to recover substantial amounts from the

petitioner.

2. Admittedly, the respondent has received the goods supplied by the petitioner. Thus, the only controversy that needs to be considered in the present case is whether the defense raised by the respondent that the said goods were defective, hazardous and substandard, is bonafide.

3. Briefly stated, the relevant facts are as follows:-

3.1 The petitioner company and the respondent company had entered into an agreement, titled "Letter of Agreement", dated 01.04.2007 whereby the petitioner company agreed to supply and sell the goods (Model Kits products, Paints Accessories, Airbrush, Metal and Slot Cars) to the respondent company on credit basis. Some of the relevant clauses of the said Agreement are extracted below:-

        "b.       Distributor Relationship.
        xxxx           xxxx        xxxx          xxxx         xxxx

The Supplier will sell to The Distributor and The Distributor will purchase from The Supplier the Products to be resold by The Distributor.

xxxx xxxx xxxx xxxx xxxx The Distributor undertakes diligently to canvass for purchasers of the Products and in all reasonable and proper ways vigorously to promote the sale of the Product in The Territory. The Distributor will maintain adequate sales, service and warehouse facilities, a sales staff and adequate inventory of the Products in The Territory. It is imperative that the deliveries to the smaller shops may not be interrupted or even disrupted. Therefore The Distributor may have to appoint a sub-

distributor (in consent with the Supplier) to deal with the smaller accounts.

The Supplier, in its turn, undertakes not to sell the Products to any other retail- as well as wholesale merchandiser in The Territory the Products to be resold in The Territory except of the cases mentioned in the Clause a-Exclusions.

        xxxx           xxxx        xxxx        xxxx         xxxx
        h.        Payment Terms

Payment for a consignment delivered is to effect:

90 days from bill of lading xxxx xxxx xxxx xxxx xxxx Until the distributor has paid in full the purchase price and any interest and other charges in respect of the goods (each order being treated as a whole) and any other sums which may be due to the Company from the buyer:

1) Legal & beneficial ownership of the goods shall remain with the Company; and

2) The Company shall be entitled to repossess the goods at any time.

        xxxx           xxxx        xxxx        xxxx         xxxx
        j.        Product Warranty and Liability

The Supplier warrants that the Products are free from defects and safe for their intended use, and indemnifies. The Distributor against any and all claims, damages and injuries resulting from or connected with the Products. The Product liability is covered by The Supplier‟s German insurance........

        xxxx           xxxx        xxxx        xxxx         xxxx
        m.        Validity of Agreement
        The term of this agreement shall be for:

60 months from April 1st, 2007*** for India, Sri Lanka, Bangladesh, Nepal"

3.2 Pursuant to the said agreement, the respondent placed two orders

dated 19.06.2007 and 12.07.2007 with the petitioner for supply of the goods in question to the respondent company. Admittedly, the petitioner company supplied the goods and raised invoices for the same. The details of the invoices and the debit/credit notes are given below:-

Amount in S No. Invoice No. Date USD

1. 067071 31.08.2007 84732.12

2. 066550 29.08.2007 52830.00

3. 078002 28.09.2007 20314.44

4. 078006 28.09.2007 45121.62

5. 078336 01.10.2007 1358.40

6. 080262 09.10.2007 17260.80

7. 080488 10.10.2007 67000.86

8. 081527 12.10.2007 60391.56

9. 083770 19.10.2007 48619.68

10. 083771 19.10.2007 70931.40

11. 850283 22.10.2007 4605.00

12. 850311 23.11.2007 484.34

13. 850312 23.11.2007 2220.54

14. 850317 29.11.2007 4085.30

15. 850318 29.11.2007 2352.04

16. 850319 29.11.2007 2446.41

17. 850320 29.11.2007 936.24

18. 029659 18.03.2008 21174.66

19. 032587 03.04.2008 19466.58

20. 038549 29.04.2008 4828.02

21. 850170 18.06.2008 2304.45

22. 850171 18.06.2008 2063.34

23. 850172 18.06.2008 805.76

24. 850173 18.06.2008 892.96 Total 537,226.52

Credit Note dated 11.08.2008 (95.05) Debit Note raised by (2435.27) Respondent

Net Balance 534,696.20

3.3 The petitioner raised the invoices dated 31.08.2008 to 19.10.2007 and invoices dated 18.03.2008 to 29.04.2008 (mentioned at serial no. 1 to 10 and 18 to 20 in the above table) for the goods supplied by the petitioner to the respondent company. The petitioner also raised invoices towards freight charges (mentioned at serial no. 11 to 17 and 21 to 24 in the above table). Therefore, the petitioner raised invoices for an amount aggregating to USD 537,226.52.

4. It is contended by the counsel for the petitioner that, despite

shipment of goods, the respondent failed to clear the payment of the initial invoices raised by the petitioner. The petitioner was inclined to cancel the orders placed by the respondent for supply of the balance goods, however, the respondent, by an e-mail dated 01.10.2007, requested the petitioner not to cancel the orders and requested for holding the shipments for some time. The petitioner has drawn the attention of this court to the said e-mail dated 01.10.2007 whereby the respondent had requested the petitioner not to cancel the orders placed by the respondent on the petitioner.

5. It is stated by the petitioner that the respondent company made a payment for a sum of USD 15,748/- on 02.01.2008 and sent a mail to this effect to the petitioner on 04.01.2008. It is submitted by the petitioner that the respondent company requested the petitioner, by an e-mail dated 10.01.2008, to cancel the order as the respondent was facing difficulty in selling the goods due to the competition in the market at local level and also due to high prices of the goods. The said request was rejected by the petitioner as the components for manufacturing the subject goods had already been procured by the petitioner and the said components could also not be used for manufacturing goods for any other customer other than the respondent. Thereafter, the respondent, by an e-mail dated 30.01.2008, requested the petitioner to postpone the delivery to March, 2008. The relevant extract of the said e-mail dated 10.01.2008 sent by the respondent to the petitioner is as under:-

"We regret to inform you that right now we are unable to take the goods of last order as we are facing lot of problems in selling these goods in the market due to high prices and local

level competitors those are selling the similar range at very low cost."

The relevant extract of the said e-mail dated 10.01.2008 sent by the petitioner to the respondent in response to the e-mail of the respondent is as under:-

"With regards to your email send to Manuela kindly note that we cannot cancel this order. As discussed with Mr. Benara and Mr. Kashyap in November all components have already been bought. As this is a special production run for Benara Retail we cannot use the component for any other customer. Due to this it was agreed that we postpone the December shipments by 1-2 months. Maybe we will be able to convince vendor to postpone until March, but then we will be forced to ship. Reg. The sales situation I am still waiting on your input reg. Marketing activities. Moreover, I plan to visit Benara in Feb together with your Marketing people to develop a sales/marketing strategy in a mutual discussion. Please check with Mr. Benera when he will be available and let me know soonest to arrange visa and flights."

6. It is submitted by the petitioner that as the respondent company failed to clear the outstanding amount the respondent was put to notice by an e-mail dated 13.08.2008 that the respondent would be liable to pay interest at the rate of 8.5% per annum on the outstanding amount. It is contended that since the respondent failed to comply with the terms of the agreement, the petitioner terminated the said Letter of Agreement on 30.10.2008. It is submitted by the petitioner that, thereafter, the respondent company had requested to the petitioner to transfer the stock lying with the respondent to any other distributor and also requested for a 50% price discount with respect to the goods supplied as the respondent was facing the difficulty in selling the goods in the market due to the competition

offered by local dealers and also due to high prices of the goods. The learned counsel for the petitioner has drawn the attention of this court to the e-mail dated 10.11.2008 sent by the respondent which reads as under:-

"We have offered them to ship the stocks to any other distributor. They never agreed / explored this option. They just want payment. Goods are not moving from retail spaces because of high prices.

May be they give us 50% discount, we can still sell the products and pay off the money.

These are the two options as of now. Legal recourse is not the right step they have taken.

We still are in financial problems and our banks have asked us to pay 40% of limits in next 4 months.

There is no way we can pay them. Please speak to them for an amicable settlement."

7. The learned counsel for the petitioner has contended that there is no dispute with regard to the fact that the goods in question had been supplied by the petitioner to the respondent and the values of the goods mentioned in the invoices raised by the petitioner were the values at which the petitioner had agreed to sell the subject goods. It is submitted that the debt is acknowledged and admitted by the respondent and the same is evident from various e-mails exchanged between the parties and specifically the e-mail dated 10.11.2008.

8. It is further submitted that the petitioner issued a demand notice dated 20.07.2010 under section 434(1)(a) of the Companies Act, 1956, to the respondent company, however, the same has also elicited no response.

It is contended that the defense raised by the respondent company is an afterthought. The learned counsel for the petitioner has submitted that the allegation that the goods were defective and substandard had been raised much after the outstanding amount had become due and payable by the respondent company to the petitioner company. It is, thus, submitted that the plea of the respondent that there is a bonafide dispute is baseless and an afterthought. The said allegation has been made only in order to avoid the payment of the outstanding dues of the petitioner. Therefore, the present petition needs to be admitted.

9. It is contended on behalf of the respondent that the present petition is not maintainable as the amount claimed by the petitioner in the present petition is disputed and there is a bonafide dispute. It is contended that the respondent has a valid counter claim against the petitioner. It is submitted by the respondent that the entire case of the petitioner is premised on the assumption that the e-mail dated 10.11.2008 indicates an admission of debt. it is contended that this is erroneous since it overlooks other communications, which indicate that the petitioner‟s claim is disputed. It is submitted that the respondent had on several occasions raised the issue of quality of the goods, even prior to the said e-mail dated 10.11.2008. The counsel for the respondent has drawn my attention to the e-mails dated 18.08.2007, 30.04.2008 and 18.03.2009 sent by the petitioner to the respondent. It is submitted by the respondent that the petitioner, by the e- mails dated 30.04.2008 and 18.03.2009, gave the details with regard to the safety measures required in respect of products which were hazardous. Therefore, it cannot be said that the defense raised by the respondent is an

afterthought or a sham defense.

10. It is submitted by the respondent that the petitioner had dumped the products with the respondent against its instructions. It is contended that despite several requests being made by the respondent to hold on the shipment of the goods or delay the shipment of the goods, the petitioner had sent the defective goods and raised the invoices.

11. It is contended by the respondent that if there is a bonafide dispute and the defense is a substantial one, the court will not pass an order for winding up of the company. The respondent placed reliance on the judgment of the Supreme Court in the case of IBA Health (India) Pvt. Ltd. v. Info Drive Systems SDN. BHD: (2010) 10 SCC 553 and also on the judgment of this court in the case of German Homoeopathic Distributors Pvt. Ltd. v. Deutsche Homeopathic Union DHU: 161 (2009) DLT 703 (DB).

12. It is submitted by the respondent that the petitioner, by an e-mail dated 16.12.2008, gave a proposal to the respondent company to pay an amount of USD 54,959.79 by 31.12.2008 and the petitioner agreed to take back the products up to the value of USD 181,772.20/- if the products provided that the products were in proper and sellable condition with labels and in undamaged boxes. Apart from other proposals, the petitioner also proposed to waive the claim for accumulated interest amounting to USD 39,058.71 till 31.12.2008 as a discount on FOB prices. The respondent, by an email dated 17.12.2008, requested the petitioner to consider and modify the said proposal to the extent that the respondent offered to pay an amount

of USD 54,959.79 in five installments in the following manner: (i) USD 20,000/- before 31.12.2008; (ii) USD 10,000/- each month for January, February & March of 2009; and iii) the balance amount in April, 2009. The respondent also requested the petitioner to consider a discount of 30% for the remaining goods retained by the respondent.

13. It is submitted by the respondent that the petitioner by an email dated 13.05.2009 asked the respondent to pay an amount of USD 113,109.54 to the petitioner latest by 18.05.2009. The petitioner agreed to take back the goods in value of USD 447,976.54 from the respondent only on payment of the due amount of USD 113,109.54 to the petitioner. The respondent, by an email dated 16.05.2009, requested the petitioner to resolve the controversy and the issue of the banned products.

14. It is submitted that the respondent served a demand notice dated 31.07.2009 to the petitioner claiming an amount of USD 273252.46, inter alia, on account of custom and other charges and cost of warehousing for storing the goods after termination of the agreement.

15. I have heard the learned counsel for the parties at length. The law on this subject is now well settled. A winding up petition is not a legitimate means of seeking enforcement of a debt which is otherwise disputed by a company. A winding up petition can also not be used to exert pressure on the company to settle the claims which are not accepted by the company. It is obvious that if a debt is disputed, a refusal to pay such a debt cannot possibly lead to an inference that the company is unable to pay its debts. Having stated above, it is also equally well settled that a sham and spurious

defense would not be permitted to deprive a creditor from maintaining a petition for winding up of the company. The scope of inquiry in the present petition is, therefore, limited to examining whether the dispute raised by the respondent is bonafide or has been raised only for the purposes of defeating the legitimate claims of the petitioner. In proceedings for winding up, the merits of the disputes raised are not as relevant as the sincerity on the part of the respondent in raising such disputes. The present petition has to be examined from this perspective.

16. The respondent has contended that the goods supplied by the petitioner were hazardous to health and were sub-standard. It is further contended that the goods were also defective.

17. In the present case, the agreement entered into between the parties (i.e. „Letter of Agreement‟ dated 01.04.2007) is not disputed. The terms of the agreement clearly indicate that the relationship between the petitioner and the respondent is not that of a principal and an agent. The transactions entered into between the petitioner and the respondent are that of a sale and purchase of goods which have been entered into on a principal to principal basis. Some of the products of the petitioner have also been specified in the agreement and it is thus obvious that the respondent was fully aware of the products of the petitioner that it desired to purchase and resell in the specified market. The payment terms were also agreed between the parties and the respondent was obliged to pay the price of goods supplied within 90 days of the Bill of Lading.

18. There is no dispute that the petitioner company supplied the goods pursuant to the orders dated 19.06.2007 and 12.07.2007 placed by the

respondent on the petitioner company. The invoices raised by the petitioner during the period 31.08.2007 to 19.10.2007 were in respect of goods that were duly received by the respondent. The respondent also made a payment of USD 15,748 against the first invoice dated 31.08.2007. However, the respondent failed and neglected to make further payments. On 01.10.2007, the respondent sent an e-mail requesting the petitioner not to cancel the order. It is relevant to note that at the material time the respondent had received the goods and had had sufficient opportunity to examine the same. Yet, at that stage there was no allegation or complaint that the goods were defective or sub-standard and not in accordance with the order placed by the respondent. As the respondent was in the business of dealing in the subject goods, it cannot be accepted that the respondent was not fully aware of the quality of the goods that it had received. However, the respondent was not confident as to how the goods would be received in the market and, therefore, requested the petitioner to withhold further orders till the respondent could gauge the market response to the products supplied. This is clearly evident from the e-mail dated 01.10.2007 sent by the respondent, the relevant extract of which reads as under:

"Please do not cancel the order. You can manufacture the same but please hold the material (if possible) at your end and we shall inform you latest by 15th November regarding shipment dates. This is with a view that we have to see the response of all these products first and then decide what we can sell and what we cannot."

19. Subsequently, by an e-mail dated 10.01.2008, the respondent informed the petitioner that they were not in a position to accept the goods

as ordered by them since the respondent was facing problems in selling the goods. The contents of the said e-mail are relevant and are quoted below:

"We regret to inform you that right now we are unable to take the goods of last order as we are facing lot of problems in selling these goods in the market due to high prices and local level competitors those are selling the similar range at very low cost."

It is material to note that the reasons given by the respondent for its difficulty in selling the goods were (a) high prices and (b) local level competitors who were selling similar range of products at lower costs. It is material to note that even at this stage there was no complaint as to the quality of goods or any suggestion that the products were hazardous and unsellable. The petitioner could not accede to the request for withholding the order as it was pointed out that the goods were being manufactured as a special production run for the respondent and the components for the same had already been bought. Thereafter, on 31.01.2008, the respondent once again requested the petitioner to postpone the delivery to March, 2008. It is apparent that this request was acceded to. The petitioner, thereafter, raised invoices for the goods supplied during the period 18.03.2008 to 29.04.2008.

20. Admittedly, the goods in respect of these invoices were received by the respondent. It is material to note that all goods were received and cleared by the respondent. The respondent has contended that the petitioner had thrust the goods on the respondent despite the same being un-sellable and despite the respondent requesting the petitioner to hold deliveries. This defense raised is clearly unsustainable and has been raised at a later date only to avoid the payments due to the petitioner. Indisputably, the orders

for the goods had been placed by the respondent on the petitioner. The goods had, thereafter, been dispatched and also cleared by the respondent. There is no possible explanation as to what compelled the respondent to place the order for the goods and thereafter, accept the same by clearing the goods from customs and accepting the delivery of the same. Having accepted the delivery of the goods it is not open for the respondent to contend that the goods had been thrust upon the respondent against its will. This is clearly not a defense which is sincere or bonafide. The fact that the respondent had requested for deliveries to be deferred was only for the reason that the respondent wanted to test the products in the market. The fact that the respondent was not successful in reselling the goods was attributed by the respondent to high prices and local competition. These defenses are certainly not available for a purchaser to avoid payments of the goods purchased by him. The petitioner is certainly not responsible for the inability of the respondent to resell the goods or any difficulty faced by the respondent in its business.

21. The petitioner continued to demand payment for the goods and also put the respondent to notice, by email dated 13.08.2008, that it would charge interest at the rate of 8.5% p.a. on the outstanding amount.

22. The exchange of e-mails that ensued thereafter, clearly indicates that efforts were being made by the petitioner and the respondent to amicably arrive at a resolution whereby the dues of the petitioner could be discharged. It is clearly evident from the correspondence exchanged between the parties that the respondent could only resell a fraction of goods that it had purchased and accordingly, the efforts of the respondent were

directed at persuading the petitioner to take back some goods and grant further discounts. The email dated 10.11.2008 sent by the respondent is relevant as it also indicates the reason attributed by the respondent for its inability to resell the goods and further also indicates that the respondent was aware that the petitioner had taken steps to take a legal recourse against the respondent. The relevant extract of the said email is quoted below:-

"We have offered them to ship the stocks to any other distributor. They never agreed / explored this option. They just want payment. Goods are not moving from retail spaces because of high prices.

May be they give us 50% discount, we can still sell the products and pay off the money.

These are the two options as of now. Legal recourse is not the right step they have taken.

We still are in financial problems and our banks have asked us to pay 40% of limits in next 4 months.

There is no way we can pay them. Please speak to them for an amicable settlement."

23. Thereafter, the petitioner made an offer for settlement of dues by an e-mail dated 16.12.2008. In terms of this offer, the respondent would be required to pay USD 54,959.79 to the petitioner by 31.12.2008. This sum includes USD 20,046.99 on account of goods that had already been sold by the respondent and USD 34,912.80 in respect of other goods. The petitioner proposed to take back goods valued at USD 1,81,772.20. The goods valued at USD 195,025.68 were to be kept by the respondent for resale. In response to this offer, the respondent give a counter-offer by an e-mail dated 17.12.2008 whereby the respondent agreed to pay USD 54,959.79, in

installments, by April, 2009. The respondent requested that return of certain goods be accepted and for the balance goods, a discount of 30% be granted to the respondent. It was proposed that the respondent would continue to sell the goods and that further purchases would be made against letters of credit. This proposal could not fructify in a settlement. However, it is apparent that the real problem faced by the respondent was regarding marketing and selling the goods and not on account of the goods being hazardous or defective as now alleged. The fact that the respondent proposed to continue to sell the goods also clearly indicate that there was no impediment, legal or otherwise, in selling the subject goods. The only issue that the respondent had voiced was with regard to the prices of the subject goods.

24. The defense now raised by the respondent has to be viewed in the backdrop of the aforesaid facts.

25. The respondent has alleged that the goods in question are hazardous and are of sub-standard quality. The respondent has also referred to the e- mail dated 10.11.2008 sent by the petitioner and has relied on the following sentence of the said mail: "Marko has requested Mr Benara several times to tell him the"alleged" problem items and to quote the quantity". It is contended that the above quoted sentence indicates that the respondent had already communicated to the petitioner that the goods were defective and sub-standard. The respondent has also relied on the e-mail dated 18.08.2007 which included the following sentence: "Thanks for your explanation for the Mattel case. We will check the again for the goods contain lead or not. It seems do children business getting more difficult

more and more." It is contended that the above sentence also indicates that the respondent had already communicated that the goods were defective. In my view, the reliance placed by the respondent on the aforesaid e-mails is completely misconceived and above all not honest. The first email refers to certain problem that seems to have been communicated and the second mail is an e-mail from the suppliers of the petitioner that had been forwarded to the respondent. The only problem pointed out by the respondent at that stage was with regard to the prices of the goods and there was not even a whisper that the goods were not of a requisite quality or were hazardous. It is apparent that in the event the respondent had any grievance regarding the quality of the goods that would have been voiced at the relevant time. However, there is no clear statement by the respondent in any of its e-mails at the relevant time that the goods were of a sub-standard quality or were hazardous.

26. Although, the respondent had contended the mail received by the respondent indicates that there was a regulatory impediment in selling the goods in the specified territories, it is apparent that there is no such impediment in selling the goods as the respondent had in the subsequent e- mails agreed to sell the goods in question and only sought a price discount. The said e-mails also do not indicate that there was any dispute between the parties with regard to the quality of the goods. It seems that the respondent is now endeavoring to cull out sentences from normal commercial correspondence to try and create an illusion of an extant dispute. In the event, there was any dispute as to the quality of the goods, the same would have been unequivocally communicated to the petitioner specially in the

circumstances where the respondent had not been able to sell the goods and had not made the payments which were being repeatedly demanded by the petitioner.

27. The emails dated 30.04.2008 and 18.03.2009 are emails sent by the petitioner to all its customers (termed as partners) communicating the safety disclosures that are required to be made. The same do not in any manner support the contention that there was dispute between the parties regarding the quality of the products.

28. The reliance of the respondent on the decision of the Supreme Court in IBA Health (I) Pvt. Ltd. (supra) is also misplaced. The said decision does not support the contentions canvassed by the respondent. In that case, the Court had concluded that there was a substantial dispute with regard to compliance with the terms and conditions of a settlement and in cases of substantial and genuine disputes a winding up petition would not lie. The relevant extract in the said decision is quoted below:-

"17. The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on

substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt."

29. The respondent has contended that a notice dated 31.07.2009 was caused to be served by the respondent on the petitioner wherein certain counter claims on account of custom duty and storage charges had been made. The learned counsel for the respondent has urged that this notice was issued prior to the notice issued by the petitioner under Section 434(1)(a) of the Act. In my view, the said facts would not be relevant as the e-mail dated 10.11.2008 which has been placed on record clearly indicates that the respondent was aware that a legal action was being contemplated by the petitioner much prior to July 2009. It is apparent that the notice dated 31.07.2009 was caused to be sent only as a pre-emptive measure by the respondent. The fact that respondent has not initiated any action for recovery of the amount claimed in the said notice also indicates that the respondent was not serious in respect of the claims made in the said notice.

30. The facts in the case of German Homoepathic Distributors Private Limited (supra) are also materially different from the facts of the present case. In that case, the appellant (respondent in the company petition) had made several counter claims. The company Judge had examined the claims and also found certain claims to be, prima facie, payable. With respect to certain other counter claims, the learned Judge had found the claims to be excessive and had scaled down the quantum. It is in these facts that the

Division Bench of this Court had held that winding up petition was not maintainable as there was substantial disputes between the parties. In cases of genuine disputes, a winding up petition would not be maintainable, however, in the present case, the disputes raised by the respondent are neither substantial nor bonafide.

31. In the given circumstances, the company petition is admitted.

32. Relist for considering the aspect for advertisement on the petition on 21.03.2014.

VIBHU BAKHRU, J FEBRUARY 21, 2014 MK/RK