H.L. Dattu, J.
1. The petitioner as well as the respondent arc companies incorporated under the provisions of the Companies Act, 1956 ('the Act').
2. The petitioner-company had entered into a lease agreement with the respondent-company for lease of machinery. A copy of the agreement is also filed along with the company petition. Under the agreement itself, the amount payable by the respondent-company for making use of the machineries supplied by the petitioner-company was indicated. Since there was default in payment of the rentals towards the machineries, the petitioner-company had sent several letters, inter alia, requesting the respondent-company to pay the rentals due, for having supplied the machinery. AH these letters were received by the respondent-company. In fact, the respondent-company has accepted the liability in those correspondences.
3. Since the respondent-company had not paid the amount due to the petitioner-company, the petitioner-company was constrained to issue a statutory notice dated 5-9-2001 to the respondent-company. In that, they had stated as under :
'That, therefore, the client was constrained to issue to you noticee a letter of demand dated 23-8-2001, calling upon you noticee to make the payment of an amount of Rs. 6,40,11,389 (Rupees six crores forty lakhs eleven thousand three hundred and eighty-nine only) that was due and payable along with service charges (payable at the rate of 30% per annum on compounding basis with monthly rents from the due dates of each of the monthly rentals/instalment) accrued up to the said date. The clientfurther had warned you noticee that in case of failure to pay the aforesaid amount, action for repossession of the equipments as per the agreements would be taken.'
4. The statutory notice is received by the respondent-company. The respondent-company had replied the same by its reply letter dated 24-12-2001. In that, at paragraphs 4 and 7, they have stated as under :
'4. The averments in paragraph 3 of your notice are absolutely unjustified. You are informed that our client does not admit that an amount of Rs. 6,40,11,389 (Rupees six crores, forty lakhs, eleven thousand three hundred and eighty-nine only) is due and payable to HP. Further, our client also does not admit that service charges at the rate of 30% per annum on compounding basis with monthly rests arc due from the dates of each monthly rental/installment payments. Please be informed that no such service charges are payable and no such liability had accrued till date. Also please note that the averments in paragraph 3 of your notice, that HP had warned our client of repossession of the equipments clearly depict the [that ?] HP has been illegally threatening our client and its officers of dire consequences. HP has also issued personal threats to the officers of our client. [Our client] reserves the right to initiate appropriate actions against HP and its officers concerned.
7. Please be informed that HP by entering into a series of transactions with third party companies, contrary to our client's expectations, has acted in breach of agreements. It is also pertinent to note that a few third party companies did not fulfil their payment obligations to the various manufacturers of the equipments, and as a result, such manufacturer stopped servicing the equipments. Further, there have been instances where the management and control of the manufacturers have changed hands and such change in management has disrupted the support and service that were to be received by our client. Despite series of requests, HP did not initiate any action to liaison with such manufacturers and suppliers with regard to affording service and support facilities to our client. In the absence of service by the manufacturers of the equipments, our client could not use the equipments for its intended purposes and as a result our client has suffered great hardship and financial loss. Further, it is pertinent to note that certain software tools and applications provided by various manufacturers did not support the intended functions of the equipments. Such failures have been acknowledged by various manufacturers. As a result, our client suffered further financial losses and suffered hardship due to loss of business opportunities.'
5. Since the respondent-company had not settled the amounts due to the petitioner-company, the petitioner-company has filed this company petition with a request to wind up the respondent-company on the ground that the respondent-company is unable to pay its debts due to its creditors in particular to the petitioner-company.
6. The respondent-company has filed its detailed objections to the company petition. Their primary objection seems to be that since there is an arbitration clause provided in the lease agreement entered into by the parlies, the petitioner-company should not be allowed to present this company petition and the relief sought in this petition need not be granted by this Court. In support of that contention, the respondents-have placed reliance upon certain observations made by the various courts.
7. Per contra, Sri Vivek Chandy, the learned counsel appearing for the petitioner-company, states that merely because arbitration clause is provided in the lease agreement, it does not prevent the petitioner-company in presenting a company petition before this Court for winding up the respondent-company on the ground that the respondent-company is not in a position to pay its debts due to its creditors. In support of that contention, the learned counsel has also placed heavy reliance on the observations made by the Madras High Court in the case of Hind Mercantile Corporation (P.) Ltd. v. J.H. Rayner & Co. Ltd [1971] 41 Comp. Cas. 548 and the observations made by the Punjab and Haryana High Court in the case of Geotze. India Lid. v. Pure Drinks (New Delhi) Ltd [1991] 80 Comp, Cas. 340.
8. A perusal of the aforesaid judgments would clearly indicate that it is the discretion of the Court to entertain the company petition, even if there is an arbitration clause in the lease agreement between the parties.
9. A perusal of the lease agreement, the reply sent by the respondent-company to the correspondence of the petitioner-company and the reply to the statutory notice would clearly demonstrate that the respondent-company, though admits its liability, it is not in a position to pay the same. Prima facie, I am of the opinion that the respondent-company is unable to pay its debts, though it has agreed to pay the same within a particular time. In view of that, the petition requires to be admitted and advertised.
10. In view of the above, the following.
ORDER
I. Admit.
II. Petitioner-company is directed to take out notice of this petition in oneedition of 'Times of India' newspaper, and in one addition of 'Prajavani newspaper which has circulation throughout that State, on or before 26-3-2002 fixing the date of hearing as 28-5-2002. Ordered accordingly.