Chatterjee Construction (Engineers and Contractors) Vs. Versatile Construction (P) Ltd.

Chatterjee Construction (Engineers and Contractors) vs Versatile Construction (P) Ltd.

Disposition Petition dismissed Court Orissa Decided Jul 07, 2006

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Citation: sooperkanoon.com/533286
Court: Orissa High Court
Judge: M.M. Das, J.
Decided On: Jul 07, 2006
Case Number: COPET No. 2 of 2003
Subject: Company
Disposition: Petition dismissed

Case Summary

AI-generated summary - not the official court judgment text.

Company - Winding Up - Section 434 of Companies Act, 1956 - Respondent company entrusted petitioner with construction work of multi-storied apartment and for this purpose, parties entered into agreement containing terms and conditions agreed to between them for execution of work - Petitioner claimed to have execute...

Key legal issue: Company
Outcome / disposition: Petition dismissed
Acts & sections: Companies Act, 1956 - Sections 433, 434 and 434(1); Workmen's Compensation Act

Parties & Advocates

Appellant / Petitioner

Chatterjee Construction (Engineers and Contractors)

Advocate P.K. Patnaik,; R.G. Singh,; S.K. Patnaik and;

Respondent

Versatile Construction (P) Ltd.

Advocate S.C. Parija,; P. Behera and; M.R. Tripathy, Advs.

Legal References

Acts: Companies Act, 1956 - Sections 433, 434 and 434(1); Workmen's Compensation Act
Cases Referred: Sika Qualcrete Ltd. v. The Orissa Bridge Construction Corporation Ltd. and Anr.
Reported In: 102(2006)CLT580; [2007]139CompCas94(Orissa); [2007]75SCL520(NULL)

Excerpt

.....construction work of multi-storied apartment and for this purpose, parties entered into agreement containing terms and conditions agreed to between them for execution of work - petitioner claimed to have executed various works entrusted to it under said agreement by investing huge amount of money and submitted number of bills to respondent company for works done - respondent company were not paid running bills of petitioner which respondent company is liable to pay, still remains - petitioner issued statutory notice under section 434 of act - as no compliance by respondent - hence, present writ application for winding up of respondent company - held, facts of case reveal that prior to issuance of notice by petitioner, respondent company in various letters referred disputed claim of petitioner and demanded payment of amount of more than remains dues, from petitioner which can be taken to be cross claim - even on receiving advocate's notice from petitioner, said demand was reiterated by respondent company in its reply of said notice - in view of above facts as revealed from record, order of winding up of respondent company would be against settled position of law - for above reasons, not inclined to allow prayer of petitioner and pass order for winding up - therefore, writ application dismissed accordingly - labour & services pay scale:[tarun chatterjee & r.m. lodha,jj] fixation - orissa service code (1939), rule 74(b) promotion - government servant, by virtue of rule 74(b), gets higher pay than what he was getting immediately before his promotion - circular dated 19.3.1983 modifying earlier circular dated 18.6.1982 resulting in reduction of pay of employee on promotion held, it is not legal. statutory rules cannot be altered or amended by such executive orders or circulars or instructions nor can they replace statutory rules. - under the letter in annexure-d, the petitioner was intimated that in spite of repeated requests and reminders, it has failed to..........433 and 434 of the companies act, 1956 (hereinafter referred to as 'the act') for winding up of the opp. party-company, m/s. versatile construction (p) ltd. (hereinafter referred to as 'the company').2. it is stated in the petition that the opp. party-company entrusted the petitioner with the construction work of the multi-storied apartment in the name and style of 'satyasai apartment' at lewis road, bhubaneswar and for this purpose, the parties entered into an agreement on 14.12.1998 containing the terms and conditions agreed to between them for execution of the above work. the petitioner claimed to have executed various works entrusted to it under the said agreement by investing huge amount of money and submitted number of bills to the opp. party-company for the works done. it is alleged in the petition that the running bills of the petitioner were not paid in time and further, the dues of the petitioner, which the opp. party-company is liable to pay, amounting to rs. 37,27,972.71 still remains outstanding on the opp. party-company. accordingly, the petitioner issued an advocate's notice by registered post on 6.12.2002, which was received by the opp. party-company. the agreement between the parties has been annexed to the petition along with other documents. on the above basis, the petitioner has sought for winding up of the opp. party-company.3. a counter affidavit has been filed by the opp. party-company disputing its liability and denying the claim of the petitioner. it has been asserted in the counter that the petitioner violated the terms of the agreement which was intimated to it by the opp. party-company by its letter dated 13.4.2000 annexure-b. the said violation relates to non-compliance of the statutory requirements by the petitioner for which opp. party-company intimated the petitioner that in spite of repeated requests it has not complied with such requirements and required it to furnish valid labour licence, insurance as per workmen's.....

Full Judgment

M.M. Das, J.

1. This is an application under Section 433 and 434 of the Companies Act, 1956 (hereinafter referred to as 'the Act') for winding up of the opp. party-company, M/s. Versatile Construction (P) Ltd. (hereinafter referred to as 'the Company').

2. It is stated in the petition that the opp. party-company entrusted the petitioner with the construction work of the multi-storied apartment in the name and style of 'Satyasai Apartment' at Lewis Road, Bhubaneswar and for this purpose, the parties entered into an agreement on 14.12.1998 containing the terms and conditions agreed to between them for execution of the above work. The petitioner claimed to have executed various works entrusted to it under the said agreement by investing huge amount of money and submitted number of bills to the opp. party-company for the works done. It is alleged in the petition that the running bills of the petitioner were not paid in time and further, the dues of the petitioner, which the opp. party-company is liable to pay, amounting to Rs. 37,27,972.71 still remains outstanding on the opp. party-company. Accordingly, the petitioner issued an Advocate's notice by registered post on 6.12.2002, which was received by the opp. party-company. The agreement between the parties has been annexed to the petition along with other documents. On the above basis, the petitioner has sought for winding up of the opp. party-company.

3. A counter affidavit has been filed by the opp. party-company disputing its liability and denying the claim of the petitioner. It has been asserted in the counter that the petitioner violated the terms of the agreement which was intimated to it by the opp. party-company by its letter dated 13.4.2000 Annexure-B. The said violation relates to non-compliance of the statutory requirements by the petitioner for which opp. party-company intimated the petitioner that in spite of repeated requests it has not complied with such requirements and required it to furnish valid labour licence, insurance as per Workmen's Compensation Act, permanent income tax account number provident fund registration number and payment receipts, wage register and muster roll. It is further alleged that he petitioner did not comply with the above requirements nor submitted the above mentioned documents with the opp. party-company. Again by latter dated 14.4.2000, under Annexure-C, the petitioner was intimated that the quality of workmenship in respect of the construction work was not as per the agreement. Under the letter in Annexure-D, the petitioner was intimated that in spite of repeated requests and reminders, it has failed to complete the contract work within the stipulated period and subsequently, time for completion was extended upto 31.12.2000. According to the opp. party-company, the petitioner abandoned the contract work and also failed to rectify the defects and deficiencies pointed out to it during the course of execution of the work. It further appears that in reply to the Advocate's notice issued by the petitioner, the opp. party-company denying the said liability to pay the amount, issued a letter which has been annexed as Anenxure-F to the counter, inter alia, stating that for the negligent act and deficiency of the petitioner, the opp. party-company had to incure expenses amounting to more than Rs. 15.00 lakhs which would be payable by the petitioner to the opp. party-company. Subsequent to the said letter, the opp. party-company by a further letter dated 20.12.2002 (Annexure-G) furnished a statement of demand to the petitioner giving therein the details of the expenses incurred by it to repair and rectify the defects and also the payments made towards the liability to workmen/suppliers/contractors which was left unpaid by the petitioner.

4. In course of hearing, Learned Counsel for the petitioner relying upon the agreement between the parties and various bills submitted to the opp. party-company contended that the claim of the petitioner being a bona fide one and the opp. party-company having not paid the dues of the petitioner, the said company is liable to be wound up.

5. Mr. S. C. Parija, Learned Counsel for the opp. party-company, per contra, submitted that the dispute raised by the opp. party-company being a bona fide dispute and the defence being a substantial one, the Court should not pass any order for winding up of the company. He further submitted that winding up of the opp. party-company would not only be in the public interest but if made, would be against the interest of the workers employed by the said company, the same being a running company.

6. Section 433(e) and relevant portion of Section 434 of the Act are quoted hereunder:

433. Circumstances in which company may be wound up by Tribunal: A company may be wound up by the Tribunal:

(a) to (d) *** *** ***

(e) if the company is unable to pay its debts; (f) to (i) *** *** ***

434. Company when deemed unable to pay its debts: (1) A company shall be deemed to be unable to pay its debts:

(a) If a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding (one lakh rupees) then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor.

(b) & (c) *** *** ***

(2) The demand referred to in Clause (a) of Subsection (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf , or in the case of a firm it is signed by any such agent or legal adviser or by any member of the firm.

7. Mr. Parija, Learned Counsel for the opp. party-company relied upon the decision in the case of Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Private Ltd. : [1972]2SCR201 and the decision in the case of Sika Qualcrete Ltd. v. The Orissa Bridge Construction Corporation Ltd. and Anr. 2005 (Supp.) OLR 412 in support of his contention that the opp. party-company has raised a bona fide dispute and its defence is a substantial one. He submitted that in view of the above position of law, the prayer for winding up of the opp. party-company should be rejected.

8. The Supreme Court in the case of Madhusudan Gordhandas & Co. (supra) has categorically held as follows:

20. Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. The Court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. [See London and Paris Banking Corporation (1874) 19 Eq 444]. Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been properly was not allowed. [See Re. Brighton Club and Norfolk Hotel Co. Ltd. (1865) 35 Beav. 204].

The ratio of the aforesaid decision in the case of Madhusudan Gordhandas & Co. (supra) was followed in the case of Sika Qualcrete Ltd. (supra).

9. Facts of the present further reveal that even prior to issuance of the registered notice by the petitioner in compliance to Subsection (1) of Section 434 of the Act, the opp. party-company in various letters referred to above disputed the claim of the petitioner and demanded payment of an amount of more than Rs. 15.00 lakhs from the petitioner which can be taken to be a cross claim. Even on receiving the advocate's notice from the petitioner, the said demand was reiterated by the opp. party-company in its reply given to the said notice of the petitioner.

10. In view of the above facts as revealed from the record, an order of winding up of the opp. party-company would be a dichotomy to the settled position of law.

11. For the aforesaid reasons, I am not inclined to allow the prayer of the petitioner and pass an order for winding up of the opp. party-company.

12. The COPET is, therefore, dismissed.

Same Court & Year Orissa · 2006 Same Parties Chatterjee Construction (Engineers and Contractors) vs Versat... Same Subject Company Same Judge M.M. Das, J. Acts & Sections Companies Act, 1956 - Sections 433, 434 and 434(1); Workmen's...

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