Judgment:
Vikramajit Sen, J.
1. Mr. Ashok Desai, learned Senior counsel has appeared for the Respondent company pursuant to a Caveat filed on its behalf. it is his contention that the present case in not a fit one for the issuance of even a Notice.
2. Mr. Badar Ahmad, learned counsel appearing for the Petitioner, has relied on a decision of the Hon'ble Supreme Court in The National Conduits (P) Ltd. v. S.S. Arora, : [1968]1SCR430 , and to the following passage in particular.
'When a petition is filed before the High Court for winding up of a company under the order of the Court, the High Court (i) may issue notice to the Company to show cause why the petition should not be admitted; (ii) may admit the petition and fix a date for hearing and issue a notice to the Company before giving directions about advertisement of the petition; or (iii) may admit the petition, fix the date of hearing of the petition, and order that the petition be advertised and direct that the petition be served upon persons specified in the order. A petition for winding up cannot be placed for hearing before the Court, unless the petition is advertised; that is clear for the terms of Rule 24(2). But that is not to say that as soon as the petition is admitted, it must be advertised. In answer to a notice to show cause why a petition for winding up be not admitted, the Company may show cause and contend that the filing of the petition amounts to an abuse of the process of the Court. If the petition is admitted, it is still open to the Company to move the Court that in the interest of justice or to prevent abuse of the process of Court, the petition be not advertised. Such an application may be made where the Court has issued notice under the last clause of Rule 96, and even when there is an unconditional admission of the petition for winding up.'
3. Predicated on the above observations Mr. Ahmad contends that a Notice must automatically issue and that the Court has no discretion in this regard. In the first place the words 'may issue' used by the Apex Court clearly preserves the discretion of the Court even at the initial and threshold stage. The facts in that case were that the High Court had taken the view that it must, as soon as the petition is admitted, advertise the petition. This view was struck down specifically keeping Rule 96 of the Company (Court) Rules in perspective. It is my understanding that since the winding-up of a company is itself a discretionary relief, the Company Court is duty bound to consider, at the earliest stage, whether the winding-up petition should be entertained further.
4. Mr. Ahmed has further relied on Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd., : [1972]2SCR201 . Since the law on the subject has been largely distilled in Pradeshiya Industrial and Investment Corporation of Uttar Pradesh v. North India Petro-Chemical Ltd. and Anr., (1994) 2 CLJ 50, reference to earlier decision would not be of great advantage. I have observed in NEPC India Limited v. Indian Airlines Limited, : 100(2002)DLT14 , that in winding-up proceedings it is necessary to keep the following conditions in perspective--
(i) If there is bona fide dispute and the defense is a substantial one, the court will not wind-up the company.
(ii) Where the debt is undisputed the Court will not act upon a defense that the company has the ability to pay the debt but the company chooses not to pay it.
(iii) Where the defense of the company is in good faith and one of substance, and the defense is likely to succeed in point of law, and the company adduces prima facie proof of the facts on which the defense depends, the petition should be rejected.
(iv) The Court may consider the wishes of creditors so long as these appear to be justified.
(v) The machinery of winding-up should not be allowed to be utilised merely as a means of Realizing its debts.
[For the above propositions see Pradeshiya Industrial and Investment Corporation of Uttar Pradesh v. North India Petro-Chemical Ltd. and Anr. (1994) 2 CLJ 50 in which the observation in Amalgamated Commercial Traders (P) Ltd. v. Krishnaswami, and Madhusudan Gordhandas and Co. v. Madhu Woolen Industries (P) Ltd. : [1972]2SCR201 have been paraphrased]. (vi) If the stance of the adversaries hangs in balance it is always open to the Company Court to order the Respondent Company to deposit the disputed amount. This amount may be retained by the Court and be held to the credit of the suit, if any. [see Civil Appeal No. 720 of 1999 arising out of SLP (C) No. 14096 of 1998 - Nishal Enterprises v. Apte Amalgamations Ltd., decided on February 5, 1999].
It appears to me that the following point may be added to the foregoing considerations.
(vii) Generally speaking, an admission of debt should be available and/or the defense that has been adopted should appear to the Court not to be dishonest and/or a moonshine, for proceedings to continue. If there is insufficient material in favor of the petitioners, such disputes can be properly adjudicated in a regular civil suit. It is extremely helpful to draw upon the analogy of a summary suit under Order xxxvII of the Code of Civil Procedure. If the Company Court reaches the conclusion that, had it been exercised ordinary original civil jurisdiction it would have granted unconditional leave to defend, it must dismiss the winding-up petition.
5. With this prefix, I shall now revert to and consider the facts of the present case. The claim in this petition is predominantly on the payment of incentive/commission/bonus as per the Petitioner's letter dated 21.12.2001, and in particular in paragraphs 14.8 and 14.9 thereof, for the sum of Rs. 1,18,36.032. It is not in dispute that an approximate amount of Rs. 41 lacs has already been paid to the Petitioner after the termination of his services with the Respondent Company. This claim is based on the DND Incentive - Commission Scheme dated 25.7.2000 (page 36 of the petition) in consonance with which a payment of Rs. 25,68,525.00 was made on 24.11.2000. The Petition contends that he was entitled to receive payments against this Scheme even for the year 2001 and that no other Scheme was conceived of, or communicated to him after the year 2000. This is in fact the nub of the dispute between the parties. The financial health and well being of the Respondent Company is not in dispute.
6. Mr. Ashok Desai's contention is that a revised Scheme was formulated for the year 2001 as has been specifically spelt out in the Reply of the Respondent Company to the Statutory Notice received by it from the Petitioner. Both parties have relied on the contents of the letter dated 1.4.2001, the relevant part of which is as follows:
'In addition, you will receive a performance-linked commission/incentive as per the special scheme spelt out separately and in keeping with the policy of the company.
All other terms and conditions will be the same as those stated in the employment agreement and subsequent modifications.'
7. The first sentence of the above quoted paragraphs is relied upon by the Respondent as clearly indicating that a special scheme had been spelt out separately to the letter dated 1.4.2001. Receipt of any such special Scheme has been categorically denied. The second sentence has been relied on the Petitioner, since it draws attention to the employment agreement, obviously for the previous year. It cannot, however, be ignored that fresh terms had been negotiated between the parties commencing April 1, 2001 and, thereforee, that a Special Scheme for that year had also been negotiated. As mentioned above the receipt of this Special Scheme, along with the letter dated April 1, 2001 has been denied in these proceedings, but there is no correspondence available to show that the Petitioner had remonstrated against the failure to forward the Special Scheme on any earlier occasion. This Objection inspire no confidence and is palpably an afterthought.
8. Both the parties have also relied on the following paragraph in the Respondent's letter dated October 30, 2001 addressed to the Petitioner.
'In regard to the alleged dues you are attempting to impose upon us, the Company wishes to record that the only amounts due and payable to you are as stated in paragraph 2 above. No other sum of money whatsoever is due or payable by the Company to you. In specific you are aware that incentives/commissions/bonus are payable according to Company Policy. The performance-linked commission/incentive scheme of the Company was communicated to you Along with letter dated 01-04-2001 whereby you were promoted to the position of Vice President - Distribution & Network Development. This scheme was in fact formulated in consultation with you. The kick-off level for incentives or the year 2001 for your department was 85% of the year-end target. In order to be eligible for the incentive you/your department had to achieve 85% (eighty-five per cent) of the year-end target for, for a mid-year pay-out (that is a pay-out as on 30-06-2001) you/your department had to achieve 85% (eighty-five per cent) of 50% (fifty per cent) of the year-end target. The year-end target for your department for the year 2001 was US Dollars 6.82 million and the mid-year target was thus US Dollars 3.41 million. up to 30-06-2001 you/your department achieved only US dollars 2.62 million against the incentives kick-off level of US Dollars 2.9 million. As per policy year-end incentives if any, are payable only to those employees who are on the Company rolls as of December 31st. You are thereforee fully aware that no incentive commission or bonus is payable to you for the present year.'
9. The above paragraph clearly discloses that a bonafide dispute of this issue is in existence. According to the Respondent the Bonus was not payable because the target of 85 per cent had not bene achieved in the year 2001.
10. Mr. Ahmed has vociferously argued that beyond bare reference to the Scheme applicable for the year 2001, this document has not seen the light of the day. It is his contention that if any such Scheme is produced it would be a false and fabricated document. According to him the defense which has been put forward is malafide and in the nature of moonshine. He has also emphasised the fact that in Reply to the statutory notice the existence of the Scheme has not been mentioned. While this is true, it cannot be ignored that there is detailed account of the Petitioner's ineligibility for payment of incentive/commission because of failure to meet year-end targets. Specific sums have been mentioned in the Reply. I must record my initial ambivalence as to the correct and appropriate course to be adopted in the face of the non availability of the Scheme for the year 2001. The Explanationn given by Mr. Desai is that the Petitioner has already threatened in writing that the intends to file a suit and that the defense of Respondent Company is clearly available from its Reply to the statutory notice. He has relied on a decision of Re Lympne Investments Ltd., [1972] 2 AER 385, that in winding-up proceedings the Company Court should not transform into debt collecting agency or means of bringing improper pressure to bear on a company. He has also relied on the observations to the effect that where viva voce evidence is required, winding-up petitions would be an inappropriate remedy.
11. It has been set down in numerous judgments that winding-up order are discretionary in nature, that such action should not be permitted to continue if it is clear that it is a pressure mode for effecting recoveries, and that if a bonafide defense has been presented, the Petitioner should be relegated to other means for adjudication of his grievances. It should not be overlooked that well before the filing of the present petition the Respondent-Company had already released a sum of over Rs. 41 lacs which, in its view, was the only amount payable to the Petitioner. I am unable to find even a semblance of an admitted debt in this case. Incentives/bonus for the year 2000 have been calculated by the Respondent Company and have been paid. For determining the amount payable, if any, for the year 2001, such accounting is again necessary. This can be properly and appropriately conducted not in the summary procedure such as the present one, but in a regular civil suit. One of the reasons for preference of winding-up petitions is the summary nature of its proceedings, and the fixed Court fee payable. But where complicated questions of fact have still to be ironed out, the Company Judge should direct the Petitioner to the civil Court.
12. In the facts and circumstances of the case I am constrained to dismiss the petition at the threshold. The petition is accordingly dismissed. The parties shall, however, bear their respective costs.