Amitava Lala, J.
1. The aforesaid two appeals have been preferred against the self-same order passed by the learned trial Judge on 27-6-2000 in disposing of a company petition being Company Petition No. 384 of 1993.
2. The Peerless Consultancy Service (P.) Ltd. is the appellant is in one appeal whereas; Ashoka Agency, is the appellant in the other appeal. When some arguments were advanced on the question of grant of interim relief, the learned counsel for the parties submitted before us that both the appeals can be disposed of by treating the same as on day's list instead of hearing the application for grant of interim relief. That being the stand takes by the parties before us. We decided to take up the hearing of the appeals and now both the appeals are being disposed of by this common judgment. Ashoka Agency had made an application under the Companies Act, 1956 for winding up of the Peerless Consultancy Services (P.) Ltd. By the impugned order the learned trial Judge came to a finding on consideration of the materials that it was a proper case where the parties should be relegated to suit. While holding as such, the learned trial Judge, however, directed the Peerless Consultancy Service (P.) Ltd. to furnish security to the tune of Rs. 1.25 lakhs. Feeling aggrieved by this directionon the Peerless Consultancy Service (P.) Ltd., it preferred this appeal (APO 564 of 2000, ACO 93 of 2000). So far as the other appeal (APO 572 of 2000, ACO 95 of 2000) is concerned, the applicant in the winding up petition has preferred the appeal against the impugned order questioning the same as to why the parties should be relegated to suit when the claim of the applicant-appellant was admitted by balance confirmation, dated 18-4-1991 issued by the Peerless Consultancy Service (P.) Ltd. to the applicant/ appellant and in the balance sheet. It was also alleged that question of the relegation to suit in view of the aforesaid admitted fact and also in view of the fact that the Central Tax Declaration Forms were also issued in respect of the aforesaid supplies by the Peerless Consultancy Service (P.) Ltd. and, accordingly, there was ho bona fide or genuine dispute raised by Peerless Consultancy Service (P.) Ltd. regarding the claim of the appellant. However, the learned Judge did not accept the aforesaid balance confirmation dated 18-4-1991 issued by the Peerless Consultancy Service (P.) Ltd. and the balance-sheet for the year 1990-91 as acknowledgement of date by the Peerless Consultancy Service (P.) Ltd.
3. Let us now first take up the hearing of the appeal (APO 564 of 2000, ACO 93 of 2000) of the Peerless Consultancy Service (P.) Ltd. for disposal. In this appeal, a question before us was whether the trial Court was justified in directing that security must be furnished although the Court felt that it was a proper case where the claim of the Ashoka Agency should be relegated to the suit as the issue that has been raised in the company petition could only be decided after adducing evidence. It is well settled that in hearing an application for judgment upon admission under order 12, Rule 6 of the Code of Civil Procedure or in hearing an application under order 37 of the same or in an application under Chapter XI1IA of the Original Side Rules of this Court, the Court shall impose condition of security upon a defaulting party in getting postponement of hearing by way of regular suit to test the bona fides. It is also well settled that such proceedings are not independent of the suits but the same arise out of suits. In the present case the learned trial Judge in the impugned order had already adjudged and found on consideration of the materials on record that it was a proper case where the applicant in the company petition or realisation of its dues should be relegated to suit and there are certain issues which can only be decided after adducing evidence. That being the finding arrived at by the learned trial Judge in the impugned order, we are of the view that question of imposition of security could not be made in the manner as proposed in the said order. We are also of the view that a company petition cannot be regarded as the process of recovery of money and the scope of company petition and the suit for recovery of money are totally distinct and different proceedings from each other. Company petition under Sections 433, 434 and 439 of the Act, is basically made for the purpose of winding up of a company provided a company falls under the conditions envisaged in Section 433. One of such conditions is Section 433(e), i.e., the company is unable to pay its debts. Therefore, when theCourt holds that it is a proper case where the parties should be relegated to a suit and further when the Court is also of the opinion that there are certain issues which can only be decided by adducing evidence, it cannot be said that a company is unable to pay its debts. That being the position and in view of the finding of the learned trial Judge that the right to claim of the petitioning creditor from the Peerless Consultancy Service (P.) Ltd. was rightly challenged, there was no scope for the learned Judge to impose condition for the purpose of relegating the parties to the suit. There is another aspect. It is now well settled law that a company petition cannot be used as a weapon for the purpose of securing a disputed claim which can only be claimed in a suit. Discretion, if any, cannot supersede the legal entitlement. In the case of Mechalec Engineers & Mfrs. v. Basic Equipment Corpn. 0043/1976 : [1977]1SCR1060 , the Supreme Court while holding that triable issues had arisen for adjudication nevertheless, concluded that the defences were not bona fide and, therefore, it could not reasonably be expected to succeed. In such a case leave may be allowed to a party to proceed on his defence on conditions of imposition of security. But if the company satisfies the Court that he has a good defence to claim on merits, the applicant of the company petition is entitled to leave to proceed with the suit and in that case the person opposing the application for winding up would be entitled to unconditional leave to defend. In Mechalec Engineers & Mfrs. case (supra), the following principles have been laid down while considering the question of granting leave to defend :
(a) If the defendant satisfies the Court that he has a good defence to the claim on its merits and plaintiff is not entitled to leave to sign the judgment and the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises triable issue indicating that he has a fair or bona fide or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign the judgment and the defendant is entitled to unconditional leave to defend.
(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.
(d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
(e) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and given leave to defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defence.
4. Applying the condition Nos. (a) and (b) as noted hereinabove and made in the aforesaid decision of the Supreme Court Mechalec Engineers & Mfrs. case (supra), we are of the view that when the trial Court has held that the appellant has a good defence, in that case it must be held that the appellant has raised a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positive good defence and accordingly, the appellant is entitled to unconditional leave to defend. Therefore, taking into totality of the matter, we are of the view that the trial Court was not justified, in the facts and circumstances of this case, in imposing conditions regarding furnishing of security for the purpose of relegating the parties to a suit. Accordingly, this appeal (APO 564 of 2000, ACO 93 of 2000) is allowed in part. The portion in which the learned trial Judge has directed the appellant to furnish security is hereby set aside.
5. There will be no order as to costs.
6. Let us now confine ourselves to the appeal (APO 572 of 2000, ACO 95 of 2000) filed by the petitioning creditor.
7. The petitioning creditor made out a case by saying that apparently a sum more than the minimum sum of Rs. 500 was due and payable by the Peerless Consultancy Service (P.) Ltd. to the petitioning creditor. If the company owes a sum of Rs. 500 to the petitioning creditor and if such petitioning creditor makes such application for winding up under Sections 433, 434 and 439 on the ground that the company is unable to pay its debts, it is just and equitable that the company should be wound up and there cannot be any embargo on the part of the Court not to admit the company petition at least for such sum which is admittedly more than Rs. 500. This process has regularly been adopted by the Courts having company jurisdiction. It is pertinent to mention in this connection that under Section 433(2) where a petition is presented on the ground that it is just and equitable that the company should be wound up, the Court may refuse to make an order of winding up, if it is of the opinion that some other remedies are available to the petitioning-creditor and that they are acting unreasonably in seeking to have the company wound up instead of pursuing the other remedies. Prima facie we are of the view that Section 433 docs not confer on any person a right to seek an order that the company be wound up. It confers power on the Court to pass an order of winding up in appropriate cases. A debt must be a determined or definite sum of money payable immediately or at a future date. Therefore, whenthe Court decides an issue, the claim is not to be ascertained as a matter of right but as a matter of discretion. In the case of Harinagar Sugar Mills Co. Ltd. v. M. W. Pradhan : [1966]60ITR508(SC) , it was held that a winding up order was not a normal alternative in the case of a company to the ordinary procedure for the realisation of the debts due to it but nonetheless it is a form of equitable execution. Propriety does not affect the power but only it exercises. Therefore, we must consider how far such discretion can be exercised in this respect. The appellant in this appeal basically proceeded on the basis of the fact that there was a sundry creditor of the company for the year 1990-91. On 18-4-1991 it was duly certified by the authorised signatory of the company. As on 31-3-1991 a sum of Rs. 2,84,133.15 was due and payable. Two further bill dated 5-4-1991 for a sum of Rs. 77,114 and the other bills dated 22-4-1991 for a sum of Rs. 47,955 totalling to Rs. 1,25,069 became additional dues. By adding the aforesaid two, a sum of Rs. 4,09,202.15 became ultimate dues. According to the appellant, the company paid on 8-4-1991 a sum of Rs. 1,08,969 and on 14-5-1991 a sum, Rs. 76,782 totalling to Rs. 1,85,751. Therefore, upon deducting such sum Rs. 2,23,451.15 became net dues on account of principal sum of price of goods sold and delivered and interest etc.
8. The main attack of the appellant in this appeal is in respect of nonpayment of two bills dated 5-4-1991 for a sum of Rs. 77,114 and dated 22-4-1991 for a sum of Rs. 47,955. The learned counsel for the appellant also had drawn our attention to the back page of the photocopy of Sales Tax Declaration 'Form annexed with the company petition where from we find that these two figures are hand written but without any seal or signature at the end of the same. The lists of purported sundry debtors for the period 1990-91 as on 31-3-1991 are shown by the appellant by which two figures were reflected, one is Rs. 2,13,667.11 p. and the other is Rs. 27,916.1 1p. Therefore, according to the appellant, it for the sake of argument the last sum is treated as an accepted sum, the company petition ought to be admitted by the learned trial Judge.
9. Mr. Sanjib Banerjee the learned counsel appearing on behalf of the appellant drew our attention to several judgments. First he cited Bangasri Ice & Cold Storage Ltd. v. Kali Charan Banerjee : AIR1962Cal613 and in particular he relied on paragraphs 6, 7 and 8 of the said decision to establish that the Court was entitled to investigate the question as to whether the dispute was not bona fide as the same was taken in order to delay and defeat the realisation of the dues of the petitioning-creditor and was merely a cloak for the inability for the company to pay its just debts. Secondly, he cited a decision in the case in Welsh Brick Industries Ltd., In re [1946] 2 All ER 197, by saying that even when there was no bona fide dispute as to the debt, a Judge cannot be precluded from applying his discretion to make a winding up order under the Act. By citing Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. : [1972]2SCR201 . Mr. Banerjee contended that in a case of winding up of a company the principle on which the Court acts at first was that the defence of thecompany must be in good faith and one of substance, secondly, the defence was likely to succeed in point of law and, thirdly, the company must adduce prima facie proof of the facts on which the defence depends. Therefore, according to Mr. Banerjee, the bare defined cannot be construed as a good defence and the Court ought to have admitted the petition at least for the admitted amount. Various defences were taken by the Company. According to the company, two separate sums were duly paid by it in the months of April and May, 1991 and thereupon nothing remained due and payable by it to the petitioning-creditor. The company also made a defence that last supply was made by the petitioning-creditor on 31-12-1990 and thereafter the appellant did not make any further supply to it. It was also denied that the appellant supplied goods to the company in March, 1991. It was further denied that on 31-3-1991 the balance outstanding was Rs. 2,84,133.15 P. The specific case was that as on 31-3-1991 the outstanding balance was only Rs. 1,85,751 which was admittedly paid by the company and, therefore, nothing was due and payable. The company filed its balance-sheet before the Registrar of the Companies. The present management took over the control of the company in the year 1992. The purported bills were false and fabricated. In spite of demands the appellant failed and neglected to produce any challan in respect of the supplies of goods to the company. It was also denied that no reply to the notice was made. On top of it, dispute was raised before the trial Court in respect of the authenticity of the appropriate signatory to the balance confirmation dated 18-4-1991. The respondent also took a further point that the case was developed in the affidavit-in-reply but not in the main company petition which is nothing but a counterblast of the defence of the company. The appellant has also tried to develop its case by way of corroborative documentary evidences annexing the same to such affidavit-in-reply,
10. However, since the case was made in affidavit-in-reply, the learned Judge rightly allowed the company to file supplementary affidavit in Court. From such supplementary affidavit some of the important facts came out. First, it was specified by the company that books of account of the company did not show that goods were supplied by the appellant to the company during the accounting year 1991-92 commencing from 1-4-1991. It was further alleged that the new management of the company take over the charge in the year 1992. The relationship between the present management and the erstwhile management, i.e., Peerless General Finance & Investment Co. Ltd. was strained and reasonably there was a belief that the proceedings were launched by the appellant at the instance of erstwhile management. It was further contended that the appellant made no demand upon the company after 6-6-1991. Even immediately after the change of management, the demand was purportedly made for the first time on 31-5-1993. It was further contended that the appellant had sent a bill on 14-9-1999 for a sum of Rs. 65,351 to the company. The company had not received any challan in respect of suchsupply. By the letters dated 28-5-1991 and 10-6-1991 the company called upon the appellant to send the challans and in spite of reminders no challan was produced. No goods were received in respect of the purported bill of Rs. 65,351. Therefore, no question of payment of such sum arose at all. There was a counterclaim of the company as against the appellant in respect of supply dated 9-6-1989. Further discrepancies were pointed out in the supplementary affidavit of the company filed before the trial Court and it was clear from those documents that the sum of Rs. 77,114 and Rs. 47,955 were not due and payable. It appears that the company itself admitted that so far as the bill for a sum of Rs. 47,955 is concerned, a letter was written by the appellant on 6-6-1989 to retain the bill till the discrepancy was sorted out. Therefore, no question of payment arose in respect of such bill without ascertaining the position by a regular suit. So far as the other bill of Rs. 77,114 is concerned, it appeared that one Sri Alok Bose, the works manager, without ascertaining whether the goods had been received or not, passed the bill. However a request was made to send the receipt of the challan which was no enclosed with the bill. Under the circumstances, whether the goods were at all delivered on account of the bill for Rs. 77,114 was also disputed and a final conclusion could only be made by way of a regular suit.
11. Mr. Utpal Bose, the learned counsel appearing on behalf of the respondent-company contented that:
(a) The ground for obtaining order of admission ought to have been taken in the winding up application itself which cannot be developed subsequently in the affidavit-in-reply on the basis of the defence of the company in its affidavit-in-opposition.
(b) A company Court hearing the application for winding up is not a debt collecting Court.
12. He also cited several judgments. So far as the first point is concerned, he cited a judgment of this Court as in Sulekha Works Ltd., In re : AIR1965Cal98 where it is categorically held:---
'In a winding up petition grounds and particulars which are relied upon by the petitioner must be set out in petition itself and not in the affidavit-in-reply.'
By showing another judgment in G. Claridge & Co. Ltd. v. Nav Bharat Investment Ltd. [1977] 47 Comp. Cas. 428 he contended that it is well settled that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. If the debt is not disputed on some substantial ground, the Court may decided it on the petition and pass the order. If the debt is bona fide disputed there cannot be 'neglect to pay' within the meaning of Section 434(1)(a). If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts cannot be substantiated. Further considerable points are (a) whether the company is able to pay its debts or not; (b) whether thecompany is able to meet its liabilities as and when those accrue due; (c) whether it is commercially solvent means that the company should be in a position to meet the liabilities as and when those arise; (d) whether there is a bona fide dispute or not; etc. which will necessarily depend on the facts and circumstances of each particular case. It is well settled that a detailed examination at the preliminary stage of admission should be avoided. It is for the limited purpose of arriving at a conclusion whether a bona fide, serious and substantial dispute arises or not that the Court should examine the matter; the Court looks out for a prima facie. If a petitioner makes out a prima facie case then the Court should exercise its discretion. He has also formally relied upon the cited judgment of the appellant being Madhusudan Gordhandas & Co.'s case (supra).
13. According to us whatever judgment as cited by the learned counsel appearing for both the parties are principally acceptable subject to the applicability in a given situation which ought to be decided by the Court having company jurisdiction. Court normally does so by applying its discretion not being a debt collecting Court. In the process, Court look into the facts, apply its test, give opportunities, then come to a conclusion. In coming to such a conclusion whether the Court has rightly applied its discretion or wrongly applied the discretion is only the subject-matter in appeal. In other words, scope of the appeal is very limited. Even within the limited scope we have dealt with the matter exhaustively and found that it is not a case of bad defence but substantial defence. Therefore, we do not fine any infirmity on the part of the Court having company jurisdiction in applying its discretion on the fact situation excepting putting an embargo on furnishing security.
14. Under the circumstances, the impugned order dated 27-6-2000 is partially (retained). So far as the claim of the appellant under ACO No. 95 of 2000 in respect of the admission of the claim under the Company Petition No. 384 of 1993 is concerned, we cannot see any infirmity in the order dated 27-6-2000 passed by the learned single Judge. Therefore, the appeal of the appellant/petitioning-creditor under ACO No. 95 of 2000 stands dismissed. However, there will be no order as to costs.
15. In the premises we make it clear that the disputes between the parties should be relegated to a suit pursuant to the order of the trial Court Judge dated 27-6-2000 but without any condition whatsoever as imposed under the order. This resolved the issue.
16. Since the order of injunction as granted by the learned trial Judge from filing suit for a period of four weeks from date of the order on 27-6-2000 has already expired, the same is extended for a period of six weeks from the date of communication of this order.
Chatterjee, J.
17. I agree.