R.L Khurana, J.:— The present petition has been filed by Messrs Mazboot Packers and Engineers Company, hereinafter referred to as “the petitioner-company”, under sections 433 and 434 read with section 439 of the Companies Act, 1956 (for short, “the Act”), for the winding up of the respondent-company, Messrs. Himachal Pradesh Horticulture Produce, Marketing and Processing Corporation Ltd.
2. The averments made in the petition, briefly stated, are these. The petitioner-company in response to the notice inviting tenders issued by the respondent-company entered into an agreement for the supply of 4,60,000 telescopic cartons to the respondent-company. The delivery was to be made during the period June 20, to September 30, 1990, as per the schedule fixed in the agreement. The entire supply was to be completed before September 30, 1990. At the time of the agreement a sum of Rs. 1,46,700 was deposited by the petitioner-company with the respondent-company as security. There was a stipulation in the agreement that inspection of the cartons, before supply, would be made by a team appointed by the managing director of the respondent-company at the cost of the petitioner-company. The team so nominated by the respondent-company, after inspection of the cartons at Yamunanagar, approved the same and, thereafter, a delivery order was placed with the petitioner-company. The cartons were supplied by despatching them through transport vehicles on October 9, 1990. The respondent-company refused to accept such supply on the ground of non-availability of storage space. Thereafter, in spite of having been repeatedly approached in this regard, the respondent-company failed to take delivery of the cartons nor any fresh schedule for the delivery was sent. Ultimately, the petitioner-company sent a notice as contemplated under section 434 of the Act calling upon the respondentcompany to refund the amount of security of Rs. 1,46,700. The respondent-company has failed to refund the amount of such security. The petitioner-company is entitled to recover the said amount of security along with interest at the rate of 24 per cent. per annum. According to the petitioner-company, calculating the interest at the said rate up to May 31, 1997, a total sum of Rs. 3,93,160 towards the principal amount of security and interest is due from the respondent-company.
3. The petitioner-company in seeking the winding up of the respondent-company has averred that the respondent-company is commercially insolvent and unable to discharge its debts and to pay the dues of the petitioner-company. The financial position of the respondent-company is wholly unsound. The accumulated losses up to March 31, 1989, as per the audited accounts of the respondent-company are Rs. 14,52,80,536. Such accumulated losses up to the end of the financial year 1989-90 are to the tune of Rs. 15,63,54,000. It has further been averred that as against the fixed and current assets to the tune of Rs. 1,776.37 lakhs, the respondent-company has a liability, in the form of borrowings and third party liabilities, to the extent of Rs. 2,580 lakhs.
4. The respondent-company resisted the petition for winding up. It was pleaded that since the petitioner-company failed to supply the cartons in terms of the conditions contained in the supply order, the amount of security deposit stands forfeited by the respondent-company, and as such, the petitioner-company was not entitled to the refund of the said security amount.
5. It was also pleaded that the respondent-company has a sound financial position, since being a Government company it is being fully financed by the Government of Himachal Pradesh to meet all its financial obligations and that it is in a position to discharge all its financial obligations in accordance with law.
6. 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. A petition filed ostensibly for a winding up order but really to exercise pressure will be dismissed and under circumstances may be stigmatised as a scandalous abuse of the process of the court. (See Amalgamated Commercial Traders (P.) Ltd. v. A.C.K Krishnaswami, [1965] 35 Comp Cas 456 (SC).
7. The High Court of Karnataka in T. Srinivasa v. Flemming (India) Apotheke (P.) Ltd., [1990] 68 Comp Cas 506, has held that it is not for the court hearing a petition for winding up under section 433 of the Companies Act, 1956, to assess evidence and refuse a decree or to draw up a decree in favour of the petitioner and then to proceed to wind up the company. In the summary procedure which the company court must follow, if the court is satisfied, prima facie, that the defence raised in the circumstances of the case is bona fide and is likely to succeed in a civil court, that would constitute sufficient reasons for the court to reject the petition, relegating the parties to the civil court.
8. The dispute between the parties in the present case revolves around a disputed question as to whether the amount of security deposited by the petitioner-company with the respondent-company could be and has been validly forfeited by the respondent-company. Such a dispute cannot possibly be decided in the present summary proceedings. The same can be appropriately decided in a properly framed suit. The defence raised by the respondent-company on the face of it appears to be bona fide and such defence is likely to succeed. Therefore, it is not a fit case for the exercise of powers of winding up under section 433 of the Act.
9. There is yet another aspect of the case.
10. Admittedly, the amount of security is shown to have been deposited by the petitioner-company in October, 1990. As per the averment made in para. 16 of the petition, notice calling for the refund of the amount of security was issued on September 29, 1991. The present petition has been made on November 3, 1997, that is, after the expiry of a period of more than six years from the date of refusal by the respondent-company to refund the amount of security. The claim of the petitioner-company, therefore, on the face of it had become barred by time as on the date of the presentation of the present petition. Therefore, there was no legally recoverable debt within the meaning of section 433 of the Act. Article 70 of the Limitation Act, 1963, prescribes a period of three years for the recovery of movable property deposited or pawned from a depository or pawnee. There is no denying that the term “movable property” used in article 70 includes money. Even on this score, the defence raised on behalf of the respondent-company is bona fide and the petitioner-company cannot take resort to the provisions of section 433 of the Act.
11. Resultantly, the present petition is dismissed.