Wimco Ltd. vs Sidvink Properties (P.) Ltd.

on 15 March, 1994

Delhi High Court

Wimco Ltd. vs Sidvink Properties (P.) Ltd. on 15 March, 1994
Equivalent citations: 1996 86 CompCas 610 Delhi, 54 (1994) DLT 260
Author: P Bahri
Bench: P Bahri
JUDGMENT P.K. Bahri, J.
1. This petition has been brought under sections 433 and 434 of the Companies Act, 1956, seeking a
winding up of the respondent-company on the ground that the respondent-company has neglected
to clear its debt despite statutory notice.
2. The facts, in brief, are that one Mr. A. N. Prasad was an employee of the petitioner-company and
was one of the directors of the respondent-company and vide leave/license agreement dated July 22,
1987, Flat No. L-27 located on the first floor in Kailash Colony, New Delhi, was taken for the
residence of Mr. Prasad from the respondent-company by the petitioner-company for a limited
period. Under the terms of said agreement Rs. 3,00,000 were given by the petitioner to the
respondent-company as a security deposit which was not to bear any interest and was to be
refunded on vacation of the flat. Vide term No. 7 in the agreement, Mr. Prasad has also taken a
personal liability for refund of the said amount and had agreed that the said amount could be
adjusted in his salary and other dues which may be recoverable from the petitioner-company.
Admittedly, on June 14, 1988, on Mr. Prasad resigning from the service of the petitioner-company
the possession of the flat was handed back to the respondent-company and the petitioner admittedly
became entitled to a refund of the said deposit of Rs. 3,00,000 from the respondent.
3. The case set up by the petitioner is that despite sending of letters dated October 18, 1988, and
December 1, 1988, and, thereafter, service of statutory notice dated May 9, 1990, the
respondent-company failed to clear the balance amount of Rs. 93,336 and thus, the
respondent-company having neglected to pay its debt due to the petitioner is liable to be wound up.
4. The respondent-company has, however, taken the plea in opposing this petition that in fact, on
August 23, 1988, Mr. Prasad had handed over a letter of even date along with cheques and the
statement of account incorporated in the letter to the petitioner-company by virtue of which the
account of the said deposit of Rs. 3,00,000 was settled in the manner that cheques to the tune of Rs.
2,06,664 were given to the petitioner-company and the balance amount of Rs. 93,336 was settled in
the salary and gratuity account of Mr. Prasad with the petitioner-company. It is also the case of the
respondent that by virtue of the said license/lease-deed certain documents pertaining to the flat in
question were kept in deposit with the petitioner-company which were to be returned by the
petitioner-company to the respondent on the refund of the said deposit of Rs. 3,00,000 and on that
very date, i.e., August 23, 1988, the said documents were also returned to the respondent and the
said account stood settled.
5. It is significant to mention that the petitioner-company had not made reference to this letter
dated August 23, 1988, in its petition or in its statutory notice served on the respondent. In
rejoinder the factum of having received this letter along with cheques mentioned in this letter has
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Wimco Ltd. vs Sidvink Properties (P.) Ltd. on 15 March, 1994

not been denied. In respect of the documents pertaining to the flat which were given to the
petitioner-company and which were to be returned on settlement of account of the said deposit of
Rs. 3,00,000, the plea taken is that the company was not aware whether such documents have been
returned as the records of the company were not available in that respect.
6. The short question which arises for consideration is whether the respondent has raised any bona
fide dispute with regard to its alleged liability with regard to the balance amount of the deposit of
Rs. 3,00,000 or not?
7. Learned counsel for the petitioner has drawn my attention to the provisions of section 434 and
has argued that as the respondent has failed to reply to the two letters written by the petitioner and
also to the statutory notice it should be deemed that the respondent has neglected to pay its debt. I
am afraid that there is a fallacy in this argument. The mere omission of the respondent to comply
with the statutory notice and in not sending any replies to the communications already given by the
petitioner-company to the respondent-company would not mean that the respondent has admitted
the liability. The question which has to be decided in order to bring about the enforcement of the
deeming provisions of section 434 of the Companies Act is whether there exists any debt or not
which the respondent-company is liable to pay to the petitioner. In case there is a bona fide dispute
about that debt, the question of applying the deeming provision would not arise because unless and
until the court has, prima facie, come to the conclusion that there exists a debt which the respondent
is liable to pay to the petitioner the statutory presumption that the company has neglected to pay on
receipt of the statutory notice would not come into force. In the present case, it is quite evident that
there is a bona fide dispute raised with regard to the liability of the respondent-company.
8. Learned counsel for the petitioner vehemently argued that the liability of the respondent is
different from the liability which may be imposed on Mr. Prasad by the said lease agreement. He has
also argued that if the accounts are to be gone into, it is the case of the petitioner that a sum of Rs.
60,384.01 or so is due from Mr. Prasad. In this case, Mr. Prasad has also undertaken to get his
gratuity and other amount due from the petitioner-company to him adjusted in the said deposit of
Rs. 3,00,000 if the respondent was not in a position to pay back the deposit amount on vacation of
the premises. So, it cannot be said that Mr. Prasad is a stranger to the lease agreement.
9. The petitioner-company, for reasons best known to it, had not mentioned in the petition as to in
what manner the cheques to the tune of Rs. 2,06,664 were received and whether the letter dated
August 23, 1988, was received by the petitioner-company or not. It is not understood why this letter
was suppressed from the pleadings of the petitioner-company. It is also pertinent to mention that
while accepting the cheques along with this letter the petitioner-company had gone on to encash the
cheques without refuting the account given out in this particular letter. Even in subsequent
communications and statutory notice, no dispute has been raised by the petitioner-company about
the correctness or otherwise of the account given in this letter dated August 23, 1988. So, it is quite
clear, prima facie, that there is a bona fide dispute raised by the respondent-company with regard to
this alleged debt. Hence, it would not be a fit case for entertaining the petition for winding up of the
respondent-company. Petition is dismissed leaving the parties to bear their own costs.

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