P. K. Bahn ( 1 ) THIS petition is instituted seeking an order of this Courtfor winding up the respondent-company on the ground that the respondent-company despite a statutory notice having been served has failed to pay off itsdebts. The facts, in brief, are that in the year 1988 the respondent-company placedan order for supply of various electronic components on the petitioner. Thepetitioner, which is a company based in New York having its representative basedin Bangalore, had despatched the consignment accompanied by the invoices alldated 12/09/1989, for the total value of US Dollars 16,992. 21. Therespondent-company had declined to take delivery of the said goods taking theplea that even before the goods were despatched the respondent-company hadcancelled the order. The petitioner-company then had made arrangement for reexport of the said consignment back to America. It is alleged that later on therespondent-company agreed to have the delivery of the said consignment on theprices mentioned in the invoices but required the petitioner-company to pay thedemurrage charges to which the petitioner agreed and the fresh set of documentswere sent to the respondent-company for taking delivery of the goods and therespondent took the delivery of the goods after paying the customs duty on thebasis of the price quoted in the invoices. It is averred that despite the goods havingbeen utilized by the respondent-company, the respondent-company did not makethe payment and thus, after serving the statutory notice and on the failure of therespondent-company to make the payment within the stipulated period, thepresent petition was filed. It was mentioned that the respondent-company is liableto pay interest on this commercial transaction @ 20% per annum and the totalamount due from the respondent-company as on 5/10/1991, is 26,167 USDollars. ( 2 ) THE respondent contested the petition pleading that the petition is notmaintainable as there is no admitted liability of the respondent-company towardsthe petitioner. It is averred in the written statement by the respondent-companythat even before the despatch of the goods the order placed by the respondent-company was cancelled vide its telex dated 30/06/1988, which was repeated byanother telex message dated 30/09/1988. It was further pleaded that theretook place some negotiations between the parties and the respondent had offeredto take the delivery of the goods if the price was to be revised in respect of one itemp 8275 at 11. 45 US Dollars against invoice price of US Dollar 20. It was further pleaded that theretook place some negotiations between the parties and the respondent had offeredto take the delivery of the goods if the price was to be revised in respect of one itemp 8275 at 11. 45 US Dollars against invoice price of US Dollar 20. 50 although thepetitioner-company had offered to reduce the price of the said item to US Dollar16. 59. It is averred by the respondent-company that after adjustment of thedemurrage charges and difference in customs duty and on the basis of the revisedprice of US Dollars 16. 59 the amount due from the respondent-company to thepetitioner-company would be US Dollars 11,634. 79 only. So, it is pleaded that the respondent s defence is bonafide and the respondent-company has not neglected to pay its debt. It is pleaded that the amount claimedin the petition is not due to the petitioner and thus, the petitioner is not a creditorwho could present a winding up petition. It is also averred that the respondent-company is fully solvent and is not liable to be wound up. It was also mentionedthat the respondent-company has always expressed its willingness to remit theamount due to the tune of US Dollars 11,634. 79 after obtaining the necessarypermission from the Reserve Bank of India. ( 3 ) SO, the question which arises for consideration presently, in order to decidewhether this petition should be admitted or not, is whether the respondent-company has neglected or failed to pay its debt to the petitioner-company despiteservice of the statutory notice? The facts as are evident from the documents filedon the record are that on 12/09/1988, the petitioner had despatched thegoods as per invoices having the total value of US Dollars 16,992. 21 despite the factthat prior to the despatch of the said goods the respondent had cancelled the saidorder and thus, on 30/09/1988, the respondent sent a telex by which itrefused to take the delivery of the goods as the order stood cancelled and alsopleaded that the price of the said particular item was US Dollars 11. 45 per piece. On 7/10/1988, the petitioner requested the respondent-company toaccept the shipment and the petitioner was making efforts to get the better pricesfor the material. The petitioner, however, then finding that better price of thematerial was not available made arrangement to have the whole shipment returnedback to America. 45 per piece. On 7/10/1988, the petitioner requested the respondent-company toaccept the shipment and the petitioner was making efforts to get the better pricesfor the material. The petitioner, however, then finding that better price of thematerial was not available made arrangement to have the whole shipment returnedback to America. On 10/12/1988, the respondent-company informed thepetitioner that it would be very difficult for the petitioner-company to get the goodstransferred back to America and it suggested three conditions that new invoices besent directly to the respondent with correction of the invoice for the said item P 8275and that after the consignment was cleared, the respondent will send the money tothe petitioner and demurrage amount will be intimated to the petitioner forpayment by the petitioner. It was mentioned by the respondent in this documentthat it was willing to take the delivery of the consignment on the above terms inview of their past relationship. In response to this telex the petitioner had sent telexmessage dated 12/12/1988, in which it did not agree for reducing the priceand incur the losses and made a counter offer that the price of the said item can bereduced to US Dollars 16. 59. On following day, i. e. 13/12/1988, therespondent sent the telex that it would accept the delivery only if the price isreduced to US Dollars 11. 45. The petitioner did not agree to this offer and vide telexdated 20/01/1989, had informed the respondent that the petitioner was nowmaking arrangements forgetting the goods shipped back to America. On 31/01/1989 and on 6/02/1989, the petitioner sent telex messages to its agent andto the respondent for making arrangement of documents for shipping back thegoods. On 13/02/1989, the Cargo Agent, who was to ship back the goods,had asked the petitioner to submit the documents for re-export. ( 4 ) IT is the case of the petitioner that thereafter on the respondent-companyagreeing to take delivery of the goods on the prices indicated in the invoices thedocuments were sent directly to the respondent and not through the Bank and therespondent-company admittedly got released the goods on paying the customsduty on the prices mentioned in the invoices and the petitioner-company paid thedemurrage charges. Reference is made in this connection to letter dated 29/03/1989, by which it was indicated to the respondent that the head-office of thepetitioner-company from New York had already sent the shipment documents tothe respondent-company and another set of documents are being sent with thisletter to the respondent and the respondent was required to raise a separatedocument for the demurrage charges and send the same to the Bangalore office foronward submission to the New York office. It is significant to mention that thereafter there was no dispute raised by therespondent-company that the prices quoted in the invoices in respect of thedocuments sent by New York office directly to the respondent-company were notacceptable to the respondent; rather the respondent-company had got released thegoods on the basis of the said documents which included the invoices containingthe price of the goods as claimed by the petitioner and the respondent-companyutilised those goods without raising any other demand of reduction of the price. Itmay be that earlier there was no agreement between the parties with regard to theprice of the goods as the goods had been despatched after the order was cancelledbut the facts show that the respondent-company had agreed to get the goodsreleased and had asked for payment of demurrage charges by the petitioner-company and on that basis the shipping documents were directly sent to therespondent-company to which reference is made in this letter dated 29/03/1989. After the goods had been got released by the respondent-company and therespondent-company had not paid the amount to the petitioner, the petitioner hadsent letterdated 26/10/1989, in which it was mentioned that consignment hadbeen cleared by the respondent. The details of the invoices and the prices mentioned in the invoices and the total amount of US Dollars 16,992. 21 were given inthe letter. The reply to this letter was sent by the respondent-company dated 2/11/1989, to the following effect: "reference your message regarding pending payment:we have not taken full delivery of the goods from Customs. If you want us topay for the deliveries which we have taken, we can make part payment. Asyou know, we have to produce Customs Bill of Entry before any despatch ofmoney. " ( 5 ) IT is significant to mention that in this communication by the respondent-company, there is no dispute raised that the amount claimed by the petitioner inletter dated O 26/10/1989, is wrong or any less price was agreed upon. Asyou know, we have to produce Customs Bill of Entry before any despatch ofmoney. " ( 5 ) IT is significant to mention that in this communication by the respondent-company, there is no dispute raised that the amount claimed by the petitioner inletter dated O 26/10/1989, is wrong or any less price was agreed upon. On 3/11/1989, again the petitioner sent a telex message to therespondent-company that payment be released immediately and the respondent-company should indicate exact date before which the respondent-company wouldrelease the payment to the petitioner. On 2/08/1990, again the petitionerreminded the respondent-company for releasing the payment. The details ofinvoices and amount due were also indicated in that letter. It was mentionedtherein that demurrage charges had been allowed to be deducted. The respondent-company sent the reply dated 19/11/1990, and forthe first time in that telex message the respondent-company mentioned that theorder was cancelled and still the goods were despatched and the petitioner hadrequested the respondent-company to clear the goods and pay the money afterclearance and then, it was mentioned by the respondent-company that the priceswhich had been mentioned about the said item P 8275 @ US Dollars 20. 50 per pieceand that the petitioner-company may consider the request of the respondent forreducing the price of the said item and should also agree to accept the money ininstalments. Even in this letter there was no dispute raised that price was not agreed tobefore taking delivery of the goods; rather the respondent-company had acceptedthe goods and taken delivery of the same on the prices indicated in the invoices. ( 6 ) THE learned Counsel for the respondent-company has, however, vehemently argued that at no point of time there has been reached any agreementbetween the parties with regard to the prices of the goods delivery of which therespondent-company had taken and thus, there is no debt due to the petitionerfrom the respondent-company. He particularly referred to para 6 of the rejoinderwhere the petitioner had taken the plea while the petitioner was in process ofhaving the material returned to USA the respondent reverted to the petitioner inmarch 1989 mentioning that the prevailing price for the device, namely, P-8275 hadgone up in the market and hence, the respondent would be agreeable to accept thegoods at the price agreed when the order was placed and he would take thedelivery of the consignment while the petitioner would be liable to pay thedemurrage charges. It is contended that there is no document to show that therespondent had agreed to take the delivery of the consignment on the price alreadyagreed upon, hence there was no agreement to have the goods on the pricesindicated in the invoices. This contention of the learned Counsel for the respondentis misconceived because even if there is no document indicating such agreementbut the conduct of the parties as is evident from the various communicationsexchanged between the parties, detailed out above, make it quite evident that thedelivery of the goods was taken by the respondent on the prices indicated in theinvoices. In case no price had been agreed upon the respondent in his communication would have disputed the facts as mentioned in the communication of thepetitioner wherein details of the invoices and the prices have been indicated and therespondent would not have just requested for some more time for making thepayment. It is only as an afterthought that the respondent in subsequent reply tothe legal notice issued to the respondent that the respondent came up with the pleathat the price agreed in respect of that particular item was US Dollar 16. 59 and notus Dollars 20. 50 per piece. It is significant to mention that it is only after a legalnotice had been served on the respondent that the respondent tried to takepermission from the Reserve Bank of India for sending the amount to the petitionerbut not the amount calculated on the basis of the prices indicated in the invoices. ( 7 ) IN case there had been no agreement with regard to the prices of the saidconsignment, there could be no occasion for the respondent to have asked for thereduction of the prices in latter communication. From the facts as have come out on the record, it is evident that therespondent-company has neglected to pay the debt even though a statutory noticeas required by the company law had been served on the respondent. Counsel for the respondent has referred to certain judgments in support of hiscontention that there is no subsisting debt which was liable to be cleared by therespondent. He has referred to Supply Company India v. Rafiulla Tea and industriesp. Ltd. and Anr. , (1978) 48 CC 796, wherein it has been laid down thatfollowing the dicta on the Supreme Court in cases of Madhusudan Fordhandas andco. He has referred to Supply Company India v. Rafiulla Tea and industriesp. Ltd. and Anr. , (1978) 48 CC 796, wherein it has been laid down thatfollowing the dicta on the Supreme Court in cases of Madhusudan Fordhandas andco. v. Madhu Woollen Industries Ltd. , (1972) 42 CC 125 and Amalgamated Commercial Traders (P) Ltd. v. A. C. K. Krishnaswami, (1965) 35 Companycases 456, that a wind ing-up petition is not a legitimate means of seeking to enforcepayment of the debt which is bonafide disputed by the company and a petitionpresented ostensibly for a winding-up order, but really to exercise pressure will bedismissed and may even be stigmatized as a scandalous abuse of the process of thecourt. Nothing said in this judgment is of any help to the respondent because in thepresent case from the facts it is, prima facie, clear that there is a clear liability of therespondent to pay the price of the said goods which liability has not been met bythe respondent-company despite a statutory notice being given to the respondent-company. In reply to the statutory notice a plea was taken that it was for thepetitioner-company to obtain permission of the Reserve Bank of India before therespondent-company could remit the amount due to the petitioner-company. Thisplea of the respondent on the face of it was preposterous because it was concededbefore me by Counsel for the respondent that it is for the respondent-company tohave obtained such permission. On similar facts the Calcutta High Court in the caseof Eurometal Limited v. Aluminium Cables and Conductors (U. P.) P. Ltd. , (1983) 53company Cases 744, had held that it was for the party which is to remit the foreignexchange to have obtained the necessary permission under the Foreign Exchangeregulation Act from the Reserve Bank of India and on failure of party to obtain suchpermission and to remit the money due even after statutory notice under Section434 of the Indian Companies Act had been served, the resort to winding-up of sucha company can be had. Counsel for the respondent has referred to Jugalkishore Benarsidas v. Southindia Saw Mills (P) Ltd. , (1975)45 CC 273, where the Kerala Highcourt had held that the fact that the company is unable to pay its debt does notnecessarily entitle the Court to order winding-up of the company as the discretionto pass such an order, even in the case of the inability of a company to pay its debts,is by Section 433 vested in the Court and that discretion has to be exercisedjudicially. There is no dispute about this principle of law. In the present case thepetitioner-company had by mistake sent the consignment in response to the orderof the respondent but the said order stood cancelled which escaped the notice ofthepetitioner-company. On refusal of the respondent-company to take delivery of thegoods the petitioner-company in its wisdom thought it fit to reduce the price of oneitem to US Dollars 16. 59 per piece but the respondent did not agree to have thegoods even on that reduced price. The petitioner-company was not willing to agreeto the price offered by the respondent and thus, the petitioner-company took stepsfor getting the consignment returned to America and thereafter it transpired thatinstead of sending the documents through the Bank, on the request of the respondent the documents were sent to the respondent directly by the petitioner to enablethe respondent to take delivery of the goods. As the respondent after takingdelivery of the goods failed to make the payment, a communication was sent to therespondent mentioning that respondent has not paid the price. In tha,t communication the prices indicated in the invoices were mentioned and the amount wasclaimed on that basis. In response to that communication the respondent did notdispute that the said prices have been agreed upon at the time the documents weresent directly to the respondent for taking delivery of the consignment. The conductof the respondent later on in not paying the amount due which, prima facie, is adebt entitles the petitioner to seek winding-up of the respondent-company. Theequities in the present case are, prima facie, in favour of the petitioner. Reference has been made by Counsel for the respondent to State Tradingcorporation of India Ltd. v. Punjab Tanneries Ltd. , (1989)66 CC 634 , inwhich it was laid down that the petitioner was not entitled ex debito justitiae to anorder winding-up of the company on the mere plea that the debt was not paid. Reference has been made by Counsel for the respondent to State Tradingcorporation of India Ltd. v. Punjab Tanneries Ltd. , (1989)66 CC 634 , inwhich it was laid down that the petitioner was not entitled ex debito justitiae to anorder winding-up of the company on the mere plea that the debt was not paid. Thepetitioner in that case had already resorted to a civil suit for recovery of the disputed debt. So, the Court held that the machinery for winding-up will not beallowed merely as a means for realising a debt due from the company. Facts in thesaid case were totally different. Hence, nothing said in this judgment is of any helpto the respondent in showing that this is not a fit case, prima facie, for admission ofthe petition seeking winding-up of the respondent-company. ( 8 ) THE learned Counsel for the respondent has then referred to Ram Kishan andothers v. Kanwar Papers Private Ltd. , (1990)69 CC 209, in which itwas held that where there was serious dispute between the parties on each essentialfact which necessitated a trial in appropriate civil proceedings, the petition forwinding-up was not the remedy. It is well established principle of law that if thereis a genuine bonafide dispute raised with regard to alleged debt, obviously resortto winding-up proceedings is not permitted. But in the present case, prima facie,it is quite clear that there is no bonafide dispute being raised with regard to theexistence of the debt which the respondent has failed to clear despite statutorynotice. ( 9 ) COUNSEL for the petitioner has brought to my notice a number of judgmentswhere it has been held that even if some amount of the debt is disputed, still awinding-up petition can be brought on failure or neglect of the debtor to clear theatleast admitted amount of the debt on service of statutory notice. Kudremukh Ironore Co. Ltd. v. Kooky Roadways P. Ltd. , (1990)69 CC 178, is one ofsuch judgments. In the said case, there was short delivery of the goods entrustedto a common carrier. Kudremukh Ironore Co. Ltd. v. Kooky Roadways P. Ltd. , (1990)69 CC 178, is one ofsuch judgments. In the said case, there was short delivery of the goods entrustedto a common carrier. It was held that liability of the carrier to the petitioner onaccount of short delivery could be regarded as a debt within the meaning of Clause (e) of Section 433 of the Indian Companies Act and since the requirement of Section434 of the said Act as to notice had been satisfied and as the respondent-companyhad neglected to pay it, so it is to be deemed unable to pay its debts and the petitionhad to be admitted. A plea was taken that till the amount of such liability wasascertained in a suit to be filed in Civil Court, such liability could not be termed asa "debt". This contention was negatived. In Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. , (1972)2 SCR 201 , the Supreme Court had laid down that the rules for winding-upon a creditor s petition are; if there is a bonafide dispute about a debt and thedefence is substantial one, the Court would not order winding-up but the defenceof the company should be in good faith and one of substance. At page 207, it wasagain laid down by the Supreme Court that where, however, there is no doubt thatthe company owes the creditor a debt entitling him to a winding-up order but theexact amount of the debt is disputed the Court will make a winding-up orderwithout requiring the creditor to quantify the debt precisely. In M/s. P. G. Bhatia and Co. v. Softsule Private Ltd. , 1977 Tax L. R. 2351, it hasbeen held that a detailed inquiry at the preliminary stage of the admission shouldbe avoided but all the same the Court has to consider the dispute raised by thecompany and the same can be achieved by an assessment and appreciation of thefacts brought before the Court at the stage of the admission. It is only for the limitedpurpose of arriving at a conclusion whether a bonafide, serious and substantialdispute arises or not, that the Court examines the matter and if the petitioner makesout a prima facie case, the Court would exercise its discretion and the remedyafforded is an equitable one. It is only for the limitedpurpose of arriving at a conclusion whether a bonafide, serious and substantialdispute arises or not, that the Court examines the matter and if the petitioner makesout a prima facie case, the Court would exercise its discretion and the remedyafforded is an equitable one. It was also laid down that whether there is a bonafidedispute or not, would necessarily depend upon the facts and circumstances of eachparticular case and no hard and fast rule can be laid down in this respect. In State of Andhra Pradesh v. Hyderabad Vegetable Products Co. Ltd. , (1962)32 CC 64, it was held that where a company is liable to only partof the debt and admits liability to repay the substantial part of the debt and neglectsto pay that amount despite statutory notice, the company is deemed to becommercially insolvent. In Indian Turpentine and Rosin Company Limited v. Pioneer Consolidatedcompany of India Limited, (1988)64 Company Cases 169, this Court has held thateven assuming there was some genuine dispute about the interest claimed to be duefrom the respondent to the petitioner and the respondent had no reasonableexplanation for its inability to pay the balance of the principal amount and in anycase it could not legitimately deny its liability to pay any interest at all to thepetitioner, it was held that the respondent-company s inability in the face of itsliabilities to comply with the directions of the Courts on various occasions todeposit certain sums showed that the company was in financial straits and wasunable to pay its clear and undisputed debts. ( 10 ) THE learned Counsel for the respondent has argued that in case the liabilityof the respondent-company is of contingent one i. e. subject to an agreementregarding the price of the goods the non-payment of such contingent debt does notbring about the rigours of Section 434 of the Indian Companies Act. Thiscontention, prima facie, is not tenable keeping in view the facts as have come outon the record in the present case, Primafacie, it is quite evident that the total valueof the goods agreed to be paid was US Dollars 16,992. 21 which the respondent-company failed to pay despite various communications and including service of astutory notice under the Act. Even the amount admitted by the respondent as duei. e. US Dollars 11,634. 79 was not paid. So, I find that it is a fit case for admission ofthe petition. 21 which the respondent-company failed to pay despite various communications and including service of astutory notice under the Act. Even the amount admitted by the respondent as duei. e. US Dollars 11,634. 79 was not paid. So, I find that it is a fit case for admission ofthe petition. I admit the petition and direct that the citations be published in accordancewith rules in the newspapers "indian Express", "navbharat Times" and also in"delhi Gazette". The matter to come up again on 4/07/1994.