S. ANANDA REDDY, J. ( 1 ) THIS company petition is filed under Sections 433 (e) and (f), 434 (l) (a), and 439 (1 ) (B) and (C) of the Companies act, 1956, read with Rules 95 of the companies (Court) Rules, 1959, seeking for an,order of winding up of the respondent company on the ground that the respondent company owes certain amounts to the petitioner and is unable to pay the same in spite of receipt of a statutory notice issued by the petitioner-Company. ( 2 ) THE petitioner-M/s. Shapoorji pallonji Finance Limited is a Company incorporated under the Companies Act, 1956 (hereinafter referred to as the Act ) with its registered office at 70, Nagindas Master road, Fort, Mumbai - 400023. The respondent-M/s. Shree Rayalaseema Alkalies and Allied Chemicals Ltd. , is also a company registered under the Act and originally incorporated on 24. 6. 1981 as a public limited Company with registered office at Gondiparla, Kurnool-518004. The respondent Company is limited by shares and the authorized share capital of the Company is Rs. 55,00,00,000/- divided into 5,50,00,000 equity shares with nominal value of Rs. 10/-each. The issued and paid up share capital is Rs. 39,33,40,600/- divided into 3,93,34,060 equity shares of Rs. 10/- each. The objects of the respondent Company were to manufacture various types of chemicals, alkalis, and allied products. The petitioner company was carrying on the business of providing finance. It is stated that in the process, the petitioner Company had entered into a lease agreement with the Respondent Company on 29. 9. 1995 in respect of three recuperators viz. , e1301b recuperator, G50 recuperator and m 108 FM recuperator. Before executing the agreement, the Respondent Company and the Petitioner Company executed a letter dated 27. 9. 1995 in which all the terms and conditions were broadly set out under which the equipment belongs to the petitioner company were agreed to be given on payment of lease rentals in terms of the agreement In terms of the lease agreement, the respondent was required to pay quarterly lease rent of Rs. 6,21,258/- in advance in every quarter which were on 1st January, 1st April, 1st July and 1st October of each English Calendar year. The duration of the lease in respect of equipments was for five years, starting from 1. 9. 6,21,258/- in advance in every quarter which were on 1st January, 1st April, 1st July and 1st October of each English Calendar year. The duration of the lease in respect of equipments was for five years, starting from 1. 9. 1995, and at the end of the five years period the Respondent Company was entitled to exercise its option to renew the lease for further year or years. The lease agreement also provided for the delayed payment charges, calculated at 0. 8220 per thousand per day of delay on the outstanding lease rentals. The lease document further provided that in case of default by respondent to liquidate the outstanding dues, the petitioner company is entitled to terminate the agreement and take back the physical possession of the equipments given to the respondent Company on lease. After the execution of the agreement between the parties, the machineries were accordingly supplied and installed at the factory of the respondent and it became obligatory on the part of the respondent to perform its part of the contract under the lease deed. ( 3 ) IT is further stated that the respondent has failed to make payments of the quarterly lease rentals, which fell due on 1-4-1999 and onwards. All the repeated requests and demands made by the petitioner for payment of lease rentals and also the delayed payment charges etc. , did not yield any result. The respondent admitted its liability time and again under the lease deed, but did not come forward to liquidate the liability. The Chairman and Managing director of the Respondent Company, in his affidavit dated 15-6-2001 filed in the C. P. No. 521 of 2000 before the Madras High court, in clear terms admitted the liability to the petitioner company. Therefore, in view of the non-payment of the lease rentals, a notice dated 23. 9. 2003 was issued terminating the lease agreement. As a result of termination of the agreement, the petitioner became entitled to recover or repossess the machineries and equipments given on lease and also claim the lease rentals on the equipment and machineries till date. The respondent is also under an obligation to make good the loss in the tax benefits that may arise on the completion of assessment by the Income- tax authorities as per the terms of the lease agreement. The respondent is also under an obligation to make good the loss in the tax benefits that may arise on the completion of assessment by the Income- tax authorities as per the terms of the lease agreement. ( 4 ) IT is stated that as per the legal notice dated 23-9-2003 the respondent was directed not only to handover the leased equipments, but also to pay a sum of rs. 56,98,612/- comprising of outstanding lease rentals plus, delayed payment charges, plus penal charges and bank charges, in addition to the lease rentals for the period between October 2000 to September 2003. In spite of receiving the said notice, the respondent did not respond positively by paying the amount. Therefore, the petitioner issued a statutory notice dated 19. 1. 2004 giving three weeks time for effecting the payment of the arrears, which, according to the petitioner, had come to Rs. 61,19,497/- with further interest from 1. 1. 2004 as there was no response even to the statutory legal notice, which shows the inability of the Respondent Company to pay off the debts. However, the respondent sent a reply dated 27. 2. 2004 denying the claim of the petitioner company stating that the claim made by the petitioner company is the subject-matter of the dispute before the Arbitrator, Sri Kartik Desai and the entire matter is before the said Arbitrator and therefore, the notice issued by the petitioner is not valid. Hence the petition. ( 5 ) UPON issuing notice before admission of the Company Petition to the respondent Company, the Respondent company filed its counter disputing and denying the allegations made by the petitioner company. At the outset, it is stated that the petitioner admittedly initiated proceedings earlier before an Arbitrator in mumbai, and the same are pending. Therefore, the present proceedings, which are parallel, are nothing but a pressure tactics against the Respondent Company to pay the monies, which it is not bound to pay practically and legally. It is stated that the petitioner in the statutory notice dated 19. 1. 2004 deliberately suppressed the fact of making an arbitral reference dated 14. 11. 2003. It is also stated that as the petitioner has raised a dispute for adjudication in an arbitral reference, it is not open to it to initiate proceedings under the Act seeking winding up of the respondent Company on the alleged ground of non-payment. 1. 2004 deliberately suppressed the fact of making an arbitral reference dated 14. 11. 2003. It is also stated that as the petitioner has raised a dispute for adjudication in an arbitral reference, it is not open to it to initiate proceedings under the Act seeking winding up of the respondent Company on the alleged ground of non-payment. It is stated that when the amount claimed by the petitioner is disputed, which is the subject-matter of an adjudication, there is no admitted debt, and therefore, the present proceedings under the Act for winding up of the Respondent company are improper and illegal. It is stated that as per the agreement dated 27. 9. 1995, the lease for a period of five years commenced from 1st September 1995, had expired by 30th August 2000, as the same was not renewed. Further, the respondent denies the liability to make any payment under the lease deed or otherwise after the expiry of the agreement. In fact, in the books of accounts maintained in regular course of business, Respondent company does not show or indicate that any amounts are due and payable to the petitioner company after the expiry of the lease. ( 6 ) IT is stated that the reliance placed by the petitioner on the contents of the affidavit dated 15. 6. 2001, filed on behalf of the Respondent Company in C. P. No. 521 of 2000 before the Madras High Court, is not at all relevant and the same cannot be relied upon, as the said affidavit was not filed in a proceedings between the parties herein. The said affidavit could not be taken as an acknowledgment of the debt to the petitioner company by the respondent Company. It is stated that as the lease period had expired by afflux of time by 30th August 2000, the question of termination of non-existing agreement does not arise, and consequently any payment of rentals on such non-existing agreement, and the demand of the petitioner that it is entitled to recover or repossess the machinery and equipment as well as lease rentals is totally denied. The respondent also denied its liability to make good the loss in the tax benefits that may raise on the completion of assessment by the Income-tax authorities due to disallowing of the depreciation benefits claimed by the petitioner. The respondent also denied its liability to make good the loss in the tax benefits that may raise on the completion of assessment by the Income-tax authorities due to disallowing of the depreciation benefits claimed by the petitioner. With reference to the claim of the petitioner for the period between october 2000 to September 2003, the liability for this period is totally denied and no such amounts are payable, and the claims are fanciful and time barred. The claim of the petitioner that the Respondent Company became insolvent and was not in a position to discharge the debts of other creditors is also denied. It is stated that as on the date of issuance of statutory notice, the petitioner got an arbitral reference for adjudication of the alleged dispute and when the said matter is pending for adjudication before the Arbitrator, the petitioner has come up with the present petition deliberately to pressurize the Respondent Company for effecting the payments, though the respondent Company is not liable to make any payments. Finally, it is stated that the respondent Company is being run on sound financial lines and are having several ancillary units and in view of the synergy developed the group as a whole is progressing steadily and it is providing employment to more than 5000 persons in a backward region of Rayalaseema and indirect employment to more than 10,000 persons. Therefore, there is no merit for granting any relief in the present petition. ( 7 ) THE learned Counsel for the petitioner reiterating the contentions made in the petition sought to contend that the respondent Company, having entered into a lease agreement in respect of the equipment, failed to pay the rentals, which fact was even admitted by the Respondent Company through its Managing Director, who filed an affidavit in C. P. No. 521 of 2000 before the madras High Court, and the same would amounts to acknowledgment of the debt due to the petitioner. Strong reliance is placed by the learned Counsel in the decision of the Apex Court in L. C. Mills v. Aluminium Corpn. of India, AIR 1971 sc 1482 , where a letter written by the accountant of the respondent Corporation was held to be an acknowledgment of the debt. Strong reliance is placed by the learned Counsel in the decision of the Apex Court in L. C. Mills v. Aluminium Corpn. of India, AIR 1971 sc 1482 , where a letter written by the accountant of the respondent Corporation was held to be an acknowledgment of the debt. The learned Counsel also would contend that when a statutory notice was issued there was no positive response for discharging the liability except sending a vague reply denying its liability. According to the learned Counsel, the respondent company did not dispute the factum of entering into a lease agreement with reference to the equipment supplied by the petitioner company, as well as the stipulations of lease rentals payable by the respondent Company apart from other terms of the lease. The learned Counsel also contended that though, in fact, the matter was referred to arbitration for adjudication in terms of the clauses of the lease agreement, but, however, the reference of such an arbitration is totally independent and not connected with the present proceeding, which is in the nature of an insolvency proceeding in view of the inability of the Respondent Company to discharge its liabilities to its creditors, including the petitioner company. The learned counsel also relied upon a decision of the kolkata High Court in S. M. Enterprises v. S. H. Nicco Finance, (1999) 96 Comp. Cases 691, wherein it was held that an arbitration clause can never stand in the way of filing of a winding up petition, provided the claim is undisputed or there is no dispute as to the debt or there is no substance either in law or in fact, in the defence sought to be raised in the winding up petition. Reliance is also placed on the decision of the Punjab and Haryana High Court in triiok Chand Jain v. Swastika Strips p. Ltd. , (1991) 70 Comp. Cases 197, wherein almost a similar view as in S. M. Enterprises v. S. H. Nicco Finance (supra) had been expressed by a learned Single judge of the Punjab and Haryana High court. The Bombay High Court In the matter of Dhootpapeshwar Sales Corpn. Pvt. Ltd. , (1972) 42 Com. Cases 197, wherein almost a similar view as in S. M. Enterprises v. S. H. Nicco Finance (supra) had been expressed by a learned Single judge of the Punjab and Haryana High court. The Bombay High Court In the matter of Dhootpapeshwar Sales Corpn. Pvt. Ltd. , (1972) 42 Com. Cases 139, expressed the view that in spite of a statutory notice given under Section 434 (1) (a) of the Companies Act, 1956 by the petitioner to the company for payment of his declared debt, the Company failed and neglected to pay the debt due to the petitioner. The company did not have sufficient assets to meet its liabilities and it was unable to pay and discharge its liabilities, that arose in the ordinary course of business. The company, was, therefore, commercially insolvent and it was a fit case where an order of winding up should be passed. ( 8 ) THE learned Counsel for the respondent, on the other hand, refuted the contentions of the petitioner relying upon the averments made in the counter. It is contended by the learned Counsel that the original lease was from 1. 9. 1995 for a period of 5 years, which is renewable at the option of the lessee. The period of 5 years expired by 31st August 2000. The lessee did not exercise its option to renew the lease. Therefore, the lease period had expired by 2000 and the lease rentals, if any payable, are only upto that date. As the present demand and the petition filed before this Court is beyond the period of three years, the same is barred by limitation. It is also contended by the learned Counsel for the respondent that an affidavit said to have been filed by the Managing Director of the Respondent Company in a proceeding, which was between the respondent and a third party would not enure to the benefit of the petitioner company as an acknowledgment so as to extend the period of limitation. Even assuming, without admitting, such an affidavit enures to the benefit of the petitioner, still the said affidavit was filed on 15-6-2001 and even if the period of limitation is computed from that date, by the date of the presentation of the Company Petition, the claim is clearly barred by limitation. Even assuming, without admitting, such an affidavit enures to the benefit of the petitioner, still the said affidavit was filed on 15-6-2001 and even if the period of limitation is computed from that date, by the date of the presentation of the Company Petition, the claim is clearly barred by limitation. The learned Counsel also contended that the petitioner issued a notice dated 23-9-2003 terminating the alleged lease, but as the lease agreement was not renewed beyond the initial period of five years, there is no question of any termination of the lease, which is non-existing. Therefore, it is not open to the petitioner to rely upon such a notice in order to claim the liability of lease rentals upto the alleged date of termination of the lease. The learned Counsel also contended that in response to the statutory notice, dated 19-1-2004, a reply dated 27-2-2004 was issued denying all the liabilities. Therefore, there is absolutely no merit in the claim of the petitioner. ( 9 ) ALTERNATIVELY, it is contended by the learned Counsel for the respondent that the petitioner itself unilaterally referred the matter to arbitration for adjudication of the alleged dispute, which is evident from the averments made in the petition itself. It is also stated that the said proceedings are awaiting for the award being passed by the Arbitrator. The said averments clearly show that there is a dispute between the petitioner and the respondent, and the said dispute was referred for adjudication to the Arbitrator. In such circumstances, it is not open to the petitioner to claim that there is an admitted debt, which is due and payable by the respondent to the petitioner, the non-payment of which would give cause of action for the petitioner to move the Company Court under Section 433 seeking an order of winding up. The learned counsel also contend that the liability as alleged by the petitioner is disputed by the respondent and therefore, it is a matter for adjudication. Therefore, the present proceedings are misconceived and are liable to be dismissed. The learned Counsel also relied upon the decision of the Allahabad high Court in Benares Cotton and Silk mills Ltd. v. Sulbha Devi, (1986) 60 comp. Therefore, the present proceedings are misconceived and are liable to be dismissed. The learned Counsel also relied upon the decision of the Allahabad high Court in Benares Cotton and Silk mills Ltd. v. Sulbha Devi, (1986) 60 comp. Cases 639, wherein it was held that the period of limitation continues to run even after the date when the petition for winding up is filed and stops to run only on the date of the order for winding up is passed. Relying upon the said decision, it is contended by the learned Counsel that the present claim of the petitioner is barred by limitation even assuming that there is a debt due and payable by the respondent. The learned Counsel also relied upon a division Bench decision of this Court in vijayalakshmi v. Hari Hara Ginning and pressing, (1999) 96 Comp. Cases 723, wherein it was held that the question of limitation or the question whether the amount was adjusted by the Company for the work carried out by the Company for the appellants were questions of fact, which were required to be determined in a regular suit. It could not be said that the defence put forth was either frivolous or not bona fide, especially when the appellant herself had approached the Civil Court in order to determine the liability of the respondent Company. The learned Counsel, therefore, sought to dismiss the Company petition. ( 10 ) FROM the above contentions, the issue to be considered is whether the petitioner is entitled for an order of admission of the Company Petition for winding up of the Respondent Company. ( 11 ) IT is not in dispute that the petitioner company entered into a lease agreement dated 29-9-1995 with the Respondent company for supplying machinery. As per the terms of the lease agreement, the lease is for a period of five years starting from 1-9-1995 and at the end of five years period, the respondent lessee is entitled to exercise its option to renew the lease for further year or years. The original period of five years of lease had expired by 31st August 2000, and there is no evidence that the lease was renewed at the option of the respondent. The petitioner claimed that the quarterly rent of rs. The original period of five years of lease had expired by 31st August 2000, and there is no evidence that the lease was renewed at the option of the respondent. The petitioner claimed that the quarterly rent of rs. 6,21,258/- payable by the respondent fell due from 1-4-1999 onwards and the respondent failed to pay the same and the said rent was computed at Rs. 56,98,612/-, in addition to the delayed payment charges, penalty charges etc. , and the total claim made by the petitioner Company comes to rs. 61,19,497/ -. As per the claim made in the present petition, the petitioner not only claimed the defaulted lease rentals for the initial period of five years, but also claimed lease rentals for the period from october 2000 to September 2003. As could be seen from the pleadings, the said claim is based on the premise that the machinery supplied by the petitioner continued to be in the physical possession of the respondent. But, however, it is not the case of the petitioner that there is any such clause in terms of the lease agreement to that effect. The petitioner also claimed that the lease agreement was terminated by notice dated 23-9-2003, and therefore, claimed the lease rentals upto that date. It is further claimed that a statutory notice under the provisions of the Act was issued on 19-1-2004 giving three weeks time for the respondent for effecting the payment of the amount claimed. As the said amount was not paid, the petitioner has come up with the present company petition. In the petition it is also stated that a reference was made to arbitration with reference to the claim of the petitioner and the decision in the arbitration proceedings is still awaiting. ( 12 ) THOUGH the respondent disputed the liability, as a matter of fact, he claimed that the petitioner s claim is barred by limitation. In the reply notice issued to the statutory notice issued by the petitioner, the respondent has clearly stated that "our client deny that there is any admission of liability on part of our clients under the lease Deed. In the reply notice issued to the statutory notice issued by the petitioner, the respondent has clearly stated that "our client deny that there is any admission of liability on part of our clients under the lease Deed. As regards the affidavit, dated 15th June 2001 of the Chairman and managing Director of our clients is concerned, the statement made therein were made in a particular reference to the context and does not amount to admission of any liability on part of our clients as is sought to be interpreted by your clients. " from the above, it is clear that there is a categorically denial of the liability by the respondent apart from disputing the alleged acknowledgment made in the affidavit filed in the company petition i. e. , c. P. No. 521 of 2000 before the Madras high Court to which the petitioner was not a party. Though the learned Counsel for the petitioner sought to rely upon the reply of the respondent dated 12-3-2004, which was issued in response to the statutory notice dated 19-1-2004, but a perusal of the said reply does not show that there is any admission on the part of the Respondent company with reference to the claim of the petitioner. ( 13 ) ADMITTEDLY, the claim of the petitioner was referred to arbitration for adjudication and it is still pending for adjudication. In spite of the pendency of the said adjudicatory proceedings before the Arbitrator, the petitioner has come up with the present petition contending that the present petition is maintainable irrespective of the arbitration proceedings and sought to rely upon various decisions referred to earlier. But a perusal of those decisions clearly provides that if there is no dispute as to the liability and if there is an admitted debt, then a proceeding under Section 433 of the Act would lie seeking for an order of winding up. But, on the other hand, if the debt is disputed and if it requires adjudication, then a proceeding under section 433 would not lie. But, on the other hand, if the debt is disputed and if it requires adjudication, then a proceeding under section 433 would not lie. This view is supported by the decision of a Division bench of this Court in Vijayalakshmi v. Hari Hara Ginning and Pressing (supra), wherein it was held that if a matter requires adjudication of the disputed facts, where, in fact, a civil suit was filed by the alleged creditor, it was held that a petition under Section 433 of the Companies act, 1956 would not lie. In the present case, admittedly, the matter was referred for arbitration for adjudication. Though the petitioner contended that there is an admitted liability, but nowhere the respondent admitted such liability. It was not the case of the petitioner that the respondent had admitted its liability to the petitioner in its books of accounts or was there any communication by the respondent to the petitioner admitting the liability. Though the petitioner relied upon the affidavit stated to have been filed by the Managing director of the Respondent Company in another proceedings before the Madras High court, but the said petition was not a proceeding between the petitioner and the respondent herein. Therefore, the petitioner cannot take advantage of the said affidavit. Further, the reference to arbitration by the petitioner itself shows that there is no admitted liability on the part of the respondent. ( 14 ) ANOTHER contention advanced on behalf of the Respondent Company is that the claim of the petitioner is barred by limitation, as the alleged liability relates to the period prior to the year 2000, and the present Company petition is filed in 2004 i. e. , on 10-8-2004. The learned Counsel also relied upon a decision of the Allahabad high Court in Benares Cotton and Silk mills Ltd. v. Sulbha Devi (supra), wherein it was held that the period of limitation continues to run even after the date of filing of the petition for winding up and the period of limitation stops running only when an order of winding up of the respondent Company is passed. If the said principle is applied, prima facie, the claim of the petitioner is barred by limitation. If the said principle is applied, prima facie, the claim of the petitioner is barred by limitation. But, however, as the matter has already been referred to the Arbitrator for adjudication, the present Company petition filed for winding up is misconceived in view of the existing dispute as to the liability of the respondent Company to the petitioner. ( 15 ) THOUGH the learned Counsel for the petitioner company relied upon the affidavits said to have been filed by the chairman and the Managing Director of the Respondent Company in a Company petition on 15-6-2001, which would amounts to acknowledgment of the debt of the petitioner and therefore, the debt is not barred by limitation. Strong reliance is placed on the decision of the Supreme court in L. C. Mills v. Aluminium Corpn. of India (supra ). In the said decision the secretary and Accountant of the respondent corporation wrote a letter admitting the liability of the Respondent Company to the appellant Company in a sum of Rs. 1,07,447/- and sought for confirmation of the appellant Company while the appellant company made a higher claim than what was shown as balance on behalf of the respondent Company. One of the issues was whether such communication issued by the Secretary and Accountant of the respondent Company could be taken as an acknowledgment so as to save the period of limitation. The Trial Court accepted the claim of the appellant Company and treated it as acknowledgment of the debt, and accordingly decreed the suits. But, however, on appeal the High Court reversed the said decrees on the ground that the Secretary-cum-Accountant was not competent to acknowledge the debt of the Respondent Company to the appellant company. The Apex Court reversed the said finding, holding that the Secretary-cum- accountant of the Respondent Company was authorized for settlement of the accounts between the appellant and the respondent and there was a lot of correspondence for settlement of the claims between the parties and finally after setting certain claims the final amount was proposed on behalf of the Respondent Company for confirmation from the appellant Company. Therefore, it was treated as an acknowledgment on behalf of the Respondent Company. Therefore, it was treated as an acknowledgment on behalf of the Respondent Company. But even if the ratio of the said decision is extended with reference to the affidavit filed on behalf of the Respondent Company by its Managing Director on 15-6-2001, and if the period of limitation is computed from that date, even from that date, the debt is barred by limitation, as, admittedly, the company petition was filed only on 10-8-2004, as the period of three years from 15-6-2001 had expired by 14-6-2004 itself. ( 16 ) UNDER the above circumstances, the company petition is devoid of merit, and the same is accordingly dismissed.