Judgment This petition has been filed by Phosphate Chemicals Export Association Inc., Illinois, U.S.A. to wind up the respondent company. According to the petitioner, the respondent placed an order for supply of approximately 6,81,000 M.T. of Die Ammonium Phosphate (DAP) as per Export Sales Contract No.01433 dated 26. 2001 on cash against documents 180 days from the date of Bill of Lading. The petitioner shipped the contracted quantity of DAP to the respondent in two shipments. The first shipment of 32,950.754 M.T.DAP was sent under Bill of Lading dated 6. 2001 and the second shipment of 34,999.480 M.T. of DAP was sent under Bill of Lading dated 16. 2001. The total value of DAP was US$. 11,675,320.70 payable within 180 days. Both the shipments were duly accepted by the respondent on arrival. 2. In terms of the agreement, the payment for the first shipment of US $5,687,959.16 became due and payable on 211. 2001 and the payment of US $5,987,361.04 under the second shipment became due and payable on 12. 2001. However, on 211. 2001, the respondent wrote to the petitioner stating that because of the financial difficulties faced by them, they were not able to make the payment on the due date i.e. 211. 2001. They proposed rescheduling of payments due to the petitioner in seven installments beginning from February 2002 and ending August 2002. The proposed rescheduling of due payment in installments was a clear breach of the agreement. Still, as a gesture of goodwill, petitioner agreed for the proposal, with a condition that the respondent strictly adhere to the schedule without any default. Thereafter, the petitioner received US $5,00,000/- from the respondent in December 2001, but, the respondent did not make any payment in January or February 2002, as per the schedule. The respondent paid a sum of US $3,00,000/-in March, 2002 and thereafter, defaulted in paying the subsequent installments. Due to the repeated efforts of the petitioner, in May 2002, a meeting was held between the respondent and the petitioner and the respondent by letter dated 5. 2002, submitted a revised payment plan, assuring that it would remit the outstanding payment in eight installments commencing from July 2002 till February 2003. However, the respondent, failed again to honour his commitments and did not make the payment even for the first installment which became due in July 2002. 2002, submitted a revised payment plan, assuring that it would remit the outstanding payment in eight installments commencing from July 2002 till February 2003. However, the respondent, failed again to honour his commitments and did not make the payment even for the first installment which became due in July 2002. They were able to make another payment of US$.0.88 Million in August 2002. Thereafter, they committed the breach and did not pay any of the installments as agreed by them. After continued persuations from the petitioner, the respondent was able to pay another sum of US$.2,00,000/- in January 2003. Therefore, the petitioner was compelled to issue a notice on 21. 2003 under Section 434 of the Companies Act 1956, calling upon the respondent to remit the outstanding payment of US$. 9,787,361.04 along with interest at the rate of 7% per annum from 112. 2001. In response to the above notice, the respondent by letter dated 12. 2003, proposed a schedule of payment for the third time suggesting, that they would remit the outstanding payment in installments from February 2003 onwards and they would clear the same by end of 2004. To impress upon the petitioner, they also paid a sum of US$.5,00,000/-. As the petitioner decided to grant a final opportunity to the respondent, the petitioner informed the respondent that it was necessary to assure that the respondent would make payment in every month from February 2003 and they would also address to the issue of interest. In April 2003, the respondent made part payment of US$.5,00,000/- for the period March 2003 to July 2003. Thereafter, they failed to make any payment at all. The petitioner sent another statutory notice under the Companies Act calling upon the respondent to make payment of US$.8,787,361.04 within interest at the rate of 7% per annum from 12. 2001. Inspite of receiving the same, the respondent failed and neglected to pay the amount and therefore it is very clear that the respondent is unable to pay its admitted dues legally due and payable and the respondent company has become commercially insolvent. Hence, they filed the above Company petition for winding up the respondent company. 3. The respondent entered appearance through their counsel and filed a counter statement. Hence, they filed the above Company petition for winding up the respondent company. 3. The respondent entered appearance through their counsel and filed a counter statement. According to the respondent, the company suffered a set back during the financial year 2001-2002 due to the reasons like: (1) The move of the Government of India recovering fertilizer subsidy on an ad hoc basis; (2) The Company’s DAP plants could not meet the production targets due to funds constraints as well as stiffening of terms of supply imposed by good raw material suppliers and there was a shortage in the company’s fertilizer production in the financial year 2001-2002 and 2002-2003. 4. Therefore, it resulted in under-utilisation of plant capacities, thereafter sharp rise in the specific consumption –norms and also direct cost of manufacture. These adverse factors caused a temporary impediment in an otherwise sound performance that the respondent company has been so consistent in turning out the financial year after financial year. To overcome the difficult situation and also to tide over it at the earliest, the respondent company taking various steps to revise its business strategy and to restructure the operations. It is further stated that a Corporate Debt Re-structuring. (CDR) Mechanism was evolved by the Reserve Bank of India for facilitating a timely and transparency system for re-structuring the Corporate debts of viable corporate entities like the respondent company which are affected by internal and external factors. It is admitted by the respondent that though it is taking its best efforts to make payments to the petitioner, unsecured debts periodically, such payments are subjected to the prior approval of the bankers Consortium in the CDR group. It is further added that it is the cumulative effect of the above said adverse conditions which is the reason for the respondents inability to repay the amounts which were A payable to the petitioner on time. They denied that they have become commercially insolvent and the inability to pay is not permanent and it is only temporary. 5. That, part, the respondent also alleged that the goods supplied by the petitioner were not as per the specification prescribed by Government of India and the same was established by the report of the Quality Control Laboratory. This was also brought to the notice of the petitioner on 8. 2001. 5. That, part, the respondent also alleged that the goods supplied by the petitioner were not as per the specification prescribed by Government of India and the same was established by the report of the Quality Control Laboratory. This was also brought to the notice of the petitioner on 8. 2001. According to the respondent, the subject matter of the dispute is purely of civil nature and winding up proceedings are not warranted. It is further stated that if at all the petitioner wanted to realize its dues, the proper remedy would be to file a suit and therefore, the above Company petition is not maintainable. The respondent also disputed the interest by saying that they have not committed to pay interest at 7% as alleged by the petitioner. Therefore, they prayed for the dismissal of the Company petition. 6. Heard the learned counsel for the petitioner and the learned counsel for the respondent. I have also gone through the entire materials on record. 7. The learned counsel for the petitioner submitted that the petitioner has clearly proved that the respondent company is unable to pay its debts and therefore, a case has been made out for winding up the same. He further pointed out that the defence put out by the respondent is not a bona fide one with regard to the goods supplied by the petitioner by alleging that they were not as per the specification prescribed by Government of India. He further added that when the company has become insolvent as it is not able to pay its debts and when there is bona fide defence put up by the respondent company, a case has been made out to wind up the company as per the provisions of the act. In support of his submissions, he relied on the following decisions: 1. Pradeshiya Industrial and Investment Corporation of Utter Pradesh v. North India Petro Chemical Ltd. And Another (1994) Vol. 79 Comp. Cane 835 (SC) 2. Natural Conduits (P) Ltd. V. S.S. Arora AIR 1968 (SC) 279 3. Madhusudan Gordhandlas & Co. v. Madhu Woolen Industries Pvt. Ltd. AIR 1971 (SC) 2600 : (1971) 3 SCC 632 4. Mediquip Systems Pvt. Ltd. V. Proxima Medical System GMBH) AIR 2005 4 SC 4175. 8. 79 Comp. Cane 835 (SC) 2. Natural Conduits (P) Ltd. V. S.S. Arora AIR 1968 (SC) 279 3. Madhusudan Gordhandlas & Co. v. Madhu Woolen Industries Pvt. Ltd. AIR 1971 (SC) 2600 : (1971) 3 SCC 632 4. Mediquip Systems Pvt. Ltd. V. Proxima Medical System GMBH) AIR 2005 4 SC 4175. 8. Per contra, the learned counsel for the respondent company submits that the failure to pay its debt is only temporary due to reasons beyond its control and therefore, a case has not been made out to wind up the company. According to him, the company is undergoing a temporary crunch and the same would be removed sooner or later. In such circumstances, he submits that proper remedy for the petitioner is to sue the company for recovering its debts and the company petition is misconceived. 9. I have considered the rival submissions carefully with regard to facts and citations. 10. It is not in dispute that the respondent company placed an order with the petitioner company for the supply of Die Ammonium Phosphate, as per Export Sales Contract dated 26. 2001. It is also not in dispute that the amount covered under this order was not duly paid by the respondent company. In fact, it is on record that the respondent company asked for a re-schedule of payments in seven installments initially by letter dated 211. 2001. Thereafter, they asked for another revised schedule of payments in May 2002. Yet another proposal for reschedule of payments in May 2002. Yet another proposal for reschedule of payment was again suggested by the respondent in February 2003. Therefore, it was made very clear that the respondent admitted its liability and therefore, the petitioner, company established that the respondent company was unable to pay its debts inspite of the time granted as requested by the respondent. That apart, the respondent in the counter statement itself clearly admitted this country, it was not possible for them to repay the amounts which were payable to the petitioner. However, they added that the delay in payments is not indicative of their permanent disability to repay the debts or that they have become commercially insolvent. That apart, the respondent in the counter statement itself clearly admitted this country, it was not possible for them to repay the amounts which were payable to the petitioner. However, they added that the delay in payments is not indicative of their permanent disability to repay the debts or that they have become commercially insolvent. To this extent, the decision is very clear that the company was not in a position and in fact they were not able to pay their admitted liability to the petitioner company towards order they made with the petitioner company for supply of DAP and also it was an admitted fact that the DAP sent by the petitioner in two shipments were received by the respondent. Though an attempt was made belatedly by the respondent company by putting g a defence that the goods supplied by the petitioner were not as per the specification that there was a dispute with regard to quality of the goods supplied and also with regard to the amount due and payable by them to the petitioner. What was attempted by the respondent is that they did not accept the interest portion and therefore, that was in dispute. But, the respondent did not even pay the entire principal amount and therefore, there was no merit in their contention that there is a dispute and therefore, the petitioner should only approach the Civil Court to recover the outstanding amounts. 11. In Mediquip Systems Pvt. Ltd. V. Proxima Medical System (GMBH) (supra), the Hon’ble Supreme Court held as under: “19. This Court in catena of decisions held that an order under Section 433(3) of the Companies Act is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under this Section must be a determined or a definite sum of money payable immediately or at a future and that the inability referred to in the expression ‘unable to pay its dues’ in Section 433(e) of the Companies Act should be taken in the commercial sense and that the machinery for winding up will not be allowed to be utilized merely as a means for realizing debts due from a company. 28. The Rules as regards the disposal of winding up petition based on disputed claims are thus stated by this Court in Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd. (supra). 28. The Rules as regards the disposal of winding up petition based on disputed claims are thus stated by this Court in Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd. (supra). This Court has held that if the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. The principles on which the Court acts are: (i) that the defence of the company is in good faith and one of substance: (ii) the defence is likely to succeed in point of law; and (iii) the company adduces, prima facie proof of the facts on which the defence depends.” 12. From the above, it is very clear that an order under Section 34(e) of the Companies Act is discretionary and there must be a debt due and the Company must be unable to pay the same. That apart, the defence raised should be a substantial one and not a mere moonshine. Only when the debt is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. 13. In Madhusudan Gardhandas & Co. v. Madhu Woolen Industries Pvt. Ltd. (supra), the Hon’ble Supreme Court held that if the debt Is bona fide disputed and the defence is a substantial one, the Court will not wind up the company. The Hon’ble Supreme Court further added that where the debt is undisputed, the Court will not act upon a defence that the company as the ability to pay the debt, but the company chooses not to pay that particular debt. The principles on which the Court acts are, first that the defence of the company is in good faith and one of subsistence, secondly, the defence is like to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. 14. In Pradeshiya Industrial and Investment Corporation of Utter Pradesh v. North India Petro Chemical Ltd and Another (supra), the Hon’ble Supreme Court observed that if there is a decision to the making of winding up order by creditors, the Court will consider their wishes and may decline to make the winding up order under Section 557 of the Companies Act 1956, in all matters relating to winding up of the company, the Court may ascertain the wishes of the creditors. The wishes of the shareholders are also considered, though the Court may attach greater weights to the view of the creditors. 15. In National Conduits (P) Ltd. V. S.S. Arora (supra), the Hon’ble Supreme Court held that a petition for winding up cannot be placed for hearing before the Court unless the petition is advertised and that is cleared from the terms of Rule 24(2) of the Company Court Rules, 1959. 16. In the light of the above settled legal principles, if the facts of the present case are considered, I am of the considered view that the debt to the petitioner company was duly established and it is a determined sum of money payable by the respondent. That apart, it has also been established that the respondent was unable to pay its dues. In fact, the liability itself was admitted and the inability to pay also was admitted by the respondent. A weak attempt was made to put up a defence which is not a substantial one and there is no bona fide dispute with regard to the same payable towards the principal. Therefore, I am of the considered view that the petitioner can very well maintain the Company petition. In the circumstances, the following order is passed. (i) Admit. Notice returnable 24. 2009. (ii) The petitioner is directed to publish the company petition in one issue of Tamil Daily “Malai Murasu” one issue of English Daily “Deccan Chronicle” and also in the Tamil Nadu Government Gazette returnable by 24. 2009 and also serve notice on the respondent-Company. (iii) The petitioner is directed to publish the Company petition giving atleast fourteen days clear advance notice. Call the Company petition on 24. 2009 C.P.No. 362 of 2003 S. RAJESWARAN, J. This Company Petition has been posted before me for “being mentioned” at the instance of the learned counsel for the petitioner. 2. On 13. 2009, this Court passed the final order in the Company Petition. As there was no mention about the names of papers in which publication has to be effected, this Company Petition has been brought me. 3. The learned counsel for the petitioner submits that the publication could be effected in “Malai Murasu” and “Deccan Chronicle” and the names of all those papers could be mentioned in the order. 4. The learned senior counsel Mr. 3. The learned counsel for the petitioner submits that the publication could be effected in “Malai Murasu” and “Deccan Chronicle” and the names of all those papers could be mentioned in the order. 4. The learned senior counsel Mr. A.R.L. Sundaresan, appearing for the respondent submits that the order passed by this Court on 13. 2009 could be suspended for a period of two weeks to enable them to move the Appellate Forum, as the publication itself would affect the interest of the respondent company. But it is being opposed by the learned counsel appearing for the petitioner. 5. Considering the submission made, I have incorporated the names of the two papers in which the publication has to be carried out. Regarding suspension of the order, I am of the view that this order could be suspended for a period of two weeks from today. 6. Accordingly, the order passed by this Court on 13. 2009 is suspended for a period of two weeks from today.