Judgment : R.V. Easwar, J. 1. This is a petition filed by M/s Rama Peer Trader under section 433(e) of the Companies Act, 1956 seeking winding up of M/s Scot Innovation Wires and Cables Pvt. Ltd. 2. The petitioner is a proprietary firm of one Sitaram Solanki, engaged in the business of manufacturing renewable plastic granules/grains which are prepared from discarded plastic items. In July 2011, the petitioner was approached by the respondent-company for supply of the above material, to be used in the manufacture of cables. It is claimed by the petitioner that he had informed the respondent that the renewable plastic granules may not be suitable for the manufacture of cables and allied products and are normally used in the manufacture of plastic mouldings and sheets. Despite this, the respondent-company requested the petitioner to supply the material. From the end of July 2011, the petitioner started supplying the material to the respondent-company. In a ledger account maintained in the name of the respondent-company, the sales were debited and the payments received were credited. The material was delivered at the factory of the respondent-company at Baddi, Solan District, Himachal Pradesh. It is also seen from the ledger account that whenever any material was returned by the respondent-company, it was duly given credit in the ledger account. Such an instance, as shown in the ledger account, was the goods returned under GR No.983656 on 19.10.2011, the value of which was Rs.3,67,200/-. As on 1.2.2012, the total material supplied to the respondent-company was worth Rs.85,28,000/- The payments received, including the credit for the goods returned, during this period amounted to Rs.42,24,207/-. Thus the debit balance as on 01.02.2012, as per the ledger account was Rs.43,03,793/-. The respondent- company made the last payment of Rs.3,00,000/- on 16.1.2012. But thereafter no payments were made though the petitioner supplied goods and debited the value of the goods in the ledger account on 28.1.2012, 29.1.2012 and 1.2.2012. 3. Since no payments were forthcoming, the petitioner requested the respondent to settle the account and it was pointed out that till such settlement takes place, no further supplies would be made. But thereafter no payments were made though the petitioner supplied goods and debited the value of the goods in the ledger account on 28.1.2012, 29.1.2012 and 1.2.2012. 3. Since no payments were forthcoming, the petitioner requested the respondent to settle the account and it was pointed out that till such settlement takes place, no further supplies would be made. Since no payments were forthcoming despite several attempts made by the petitioner, it issued a legal notice on 21.5.2012 notifying the respondent that the balance outstanding should be paid within a period of 15 days from the receipt of the notice and if it is not so paid, the petitioner would charge interest at the rate of 18% per annum. It would appear that a copy of the ledger account was also attached to the legal notice. Despite service of the notice upon the respondent-company, including by e-mail, there was no reply to the same. The petitioner has therefore filed the present company petition for winding up. 4. Counsel for the petitioner submitted that since the respondent-company could not pay the balance outstanding, it should be wound up under section 433(e). It is pointed out that in order to ward off the payment, the respondent-company filed a suit in the Court of the District Judge, District West, Delhi against the petitioner for recovery of a sum of Rs.20 lakhs as loss claimed to have been suffered by the respondent-company on account of manufacture of cables by using the material supplied by the petitioner. He contends that the suit is clearly an after-thought and there is no evidence to show that it was only on account of the defective material supplied by the petitioner, that the cables manufactured by the respondent-company had cracked making them unsuitable for use. It is also pointed out that the computation of loss at Rs.20 lakhs as recoverable from the petitioner is without any basis or evidence and is a mere assumptive attribution of the loss to the petitioner. It is again pointed out on behalf of the petitioner that the respondent did not raise any objection on receiving the material from the petitioner as to the quality. Counsel for the petitioner also disputed the claim that the respondent returned the material which was found defective, stating that if the material was returned then there was no question of its being used in the manufacture of cables. Counsel for the petitioner also disputed the claim that the respondent returned the material which was found defective, stating that if the material was returned then there was no question of its being used in the manufacture of cables. He points out that the only occasion on which the material was returned by the respondent-company was on 19.10.2011 and the value of the material amounting to Rs.3,67,300/- was duly given credit to the respondent-company in its ledger account. Moreover, it is contended that the respondent-company was making payments from September, 2011 till 16.1.2012 without any protest or demur and had the material been defective, the respondent would not have made those payments. 5. Counsel for the respondent however contends that this is not a case of inability to pay on the part of the petitioner; it is a case of bona fide dispute regarding the quality of the material supplied by the petitioner. It is argued that the winding up petition is a counter-blast to the notice sent by the respondent on 7.3.2012 seeking recovery of Rs.20 lakhs from the petitioner. Attention is drawn to the letter dated 14th October, 2011 written by the respondent to the petitioner on the subject “bad quality of PVC compound supplied” (Annexure R4-Colly). It is submitted that in this letter the respondent-company has drawn the attention of the petitioner that the “PVC Compound – Grey” supplied by the petitioner and received on 9.10.2011 was to be rejected on colour scheme and on quality parameters. The letter also says that the material will be returned to the petitioner with a debit note for all expenses incurred after receiving the same. Attention is also drawn to the “inter office memo” on the subject “poor quality of PVC compound received from M/s Rama Peer Trader”. The memo was issued by the respondent-company to its purchase department head, drawing his attention to the defects in the quality of the material received from the petitioner and requesting him to look into the matter and do the needful at the earliest. There is also a letter dated 14.12.2011 written by Areva, a company to which the respondent claims to have supplied cables, to the respondent-company, drawing its attention to the defects in the cables manufactured by it and cancelling the orders placed for some of the projects. 6. There is also a letter dated 14.12.2011 written by Areva, a company to which the respondent claims to have supplied cables, to the respondent-company, drawing its attention to the defects in the cables manufactured by it and cancelling the orders placed for some of the projects. 6. In his brief rejoinder, the counsel for the petitioner submitted that the company petition is not a counter-blast to the notice dated 07.03.2012 said to have been issued by the respondent-company since even according to the respondent-company, the said notice was not served on the petitioner. The submissions made initially were reiterated. 7. I find no merit in any of the submissions made by the respondent-company in its defence. There is no dispute that the statutory demand notice sent under Section 434(1)(a) of the Act was served at the registered office of the respondent-company. The debt is also not denied. What is, however, contended by the respondent is that because of the defective material supplied by the petitioner, the cables manufactured by it were also defective and were rejected by its customers, which resulted in a loss, a part of which is recoverable from the petitioner even after setting off the amount due to the petitioner. If the goods were defective, it was for the respondent to return the same. The ledger account of the respondent-company maintained by the petitioner shows that on 19.10.2011, goods of the value of Rs.3,67,200/- were returned by the respondent. The ledger account does not show any other return of the goods. There is no evidence brought on record by the respondent to show that apart from the above, some other goods were also returned. Annexure R-4 (Colly.) does not contain any evidence to show that the goods, allegedly found defective, were returned to the petitioner. The letter dated 14.10.2011 said to have been written by the respondent to the petitioner merely mentions that the material supplied “shall be returned back to you with the debit note of all expenses incurred on the receipt”. This letter refers to goods received by the respondent on 09.10.2011 at its factory. I find from the ledger account that on 08.10.2011, there is a debit of Rs.3,76,992/- and a credit of Rs.3,67,200/- on 19.10.2011 representing the value of goods returned as per GR No.983656 – Bill No.057 dated 08.10.2011. This letter refers to goods received by the respondent on 09.10.2011 at its factory. I find from the ledger account that on 08.10.2011, there is a debit of Rs.3,76,992/- and a credit of Rs.3,67,200/- on 19.10.2011 representing the value of goods returned as per GR No.983656 – Bill No.057 dated 08.10.2011. Therefore, it can be taken that the reference in the letter dated 14.10.2011 is to the goods supplied by the petitioner under the above bill. This return of goods actually finds place in the ledger account on 19.10.2011. Apart from this there is no other credit in the ledger account for goods returned. The respondent also does not have any proof or evidence to that effect. The office memo dated 03.02.2012 is an internal communication in the factory of the respondent; it merely cautions its purchase department head that the goods have to be checked physically for any defects. This does not prove that the goods supplied by the petitioner were defective, though it refers to the goods supplied by the petitioner. If the respondent was serious about the defects noticed in the material supplied by the petitioner, in addition to cautioning its own purchase department head, one would have expected it to bring the defects to the notice of the person who supplied the material i.e. the petitioner. Moreover, this office memo is dated 03.02.2012 by which time the last of the supplies had been made. This appears to me to be a self-serving record which cannot be given any credibility. The letter dated 03.02.2012 addressed by the respondent to the petitioner on the subject of “poor quality of PVC compound of outer sheathe” acknowledges the fact that the material supplied by the petitioner was “used for our various buyers”. It was for the respondent to have inspected the goods properly for defects. Once the goods have been used and the cables supplied to various customers of the respondent, who also admittedly used material supplied by several other suppliers, there should be strict proof to show that the defects found in the cables were attributable only to the material supplied by the petitioner. There is absolutely no evidence to this effect. The statement of loss (Annexure R-6) which contains the calculation of the loss of Rs.65,52,567/- attributable to the petitioner is a statement made on several assumptions, none of which is supported by any evidence. There is absolutely no evidence to this effect. The statement of loss (Annexure R-6) which contains the calculation of the loss of Rs.65,52,567/- attributable to the petitioner is a statement made on several assumptions, none of which is supported by any evidence. It merely attributes the total loss on account of rejection of material by M/s. Crompton Greaves Ltd. and transportation costs aggregating to Rs.1,25,93,220/- to the petitioner to the extent of 56.25% thereof after reducing 43.75% as the average share of the other suppliers on account of rejection. This statement is bereft of any supporting material or evidence and appears to me to be an arm-chair statement. Out of the share of the petitioner, the respondent has set off the amount of Rs.42,64,268/- being the value of disputed bills issued by the petitioner and has arrived at the balance of Rs.22,88,299/- recoverable from the petitioner. From this figure, an amount of Rs.2,88,299/- is deducted as waived and the balance amount recoverable is shown at Rs.20,00,000/-; it is on the basis of this statement that the suit was filed in the District Court by the respondent-company. The statement cannot be taken as sacrosanct or even be relied upon in the absence of any evidence or proof supporting it. Even the letter dated 14.12.2011 written by Areva to the respondent (Annexure R-3) is a letter in which Areva has cancelled the orders placed on the respondent for certain projects based on the progress of the orders till then and various rejections which took place during the inspections. I am unable to understand how this letter pins down the liability for supplying defective material upon the petitioner. 8. It appears to me that the claim of the respondent that the material supplied by the petitioner other than the material supplied under bill No.057 dated 08.10.2011, on account of defects therein, had caused huge loss to the respondent, the responsibility for which should be taken by the petitioner, is clearly an afterthought. The contention of the respondent that the legal notice issued by the petitioner was a counter blast to the legal notice sent by the respondent on 07.03.2012 seeking recovery of Rs.20,00,000/- from the petitioner is not acceptable, since even according to the respondent, the notice dated 07.03.2012 could not be served on the petitioner and was returned with the noting “no such person at this address”. It has been admitted so in para 8 of the counter filed by the respondent. If the notice dated 07.03.2012 was not served on the petitioner I do not see how the steps taken by the petitioner commencing with the legal notice dated 21.05.2012 can be a counter blast to the same. 9. In the course of the arguments before me, I requested the learned counsel for the respondent to produce the copies, if any, of other debit notes said to have been sent by the respondent to the petitioner to substantiate its claim that the material supplied under disputed bills were actually returned to the petitioner. Till the close of the hearing, the respondent who was present in Court through its authorised representative, could not produce any of the debit notes though it was asserted that the respondent did send those debit notes. 10. Therefore, it seems to me to be a case where the defence put up by the respondent is not bona fide, is mere moon-shine. Except one debit note and return of the goods to the petitioner, for which credit was given by the petitioner, no other goods were returned. The other goods supplied by the petitioner were used by the respondent for manufacture of cables. There is no evidence adduced by the respondent to prove that the alleged defects in the cables manufactured by it were on account of defective materials supplied by the petitioner, particularly when admittedly the respondent was getting material also from other suppliers. It seems to me that the respondent raised the bogey of loss recoverable from the petitioner only to ward off the claim of the petitioner with regard to the balance amount outstanding in the ledger account. The defences raised by the respondent do not have any substance. 11. I accordingly admit the winding-up petition. 12. List for further proceedings on 12.02.2014.