Case Note & Summary
The petitioner, Fomento Resorts And Hotels Ltd., filed a winding up petition under Section 433(e) of the Companies Act, 1956 against the respondent, Goa Golf Club Pvt. Ltd., claiming a debt of Rs.19,73,535/-. The respondent resisted, alleging the petition was to exert pressure for unreasonable demands and that the petitioner owed the respondent Rs.5,14,406/-. The parties had an agreement dated 15-4-1995 to set up a casino in the petitioner's hotel, which ended on 31-8-2002. Disputes arose regarding the renewal of the agreement and other demands. The court found that the debt was bona fide disputed and the petition was an abuse of process, dismissing it with costs.
Headnote
A) Company Law - Winding Up - Section 433(e) Companies Act, 1956 - Bona fide dispute - The petition for winding up on ground of inability to pay debts under Section 433(e) is not maintainable when the debt is bona fide disputed and the petition is filed to exert pressure for unreasonable demands. The court held that the petition is an abuse of process and dismissed it. (Paras 1-10)
Issue of Consideration
Whether a winding up petition under Section 433(e) of the Companies Act, 1956 can be maintained when the debt is disputed in good faith and the petition is filed to exert pressure for unreasonable demands.
Final Decision
The petition is dismissed with costs.
Law Points
- Winding up petition under Section 433(e) Companies Act
- 1956
- Bona fide dispute of debt
- Abuse of process of court
- Debt must be undisputed
- Petition for recovery of debt not winding up
Case Details
2006 LawText (BOM) (06) 81
Company Petition No. 19 F of 2003
Mr. M. S. Usgaonkar, Senior Advocate with Mr. Sudesh Usgaonkar, Advocate for the Petitioner; Mr. S. G. Dessai, Senior Advocate with Mr. M. S. Sonak, Advocate for the Respondents.
Fomento Resorts And Hotels Ltd.
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Nature of Litigation
Winding up petition under Section 433(e) of the Companies Act, 1956 on the ground of inability to pay debts.
Remedy Sought
Petitioner sought winding up of the respondent company for alleged debt of Rs.19,73,535/-.
Filing Reason
Respondent failed to pay the alleged debt despite statutory notice dated 21-4-2003.
Issues
Whether the debt claimed by the petitioner is bona fide disputed by the respondent.
Whether the winding up petition is an abuse of process of court.
Submissions/Arguments
Petitioner argued that the respondent is indebted to the petitioner in the sum of Rs.19,73,535/- and failed to pay despite statutory notice.
Respondent argued that the petition is filed to exert pressure for unreasonable demands and that the petitioner owes the respondent Rs.5,14,406/-.
Ratio Decidendi
A winding up petition under Section 433(e) of the Companies Act, 1956 cannot be maintained when the debt is bona fide disputed and the petition is filed to exert pressure for unreasonable demands, as it amounts to an abuse of the process of the court.
Judgment Excerpts
This petition is filed under Section 433(e) of the Companies Act, 1956 for the winding up of the Respondent Company M/s. Goa Golf Club Pvt. Ltd. on the ground that the Respondent is indebted to the petitioner Company in the sum of Rs.19,73,535/ which the respondent has failed to pay to the petitioner inspite of the statutory notice dated 21 4 2003.
The petition is resisted on the ground that the petition has been filed to exert pressure on the respondent to give in to the unreasonable and inconceivable demands made by the petitioner from time to time and it is the petitioner which is due and payable to the respondent a sum of Rs.5,14,406/ .
Procedural History
Petition filed under Section 433(e) of the Companies Act, 1956 for winding up of the respondent company. Respondent filed a reply resisting the petition. The court heard the matter and dismissed the petition.
Acts & Sections
- Companies Act, 1956: 433(e)
- Goa, Daman and Diu Public Gambling Act, 1976: 13A
