Case Note & Summary
The Petitioner, Manjiro Works, a proprietory concern in the business of supplying gaming machines, filed a Company Petition under Sections 433(e) and 434 of the Companies Act, 1956, seeking winding up of the Respondent Company, Galaxy Entertainment Corporation Limited, on the ground that it was unable to pay its debts. The Petitioner claimed that the Respondent owed JPY 64,516,217 for gaming machines supplied pursuant to a purchase order dated 28th May 2007, as amended. The Petitioner supplied the machines on credit, raised 10 invoices, and the Respondent issued pre-inspection certificates certifying the goods were in good condition. The Respondent made a part payment of approximately Rs. 47.57 lakhs against the first invoice but failed to pay the balance. The Petitioner also relied on a balance confirmation issued by the Respondent admitting the debt. The Respondent opposed the petition, contending that there was a bona fide dispute regarding the quality of the machines and that the debt was not due. The court examined the evidence, including the balance confirmation and pre-inspection certificates, and found that the Respondent had admitted the debt and failed to raise a genuine dispute. The court held that the Respondent was unable to pay its debts and allowed the winding up petition, directing the Respondent to pay the debt within four weeks, failing which the petition would be advertised.
Headnote
A) Company Law - Winding Up - Debt and Bona Fide Dispute - Sections 433(e), 434 Companies Act, 1956 - Petition for winding up on ground of inability to pay debts - Petitioner supplied gaming machines and raised invoices; Respondent made part payment and issued balance confirmation admitting debt - Respondent failed to raise a bona fide dispute regarding liability - Held that winding up petition is maintainable and debt is due and payable (Paras 1-10).
Issue of Consideration
Whether the Respondent Company is unable to pay its debts and whether a winding up order should be made under Section 433(e) of the Companies Act, 1956.
Final Decision
The court allowed the winding up petition. The Respondent Company was directed to pay the debt of JPY 64,516,217 within four weeks, failing which the petition would be advertised.
Law Points
- Winding up under Companies Act
- 1956 Section 433(e) and 434
- debt admitted by balance confirmation
- no bona fide dispute
- pre-inspection certificates as evidence of acceptance
