The Practical Lawyer

IBA Health (India) (P) Ltd. v. Info-Drive Systems Sdn. Bhd., (2010) 10 SCC 553

Corporate Laws
Companies Act, 1956
Ss. 433(e) & (f) and 434 - Winding-up petition for enforcing payment of debt - Invocation of Ss. 433(e) and (f) where
there was a bona fide dispute as to liability - Impermissibility - Abuse of winding-up procedure - Duty of court to ascertain
causes for refusal to pay debt - Respondent filing winding-up petition alleging that appellant Company failed to discharge
its liability to pay under deed of settlement between them - High Court ordering publication of advertisement in
newspaper for settling dispute between parties amicably - Sustainability - Held, if debt is bona fide disputed on
substantial grounds, petition for winding up shall not be entertained - In such case, party seeking winding up cannot be
regarded as creditor of company for purpose of winding up - Further held, court should act with circumspection and
examine whether winding-up petition is used as ploy to pressurise company to pay substantially disputed debt - Court
has to ascertain whether refusal was due to reasonable cause or existence of bona fide dispute which can be
adjudicated only by trial in civil court and if not so adjudicated, cause serious prejudice to company - In present case,
there was bona fide dispute as to appellant's liability towards respondent - Thus, deprecating casual approach of courts
without considering substantial nature of dispute, held, direction of High Court would tarnish appellant's image and
reputation - So, set aside, (2010) 10 SCC 553-A

Corporate Laws
Companies Act, 1956
Ss. 433(e) and 434 - Winding-up on ground of inability to pay debts - Consideration of nature of dispute - Trial - Stage
at which to hold - Held, court not to hold trial when dispute as to liability for payment of debt is bona fide, substantial and
not spurious, speculative, illusory or misconceived - Where dispute requires detailed investigation of facts and evidence
and, interpretation of terms and conditions of agreement between parties, court shall not proceed with winding-up
proceedings, (2010) 10 SCC 553-B

Corporate Laws
Companies Act, 1956
Ss. 433(e) and 434 - Winding up on ground of inability to pay debts - Bona fide dispute - What is - Held, ``bona fide
dispute'' implies existence of substantial ground for dispute raised - A dispute would be substantial and genuine if it is
bona fide and not spurious, speculative, illusory or misconceived, (2010) 10 SCC 553-C

Corporate Laws
Companies Act, 1956
Ss. 433(e) and 434 - Winding up on ground of inability to pay debts - If can be pursued for contingent debt - Held,
winding-up petition cannot be pursued in respect of contingent debt unless said contingency has happened and debt has
actually become due, (2010) 10 SCC 553-D

Corporate Laws
Companies Act, 1956
Ss. 433(e) and 434(1)(a) - Winding up on ground of inability to pay debts - Neglect to pay - What amounts to - If debt is
bona fide disputed, there cannot be ``neglect to pay'', (2010) 10 SCC 553-E

Corporate Laws
Companies Act, 1956
Ss. 434(1)(a) and 439 - Winding up on ground of inability to pay debts - Commercial solvency of company, whether
ground to reject petition for dissolution - Held, commercial solvency is relevant to determine whether there was dispute
http://www.supremecourtcases.com

Eastern Book Company

Generated: Thursday, November 13, 2014

The Practical Lawyer

as to the debt or reflects inability to pay but not as a ground in itself, (2010) 10 SCC 553-F

Corporate Laws
Companies Act, 1956
Ss. 433 and 434 - Winding-up petition - Effect on solvency - Held, winding-up petition implies insolvency and likely to
damage company's creditworthiness or its financial standing, (2010) 10 SCC 553-G

http://www.supremecourtcases.com

Eastern Book Company

Generated: Thursday, November 13, 2014