Anil Kshetarpal, J.

1. Through this petition, filed under Section 433 (e) and (f), 434 and 439 of the Companies Act, 1956 (hereinafter referred to as “the 1956 Act”) read with Rule 9 of the Companies (Court) Rules, 1959 (hereinafter referred to as “the 1959 Rules”), the petitioner prays for passing an order for winding up of the respondent company for having failed to pay its debt.

2. At the outset, it must be noticed that Section 433(e) of the 1956 Act uses the expression “if the company is unable to pay its debts”. Sub Section (f) to Section 433 of the 1956 Act uses the expression “if the Tribunal is of the opinion that it is just and equitable, then the company should be wound up”. Section 434 of the 1956 Act elaborates as to when the company is deemed to unable to pay its debts. Section 439 of the 1956 Act prescribes the procedure for filing a petition.

3. In the present case, the respondent company had placed orders for supplying, testing, installation and commissioning of heating, ventilating and air conditioning system at its factory in the year 2010 for a total amount of ₹ ₹ 6,25,00,000/-. Admittedly, the amount of 5,78,23,012/- out of total payment of ₹6,25,00,000/- has been paid by the respondent to the petitioner. The petitioner claims that the balance amount of 68,56,000/- has not been ₹ paid. As per the tendered document and the contract entered into between the parties, the payment was payable as per the following schedule:-

“a) 10% advance against ABG (Advance Bank Guarrantee).

b) 80% against prorata installation.

c) 10% against commissioning and submission of PGB (Post Bank Guarantee) of 10% valid for one year from the date of commissioning”.

4. On the one hand, the petitioner company claims that it has already completed its work, whereas on the other hand, the respondent claims that neither the work is complete nor the material that was used was of appropriate quality. It is claimed that the petitioner company used the substandard quality material which was not as per the specification and the petitioner company has also failed to provide a standard quality certification of the products used by them as per the standards mentioned in the tendered document.

5. Since a dispute arose, a joint meeting between both the parties was held on 13.06.2013 at the work site of the respondent company at Ludhiana. The minutes of the aforesaid meeting have been placed on the record, which are extracted as under:-

“MOM-MEETING HELD AT COSMAS, LUDHIANA ON 13/06/2013

Following was agreed by all present:

1)	COSMAS VRF ACCOUNT
	Net Balance payment @ 90%	Rs.13.26 L
2)	Payment due on commissioning of VRF @ 10%	Rs.1.83 L
3)	COSMAS BETALECTUM BLOCK
	Balance amount payable	Rs.68.56 L
4)	COSMAS HAS SUGHT CLEARANCE OF EXTRA ITEMS OF VALUE FROM MEHTALIA	Rs.9.80 L
	Housings - 7,50,000/- Flexible - 2,30,000/- 9,80,000/-
	Cosmas committed to get this extra items cleared before 3rd July, 2013.
5)	Cosmas will issue a List of operational observations noted by them after commissioning so that Suvidha address them to the requirement. List to be issued by 20/06/2013
6)	COSMAS PROPOSED RELEASE OF BALANCE PAYMENTS AS PER FOLLOWING SCHEDULE.
6.1)	Rs.10L on account of balance payment listed at Poiint (1) above (on account of VRF)	Released by 05/07/2013
6.2)	Cosmas committed to release Rs.60L in six installments of Rs.10L each. Starting date of these installments will be 10/07/2013. These installments to be completed by 30/08/.2013. Total balance payment of 68.56 L on account of Betalectum will be made by 31/08/2013.
6.3)	Complete balance payment of VRF account will be released within one week from the date of commissioning of VRF.
7)	SUVIDHA PROPOSED TO ADDRESS ISSUES RAISED BY COSMAS AS UNDER
7.1)	On receipt of list of pending opertaional points for Cosmas on 20/06/2013, A meeting will be scheduled at site within a week and plan for completion discusses. Action will be started by Suvida July 1, 2013 onwards.
7.2)	On receipt of payment as per poiont 6.1 Suvidha will arrange to mobilize commissioning team for VRF withhin a week’s time.
7.3)	Approx. time of 10 days is required for commissioning of VRF.

6. In furtherance to the minutes of the meeting, the respondent company provided the list of 58 pending jobs/non-compliance, which is extracted as under:-

Final Non-compliance/Pending 20.06.2013		jobs	of	suvidha	engineeers	Dated
1.	Insulation with cloth and 2 coad UV paint for the exposed chilled water piping to be provided by Suvidha.
2.	Insulation for the syphuns for the gauges not completed.
3.	Al. insulation tapes are not provided by suvidha as per standard tender.
4.	Rubber pads are not provided for the pumps and piping supports in chiller plant by Suvidha.
5.	Balancing valve for the condenser pipe header line is not as per our standard tender specification.
6.	It should be of 300 mm in place of 250 mm.
7.	Wooden blocks are not provided by Suvidha for the piping supports.
8.	Paint work is not upto the mark.
9.	Chicken mesh not provided by Suvidha for the exhaust ducting ends.
10.	AHU drain not proper in AHU no.43.
11.	No markings on the duct dampers.
12.	Doors not proper, air leackages through doors as gasket not ok and required.
13.	Doors handles not ok in most of the Ahu’s
14.	No HEPA filters in BIBO casing of no.4 of AHU.
15.	AHU motor burnt in 3 nos of AHUs.

16.	7 nos. of Motors in AHU giving problems (Overloading, Noice vibration) AHU no.8, 10, 24, 32, 27, TFA1, TFA2
17.	No grills no Supply linescepha block generator room.
18.	No pre filter in TFA for injection line.
19.	Damper damaged in AHU no.40 1200x350
20.	Damper not fitted in AAS room in Admin area (QC)
21.	Electrical Panel work not completed.
22.	Damper not fitted in Hot room in QC area.
23.	Dx-Unit for Cepha block Pending
24.	Admin Hand made/Tailormade diffuser instead of factory made
25.	Damper not installed at admin GF
26.	Commissioning of VRF System
27.	Emergency light are not working in most of AHUs.
28.	Door limit switch are not working properly and AHUs. Door handle also not proper work or loose.
29.	Wire termination in circulating pump VFD are not proper
30.	Marking of open/close on Dampers pending (fire damper, bleed of damper)
31.	TFA-1, 2 doors are not properly fitted.
32.	AHU Doors are not properly fitted and leaking (AHU-1, 3,4, 7, 8, 9, 10,11,12, 17, 19, 22, 24, 27, 28, 30, 32, 33) and TFA
33.	Air Balancing pending in packing hall.
34.	Hole pending in AHU for POA test
35.	Some duct insulation poending
36.	10 grill not fitted in Production area (Autoclave wash area, production store, QA office, Plant head etc.)
37.	Water balancing work is pending in AHU
38.	Pre filter pending in TFA-2
39.	Pre filter pending in AHU-28
40.	Motorized damper connection pending (All Osd)
41.	Panel 1, AHU no.1, start push button is pending.
42.	No HEPA filters in BIBO casing of no. 8 of AHU, 02 no HEPA filter. Size 915x610x300
43.	System commissioning and validation pending
44.	All deffuser damper are not proper working (main cepha block
45.	Duct support Pending
46.	Hepa not avialable in injectable area wash room Near auto clave
47.	During commissioning chilled water pump VFD was flashed, however, till date it is not handed over, observed connected cables
	are without colour coding and numbering.
48.	Motor certificate availability to be check
49.	MPCB of nearly 3 nos Ahu is defective
50.	Performance test of cooling tower to be carried out.
51.	Relay are not identical Ahu-09, 21, 25, 28, 33, 35, 37, 02, 05, 04, 15, 21 TFA-02
52.	Performance and validation report of Each Ahu to be carried out
53.	Chillier Coils issue
54.	Fixing of Hepa not proper
55.	Duct inside through gril for fresh air
56.	Exhaust of second floor area is not sufficient.
57.	Door handle to be provided by Suvidha cost to be paid by us

This list is again signed by the representatives of both the sides.

7. On 20.06.2013, the representatives of the respondent company wrote an e-mail to the petitioner company, which is extracted as under:-

“Dear Mr. Sanjay,

As discussed during our meeting on 13th June, I would like to personally review the list of points forwarded by you during my site visit planned in first week of July, 2013.

I am sure we would be able to work out a plan for addressing the issues to the satisfaction of all concerned.

We would also like to discuss dependencies/causes so as to work out a schedule for attending the above.

Kindly confirm a suitable date for the above review”.

8. Thereafter, on 12.07.2013, the representatives of both the parties again met and verified the pending works/non-compliance works and another proceedings were signed by the parties, which is extracted as under:

M.O.M. on electrical issue (reference E-mail with attachment on 24.06.13.

Dated: 12.07.13

Ms Cosmas M/s Suvidha Engg.

1. Mr. Kishore Mr.Arif Khan Mobile-9810677066

2. Mr. Chandan

3. Mr. Sanjay Kumar Singh Mobile – 9855588979

AHU AREA PANEL

1. Checked and attended points as per attached list with remarks (refer signed attachment with this MOM) (In totally 12 No. MPCB need to be replaced and two AHU are not running due to overloading.

2. DOL+VFD Provision for all above 7.5 HP are given need to change in Star Delta+VFD. So that failure of VFD Motor can be run in stat delta mode.

Utility Area Panel:

1. Seven nos Cooling fans of Utility panel are burnt out of eight fans and also there is no provision for efficient cooling of Variable frequency drive to balance the heat generation and removal hence variable frequency drive operation cannot be ensure for long run duration due to high temperature. Hence proper extra cooling arrangement in panel to be provided for the cooling of VFD.

2. Power cable termination of starter are heat up and carbon deposition found over connection terminal need to be rectify.

3. MPCB-1 no. of spare feeder range – 11-16 is damaged from beginning.

4. DOL+VFD Provision for all above. 7.5 HP are given need to change in Star delta+VFD. So that failure of VFD Motor can be run in star delta mode”.

9. The petitioner company, on the one hand, complains that since the respondent company has failed to pay the amount as per the minutes of the meeting dated 13.06.2013, therefore, the respondent company is liable to be wound up. Per contra, the respondent company complains that despite providing a list of pending jobs and final non-compliance list on 20.06.2013, which has been verified at the spot on 12.07.2013, the petitioner company has not started its work. It has further been submitted that the respondent company did not furnish the bank guarantee as agreed in the contract with respect to 10% of post bank guarantee. It would be noted here that the respondent company has filed a suit for mandatory injunction and for recovery of damages which is pending adjudication at the Civil Court, Ludhiana. The suit was filed on 11.04.2014, whereas the present petition was filed on 23.05.2014. After removal of the objections, the petition was listed for the first time before the Court on 21.07.2014. It was adjourned due to absence of the counsel representing the petitioner and the notice, in the petition, came to be issued for the first time on 08.08.2014. Thus, the suit was filed prior in point of time from the filing of the company petition.

10. Before ordering winding of the respondent company under Section 433 (e) & (f) of the 1956 Act, the Court is required to record a finding that the respondent company has neglected to pay the amount despite notice served by the petitioner company on the respondent demanding the amount within a period of 21 days from the date of receipt of notice. If the respondent company put forth the substantial dispute as to liability, a petition filed by the creditor is liable to be dismissed. In these circumstances, the company Court is required to examine as to whether the company has a genuine dispute to claim debt or not. If the defence put forth is bonafide and substantial, the company Court will be justified in dismissing the petition. The company Court is not expected to hold full trial of the matter. Of course, the company Court is required to examine as to whether the grounds of dispute consist of defence, which is merely a moonshine or substantial and bonafide one. It is also the duty of the company Court not to allow use of threat of winding up of the company as a mean to force it to pay bonafide disputed debt. Way back, in the year 1965, the Supreme Court in Amalgamated Commercial Traders (P) Limited v. A.C.K. Krishnaswami and Others (1965) 35 Company Cases 456 (SC) held that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bondafidely disputed by the company. Similarly, the aforesaid principle laid down has been consistently followed by the Courts in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. (1971) 3 SCC 632 [LQ/SC/1971/569] and Mediquip Systems (P) Ltd. v. Proxima Medical Systems, (GMBH) (2005) 7 SCC 42 [LQ/SC/2005/385] .

11. After having heard the learned counsel representing the parties, at length and with their able assistance, having carefully scrutinized the documents produced before this Court, this Court is of the considered opinion that there is no material to record a finding that the company is unable to pay the debt or the dispute put forth by the respondent company is neither bonafide nor substantial. The reasons for forming that opinion are as under:

i) The company has already paid approximately 92.5% of the total amount.

ii) From the reading of the various minutes of meeting, it is evident that the petitioner is required to carry out certain jobs, works and remove shortcomings like 12 MPCB require replacement, 2 AHU not working properly due to overload, 7 cooling fans out of 8 burnt out etc. etc..

ii) The company is not proved to be commercially insolvent and the defence put forth by the respondent company cannot be said to be merely a moonshine.

iv) In the opinion of the Court, there is a lack of material to record a finding that the respondent company is unable to pay the amount.

v) The suit filed by the respondent company was prior in point of time.

vi) Admittedly, the petitioner did not furnish a post bank guarantee of 10% of the amount valid for a period of one year.

12. Keeping in view the aforesaid facts, the petition is dismissed. Needless to observe that the observations made by this Court while disposing of the company petition shall not be construed as an expression of final opinion on the merits of the case in a civil suit or appropriate proceedings, which may be filed by the parties.

13. The miscellaneous application(s) pending, if any, shall stand disposed of.