Patherya, J. - (1.) THIS is an application filed under Sections 433, 434 and 439 of the Companies Act 1956 for winding up of ATN International Limited (Company).
(2.) THE case of the petitioning Creditor is that for supply of Satellite service to the Company rent agreed between the parties was to be paid. A sum was also deposited on account of security deposit and for default in payment of the monthly rent a notice was issued under Section 434 of the Companies Act 1956 whereby the agreements between the parties was terminated with immediate effect and a sum of US Dollar 2,12,452.78 was demanded alongwith interest. In its reply to the Section 434 notice payment of a part of the demanded sum was admitted. The forfeiture of the security deposited was disputed. There is No. reason for disputing the forfeiture of the security deposit as under Clause 6.3 of the agreement the petitioning creditor is entitled to forfeit security deposit in case of termination of agreement for the reasons contained in Clause 6.2 of the agreement. The arbitration clause has No. application and neither in the reply to the 434 notice nor in the affidavit in opposition bar of the arbitration clause has been pleaded. No. payment was made within the credit period of 40 days and the payment schedule suggested was also not honoured. There is No. denial of outstanding and in spite of confirmation to pay as per the agreed schedule No. payment was forth coming. Therefore, the notice under Section 434 was issued. As held in, 1994 (5) SCC 688 in winding up proceeding an application under Section 8 of the 1996 Act is not maintainable. As the agreement between the parties has been terminated under Clause 6.2, Clause 6.3 (a) has become operative and the petitioning creditor was entitled to forfeit the security deposit. Although in the affidavit in opposition filed by the company it has been contended that the services rendered was not up to the mark this is not a point taken in reply to the notice issued under Section 434 of the 1956 Act. No. counter claim of 75,000 US dollar has been made nor has any proceeding been initiated by the company to dispute such forfeiture. Reliance is placed on 1993 Butterworths Company Law Cases 131 for the proposition that mere existence of cross claim is not a good reason to refuse payment. Reliance is placed on : 1999 5 SCC 688 for the inapplicability of the laws of Singapore and the arbitration clause to winding up proceedings. For all the said reasons order as sought be passed.Counsel for the Company submits that in the statutory notice although a claim has been made, there is No. admission in the reply given to such statutory notice as admission must be taken as a whole and not in part as held in : AIR 1952 SC 343. The winding up Court is not a debt collecting Court and in case of the slightest doubt the petitioning creditor will not be entitled to relief as held in, 1994 (1) CHN 409 and : (2005) 4 CHN 343. The validity of termination contained in notice issued under Section 434 cannot be decided in winding up proceeding as the question of alleged breach cannot be considered by winding up Court. No. notice has been issued under Clause 6.2 and in view of Clause 13 and 14 of the agreement the parties have agreed that the disputes be decided by the laws of Singapore and to refer the disputes to arbitration. Therefore this winding up application cannot be entertained.
(3.) THE claim made has not been established as there is No. admission and No. particulars of the amounts claimed has been specified. The reply given to the notice issued under Section 434 makes it evidently clear that there is No. admission on the part of the company. As held in, AIR (1954) SC 583 the Company Court exercises discretionary power even if the debt is proved. In fact : 1999 5 SCC 688 is of assistance to the Company. There is No. evidence of commercial insolvency shown in the petition and winding up application is not a remedy for collecting a debt. For all the said reasons No. order be passed on this application.;