Whether Winding up petition can be filed under Companies Act for recovery of outstanding debts?

Last updated: 12 May 2014

Court :
Delhi High Court

Brief :
The petitioners M/S Nakshatra Steel Sales & Services Ltd. And M/S Leo Ispat Ltd.supplied various iron and steel products tothe respondent companyM/S Radlay Metal Products Pvt. Ltd as per agreed specifications andraised bills for the materials supplied. Petitioners claimed that some of the invoices remained unpaid by the respondent despite receiving the delivery of products. Thepetitioners further stated that therespondent is liable to pay interest atthe rate of 4% per month on the delayed payment. Thesaid rate of interest has been agreed and specifically mentioned in theinvoices raised by the petitioner. The respondent issued various chequesin discharge of its liabilities which were dishonoured. Thus, the petitioners initiatedproceedings undersection 138 of NI Act against the respondent. Held that theproceedings were initiated by the petitioners to pressurize the respondent for extracting the disputed sums. Also, the proceedings before a company court are notrecovery proceedings and the company court cannot be used as a debtcollecting agency or as a means of bringing improper pressure on thecompany to pay a bona fide disputed debt. The conduct of petitioners was unfair.

Citation :
M/S Nakshatra Steel Sales& Services Ltd.- Petitioner versus M/S Radlay Metal Products Pvt. Ltd. – Respondent and M/S Leo Ispat Ltd. – Petitioner versus M/S Radlay Metal Products Pvt. Ltd- Respondent

Daily Limit Reached