MEDIQUIP SYSTEMS PVT. LTD. versus PROXIMA MEDICAL SYSTEM G.M.B.H.

Citation: [2005] 2 S.C.R. 1015 · Decided: 17-03-2005 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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MEDI QUIP SYSTEMS PVT. LTD. 
A 
v. 
PROXIMA MEDICAL SYSTEM G.M.B.H. 
MARCH 17, 2005 
(ASHOK BHAN AND DR. AR. LAKSHMANAN, JJ.] 
B 
Companies Act, 1956-Section 433(e)-Winding up proceedings-
Maintainability of-Held : Maintainable when there is determined debt due 
and the company is unable to pay-Expression 'unable to pay its dues' to be 
taken in commercial sense-Machinery for winding up not to be utilised merely C 
for releasing debts from a company-On facts, petitioning creditor failed to 
prove that the debt is payable to it by the company-Hence winding up orders 
cannot be passed 
Words and phrases-'unable to pay its dues '-Meaning of in the context D 
of Section 433(e) of Companies Act, 1956. 
Respondent-company filed a winding up petition against the 
appellant-company on the ground that appellant had failed and neglected 
to refund US $ 5000 and US $ 11000 which was remitted to it by 
respondent as bid amount. Appellant opposed petition contending that said E 
amounts were not payable to respondent-company. Single Judge of High 
Court disposed of the winding up petition holding that appellant has 
disputed the amount of US$ 5000 but so far US$ 11000 is concerned, the 
same may be repatriated to the remitter and directed appellant to deflosit 
Rs. 4.69 lacs equivalent to US$ 11000 and in case of default, the petition 
would stand admitted and it would then be open to the petitioning creditor F 
to pray for issuance for advertisement. 
Aggrieved by the order, appellant filed an appeal before Division 
Bench along with stay application. Division Bench granted stay of issuance 
of advertisement and directed appellant to deposit Rs. 2 lakhs. Appellant 
made the deposit. Subsequently, Division Bench dismissed the stay G 
application and the appeal. 
In appeal to this court, appellant contended that the Division Bench 
erred in dismissing the appeal summarily on the finding that the appellant 
is not entitled to any stay; that the remitter of US $ 11000 was not the 
1015 
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1016 
SUPREME COURT REPORTS 
[2005] 2 S.C.R. 
A 
petitioning creditor but altogether a different company and that the 
winding up proceedings is not maintainable by the alleged petitioning 
creditor as no debt is payable by appellant to them. 
Allowing the appeal, the Court 
B 
HELD: 1. The High Court has failed to appreciate that the 
petitioning creditor was not the remitter and was not entitled to the said 
sum of US$ 11000. Admittedly, the remitter of the sum of US$ 11000 
was not the petitioning creditor. A reading of the order of the High Court 
would show that the learned Judges themselves had doubt regarding lawful 
C entitlement of the petitioning creditor and erred in directing the appellant 
to deposit the amount and in default directing admission of the appeal. 
(1022-G; 1023-BJ 
2. There is no clear cut finding by the Single Judge that a debt is 
primafacie due and payable by the appellant to the petitioning creditor. 
D The impugned orders have been passed in a purported exercise of 
jurisdiction not vested with the Single judge sitting in the Company Court, 
for an application for windin~ up of the appellant, the Company Court 
had no jurisdiction to direct the appellant to deposit the amount payable 
to third party or to a party other than the petitioning creditor. The High 
Court is not justified in dismissing the appeal summarily holding that the 
E appellant was not entitled to stay of the operation of the order passed by 
the Single Judge under appeal. (1023-C-D, E) 
F 
3.1. An order under Section 433(e) of the Companies Act is 
discretionary. There must be a debt due and the company must be unable 
to pay the same. A debt under this section must be a determined or a 
definite sum of money payable immediately or at a future date and that 
the inability referred to in the expression 'unable to pay its dues' in Section 
433(e) of the Companies Act should be taken in the commercial sense and 
that the machinery for winding up will not be allowed to be _utilized merely 
as a means for realising debts due from a company. The respondent is 
G not a creditor and the appellant is not a debtor in so far as US$ 11000 is 
concerned. The defence raised by the appellant is a substantial one and 
not mere moonshine, which is to be finally adjudicated upon on merits 
before the appropriate Forum. (10~3-E-GJ 
3.2. The financial position of the appellant is sound. This apart, both, 
H the Single Judge and the Division Bench have granted in

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