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Zhuhai Hansen Technology Co. Ltd. v. Shilpi Cable Technologies Ltd.

HIGH COURT OF DELHI

Zhuhai Hansen Technology Co. Ltd. v. Shilpi Cable Technologies Ltd.

CO. PETITION No. 333 of 2012

MARCH  19, 2013

Excercising Winding up not possible if disputes between parties pending- Section 433(e) and 434 of the Companies Act, 1956 The Petitioner, Zhuhai Hansen Technology Co. Ltd., a company incorporated in People’s Republic of China having its office in  Guandong, China has filed this petition under Sections 433(e) and 434 of the Companies Act, 1956 (‘Act’) seeking the winding up of the Respondent, Shilpi Cable Technologies Ltd. In the current case, the petitioner had three separate contracts entered into between tw0 parties. One of the said contracts was for the supply of cables and the other two contracts were for the supply of electrical accessories, i.e., Jumpers, Connectors and Surge Arrestors. Prior to this contract, both the parties had been dealing with each other for more than seven years. The Petitioner itself being the manufacturer of cables and accessories knew that for the purpose of the business of the Respondent the mere supply of cables without the accessories could not be sufficient. The Respondent was in turn supplying cables and accessories to the telecom service providers including Tata Tele Services Limited (‘TTL’). The mere supply of cables to TTL would not have constituted a complete delivery of goods. The peak period in the telecom industry for the supply of cables was the first three months of the year. Therefore, the failure on the part of the Petitioner to supply the accessories would adversely affect the corresponding obligations of the Respondent to its customers. The Petitioner had filed this petition under Sections 433(e) and 434 of the Companies Act, 1956 (‘Act’) seeking the winding up of the Respondent, Shilpi Cable Technologies Ltd. owing to non-completion of contract due to non-payments and also that claimed that the winding up is necessary as the Respondent has become commercially insolvent. The Petitioner in its narration of facts in the petition had however not referred to two emails, the first dated 26th March, 2009 in which the Respondent asked for the reasons why the accessories such as  Jumpers, Surge Arrestors and Connectors had not been received by mentioned date. The second email was dated 3rd April 2009 again asking for a response to the above issue. The respondents then sent out emails dated 9th May, 2009 and 22nd May, 2009 in which they asked the Petitioner to stop despatching any further cables. It was apparent that there had been a dispute between the two parties on the completion of supplies and the Respondent was justified in not accepting delivery of any further consignments. Decision: 1.While the pendency of a suit will not per se preclude the exercise of the winding up jurisdiction of the Company Court, on the facts of the present case, the Court is not persuaded to hold that the Respondent is unable to pay its debts and is, therefore, required to be wound up under Sections 433(e) and 434 of the Act. 2. It was clarified that the present decision is limited to the context of the prayer for winding up of the Respondent and is not intended to prejudice the contentions of the parties on merits in the pending suit. 3.Consequently, the petition was dismissed with costs of Rs. 20,000 which will be paid by the Petitioner to the Respondent within four weeks.  
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