Strong Financial background of a company may not deter a court in refraining to pass an order of winding up at the request of a creditor

HIGH COURT OF GUJARAT -Baader Beteiligungs GMBH v. Parsoli Motor Works (P.) Ltd.

Even if a company which has good and solid financial foundation and also has capacity to pay, cannot avoid its obligation to pay and be allowed to neglect its financial obligations.

The proceedings under section 434 of the Companies Act ,1956  is not legitimate means to enforce payment of debt and cannot be permitted to be converted into proceedings which are ostensibly for winding up, but actually are meant to enforce payment of debt therefore, the court would also not allow the petitioner-claimant to use the remedy as arm twisting method and pressure tactics or as a weapon or a means for enforcing recovery/payment of debt, which is bona fide and substantially and genuinely disputed.

In instant case, it is prima facie established, from the facts that the respondent appears to be unable, within the meaning contemplated under section 434(1), to pay its debts and it prima facie appears that it would be just and equitable to grant order of admission of petition and winding up. However, before making such an order, it would be appropriate to allow an opportunity to the respondent company to deposit the amount in question.