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Capital Valves & Industrial Supplies Pte Ltd v Kumar [2025] FJHC 202; HBE51.2024 (31 March 2025)

IN THE HIGH COURT OF FIJI

AT SUVA

COMPANIES JURISDICTION

Companies Action No. HBE 51 of 2024

IN THE MATTER of a Statutory Demand dated 20^th November 2024 and served on 21^st November 2024 by SATISH KUMAR T/A SATISH KUMAR FOODMART a sole trader business having its principal place of business at Lot 3, Matei, Naqara, Taveuni, Fiji on CAPITAL VALVES & INDUSTRIAL SUPPLIES PTE LTD a limited liability company having its registered office at Lot 25 Wailada Road, Lami, Fiji.

- AND –

IN THE MATTER of an application to Set Aside a Statutory Demand served on 21^st November 2024 on CAPITAL VALVES & INDUSTRIAL SUPPLIES PTE LTD pursuant to Section 516 and 517 of the Companies Act 2015.

BETWEEN: CAPITAL VALVES & INDUSTRIAL SUPPLIES PTE LTD a limited liability company having its registered office at Lot 25 Wailada Road, Lami, Fiji.

APPLICANT

AND: SATISH KUMAR T/A SATISH KUMAR FOODMART a sole trader business having its principal place of business at Lot 3, Matei, Naqara, Taveuni, Fiji

Respondent

Representation

Applicant: Mr. V. Anand (Artemis Legal & Consultancy) (O/I Sairav Law).

Respondent: Mr. A. Chand & Mr. S. Nand (Amrit Chand Lawyers).

Date of Hearing: 17^th March 2025.

Decision

Setting Aside Statutory Demand

A. Introduction

[1] A notice seeking to set aside the Statutory Demand was filed on behalf of the Applicant. An affidavit in support of Gitendra Chetty was filed with the application. .

[2] An affidavit in response of the Respondent was filed. The Applicant filed an affidavit in reply.

2. The Law
   

[3] The relevant sections of the Companies Act are 516 and 517. The respectively provide as follows:

“516.— (1) A Company may apply to the Court for an order setting aside a Statutory Demand served on the Company. (2) An application may only be made within 21 days after the demand is so served. (3) An application is made in accordance with this section only if, within those 21 days— (a) an affidavit supporting the application is filed with the Court; and (b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the Company. Determination of application where there is a dispute or offsetting claim.”

“517.—(1) This section applies where, on an application to set aside a Statutory Demand, the Court is satisfied of either or both of the following— (a) that there is a genuine dispute between the Company and the respondent about the existence or amount of a debt to which the demand relates; (b) that the Company has an offsetting claim.

(2) The Court must calculate the substantiated amount of the demand.

(3) If the substantiated amount is less than the statutory minimum amount for a Statutory Demand, the Court must, by order, set aside the demand.

(4) If the substantiated amount is at least as great as the statutory minimum amount for a Statutory Demand, the Court may make an order—

(a) varying the demand as specified in the order; and

(b) declaring the demand to have had effect, as so varied, as from when the demand was served on the Company.

(5) The Court may also order that a demand be set aside if it is satisfied that—

(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or

(b) there is some other reason why the demand should be set aside.”(My Emphasis)

100. The Submissions
     

[4] The Applicants position is that they were engaged by the Respondent to supply two fuel dispensers. Each was worth $17,500.00. The Respondent was to pay a deposit of 50% for the Applicant to order the dispensers. Respondent paid a total sum of $20,000.00 by 11^th May 2024. The dispensers were ordered around March 2024. It was further submitted that there was no written agreement and no time frame was given for the supply of the dispensers.

[5] According to the Applicant the dispensers arrived in Fiji around May 2024. Due to errors in the power system it had to be re-ordered. The state that they used the deposit paid to order the item. They are not in a position to refund the money. The company is solvent and able to pay its debts.

[6] The Respondents submission is that the Applicant has failed to show that there is a genuine dispute of the debt. According to the Respondents the Applicant was under an obligation to supply the fuel pumps and failed to do so. They infer that this makes the company insolvent.

4. Determination
   

[7] It is common knowledge that winding up proceedings are not debt recovery action. It is neither appropriate when parties are in dispute over commercial transactions. Winding up proceedings are relevant when a company is insolvent. It is for situations when a company cannot pay its debts as and when it arises.

[8] In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; [1997] FCA 681; (1997) 76 FCR 452 at 464, the Full Court of the Federal Court held that a “genuine dispute” must be bona fide and truly exist in fact, and the grounds for that dispute must be real and not spurious, hypothetical, illusory or misconceived.

[9] Having perused the submissions and the relevant affidavits in this matter I find that a genuine dispute exists between the Applicant and the Respondent about the existence or amount of a debt to which the demand relates. The Applicant does not dispute receiving the money from the Respondent. It was a deposit for the dispenser. Items were ordered and then had to be re-ordered. The Respondent due to the delay sought the monies be refunded. The Applicant stated that the monies were used to order the item. This is the dispute that exists between the parties. The issue does not relate to a debt. The parties are at an impasse. The Respondent served a statutory demand. This is not the proper cause for the Respondent. Statutory demands are for those companies that are insolvent.

[10] The Applicant is not shown to be insolvent. The Applicant has placed material before me to show that it is solvent. These are bank statements and valuation of their industrial property.

[11] The Statutory Demand is set aside. The Respondent is to pay the Applicant $2000.00 as costs within 21 days. The costs have been summarily assessed.

.

5. Orders
   • (a) Statutory Demand dated 20^th November 2024 and served on 21^st November 2024 by SATISH KUMAR T/A SATISH KUMAR FOODMART a sole trader business having its principal place of business at Lot 3, Matei, Naqara, Taveuni, Fiji on CAPITAL VALVES & INDUSTRIAL SUPPLIES PTE LTD a limited liability company having its registered office at Lot 25 Wailada Road, Lami, Fiji is set aside.
     
   • (b) Costs in favour of the Applicant in the sum of $2000.00 to be paid by the Respondent within 21 days. The costs have been summarily assessed.

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Chaitanya S.C. A Lakshman

Puisne Judge

31^st March 2025