Gujarat High Court
Excel Generators Private Ltd - Through ... vs Meghamani Organics on 23 September, 2013
Author: K.M.Thaker
Bench: K.M.Thaker
EXCEL GENERATORS PRIVATE LTD - THROUGH MANAGING DIRECTOR....Petitioner(s)V/SMEGHAMANI ORGANICS LTD....Respondent(s) O/COMP/147/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY PETITION NO. 147 of 2012 ================================================================ EXCEL GENERATORS PRIVATE LTD - THROUGH MANAGING DIRECTOR....Petitioner(s) Versus MEGHAMANI ORGANICS LTD....Respondent(s) ================================================================ Appearance: MR MI HAVA, ADVOCATE for the Petitioner(s) No. 1 MR AMAR N BHATT, ADVOCATE for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE K.M.THAKER Date : 23/09/2013 ORAL ORDER
1. In present petition under section 433 read with section 434 of the Companies Act, 1956 (hereinafter referred to as the Act) the petitioner has prayed, inter alia that:-
18(a).........
(b) The Company Meghamani Organics Limited be would up and under the orders and directions of this Hon'ble Court under the provisions of the Companies Act, 1956;
(c) The official liquidator attached to the High Court of Gujarat, Ahmedabad be appointed as liquidator of the company with all powers under the companies Act, 1956 including powers to take charge of assets, affairs, book of accounts, documents, vouchers, bills etc. of the company;
(d).....
(e)......
(g)......
(h)......
(i)......
2. The petitioner has taken out present petition on the premise and the allegation that despite repeated demands and even after statutory Notice the respondent company has not paid balance amount out of the total price of the two Deasel Generations Sets (D.G. Sets for short) purchased by the respondent. The petitioner has also alleged that it is the respondent company herein who initiated negotiations with the petitioner for purchasing Deasel Generating Sets and called for quotations from the petitioner for two DG sets.
2.1 It is further claimed and alleged by the petitioner that upon positive conclusion of the negotiation the respondent company placed order for two DG sets with the petitioner company which it was supposed to import from CLIS power system limited, Singapur.
2.2 The petitioner has further alleged that the terms and conditions for the said contract were discussed and settled with the respondent company in view of respondent s representation that the petitioner was dealing with the respondent company and the DG sets were required by and were to be supplied to the respondent and in execution of the said contract the petitioner supplied two DG sets to the respondent in satisfaction of the respondent s purchase order and as per the terms and conditions of the contract.
2.3 It is also claimed that the petitioner has received part of the sale consideration i.e. value of the contract however the balance payment is not made and therefore the petitioner repeatedly demanded the payment from the respondent who failed and neglected to make the payment of the balance amount of the invoice for two DG sets.
2.4 It is further claimed and alleged by the respondent that in view of the said failure to make the payment, despite repeated requests, the petitioner was constrained to issue statutory notice dated 21.10.2011 and served the same to the respondent at its registered office.
2.5 It is further alleged by the petitioner that even after service of the statutory notice the respondent not only failed and neglected to pay the amount due to the petitioner but the respondent came out with unjustified, incorrect and dishonest plea / defence in its reply to the petitioner's statutory notice and denied its liability to pay the amount.
3. With the said allegations in the backdrop the petitioner has preferred present petition and claimed that the respondent company may be directed to be wound up and as it has, without justification and bonafide defence and on dishonest plea, failed and neglected to discharge its debts and that the respondent s action of non-payment of petitioner s dues amounts to neglect to pay and /or inability to discharge its debt.
3.1 Considering the petitioner s case the Court, vide order dated 2.7.2012 summoned the respondent who has entered appearance opposed the petition by filing reply affidavit disputing and denying all contentions and allegations raised by the petitioner.
4. The respondent has claimed that it has no privity of contract with the petitioner and that the purchase order in question was placed by its sister concerned which is an independent entity / company having distinct existence separate from the respondent and the correspondence in the question is also exchanged between the petitioner and the respondent's sister concern viz. Meghmani Fine-Chem Limited (hereinafter referred to as the said other company) and that the DG sets in question are supplied to and installed at the premises of the said other company and merely because the respondent company is a larger establishment, the petitioner has unjustifiably raised claim against the respondent, instead of making claim against the said other company.
4.1 The respondent has also alleged that the petitioner is guilty of suppression of material facts and material and that even otherwise the respondent has bonafide defence and that therefore the petition is not maintainable against it and does not deserve to be entertained.
5. Mr. Hava, learned advocate has appeared for the petitioner and Mr. Soparkar, learned Senior Counsel has appeared with Mr. Bhatt, learned advocate for the respondent.
6. Mr. Hava, learned Counsel for the petitioner has reiterated the facts stated in the petition and referred to the quotation (page 13/14) said to have been submitted by the petitioner to the respondent, in response to the trade inquiry made by the respondent. Mr. Hava, learned Counsel for the petitioner also referred to the documents at pages 15, 19 to 24, 26 to 30, 33, 37, 47, 50, 71, 72 and also the annual report (for financial year 2011-2012) of the respondent company.
6.1 By referring to and relying upon the said documents learned Counsel for the petitioner submitted that it was the respondent company who approached the petitioner with trade inquiry for purchasing two DG sets and it was the respondent company with whom the petitioner entered into negotiations and finalized the terms and condition of the contract for supplying two DG sets and that the DG sets were supplied to the respondent company which is evident from the said documents and that the first letter of credit was opened and submitted by the respondent company and all along the respondent company represented that the petitioner was dealing with the respondent company.
6.2 The learned Counsel for the petitioner submitted that only after the contract was finalized and signed and the part payment was made that the respondent company represented to the petitioner that for its own taxation purpose and administrative reasons the transaction will have to be carried out in name of the said other company which is created as a special purpose vehicle by and for the respondent company and it was only because of the said and such representation by the respondent company that the petitioner agreed to continue further execution of the contract in name of the said other company i.e. respondent's special purpose vehicle and now the respondent is taking disadvantage of the said situation and has come out with dishonest defence which cannot and should be entertained and accepted by the Court.
6.3 The learned Counsel for the petitioner submitted that in light of the facts of the case and having regard to the material on record the Court ought to lift and pierce the corporate veil which would establish that it is the respondent company who has entered into the contract with the petitioner company and actually it is the respondent company who is the beneficiary of the execution of the contract of supply of two DG sets and that the obligation to pay the dues of the petitioner company is that of the respondent.
6.4 Learned Counsel for the petitioner also submitted that before and after the statutory notice the respondent has failed to pay its dues which amounts to neglect to pay and demonstrates respondent s inability to pay and therefore the petitioner is entitled for order of admission of the petition and the respondent should be ordered to be wound up.
6.5 The learned Counsel for the petitioner relied on the decision by Apex court in case of IBA Health (India) Private Limited (2010 [10] SCC
553) and the observations by this Court in the decision dated 18.6.2012 in Company Petition No. 154 of 2010 in case of Baader Beteiligungs GMBH vs. Parsoli Motor Works Private Limited.
6.6 The learned Counsel for the petitioner submitted that the respondent s defence is neither bonafide nor honest but it is sham and dishonest plea which does not deserve to be accepted.
7. Per contra, Mr. Soparkar learned Senior Counsel for the respondent has vehemently opposed the petition and at the outset he submitted that the petition suffers from supperssio veri and suggestio falsi.
7.1 learned Senior Counsel for the respondent referred to and relied on the documents at pages No.28, 33, 34, 49, 56 to 58, 66, 84, 91, 103, 104,105, 107 and, submitted that the allegation and claim made by the petitioner are incorrect to the knowledge of the petitioner and that in fact, there is no privity of contract between the petitioner and the respondent and the respondent company cannot be held liable or responsible for the alleged acts of omission or commission and alleged failure by or of the said other company.
7.2 learned Senior Counsel also submitted that the said other company is an independent entity in eye of law and merely because it is respondent company s sister concern i.e. the respondent cannot be held liable or responsible for alleged acts of failure of the said other company.
7.3 learned Senior Counsel also vehemently opposed the petitioner s allegation that respondent is not able to discharge its debts and that it has lost its capacity to pay its dues.
7.4 To support and justify the said submission the learned Senior Counsel for respondent relied on the annual report for the financial year 2011-2012 and submitted that the profit earned by the respondent company in the said financial year is to the tune of Rs.165,837,807/- and that the respondent company employes about 1500 workmen and it has surplus / reserves to the tune of 5,016,704,757/- and that the respondent is not only a going and growing concern but it is also a profit making concern employing several hundred workmen and that therefore also there is no basis of justification in the petitioner s claim that the respondent company be ordered to be wound up.
7.5 The learned Senior Counsel for responder company further submitted that in view of the baseless and unjustified allegation by the petitioner and suppression of relevant facts vis-a-vis the facts stated in respondent's reply present petition raises and involves several highly disputed issues of facts and therefore also the petition is not maintainable and does not deserve to be entertained. It is also submitted that the respondent has bonafide defence, more particularly in light of the fact that alleged debt of a separate legal entity and different company is sought to be imposed on the respondent and that the petition amounts to abuse of process and therefore also the petition deserves to be dismissed with cost.
8. I have heard learned Counsel for the petitioner and learned Senior Counsel for the respondent and also examined the material placed on record.
9. At the outset it is relevant and necessary to note that there is no dispute that the said other company is a separate legal entity, different and distinct from the respondent company.
9.1 It is also not in dispute that the said other company is incorporated and registered as a separate and distinct company under the provision of Companies Act 1956 and the Registrar of companies has issued separate certificate of incorporation and in favaour of the said other company.
9.2 On the other hand the respondent company is also incorporated and registered as separate and distinct company under the provision of the said act and has its own separate certificate of incorporation.
9.3 Thus, the said two companies are different and distinct legal entities in eye of law.
10. The learned counsel for the petitioner being aware and conscious about the said legal position, has based his submission on the premise that it is the respondent who entered into the contract for the two DG sets with the petitioner company and it was the respondent who had initiated the trade inquiry with the petitioner and had entered into negotiations for finalizing the contract with the petitioner and that therefore it is actually the respondent company who is responsible to make the payment of petitioner's dues whereas the said other company is only a special purpose vehicle of the respondent company, which is created by the respondent for its own and special purpose including taxation purpose and administrative reasons but that does not, in any manner alter the position that it is the respondent who entered into the contract with the petitioner.
10.1 Mr. Hava learned Counsel for the petitioner, in the first instance relied on the document at page 13, and claimed that it was at the request of the respondent company that the said quotation was submitted by the petitioner to the respondent on 19.9.2007. Mr. Hava, learned Counsel for the petitioner submitted that the quotation is issued in name of respondent company and not the said other company. Mr. Hava learned Counsel for petitioner also relied on the document at page 15 and then he made reference of the document at annexure 4 page 19 which is communication dated 23.10.2007. Mr. Hava, learned Counsel for the petitioner submitted that the said communication is addressed to the petitioner company by the respondent and in the said communication dated 23.10.2007 addressed to the petitioner company the respondent company has clearly and specifically mentioned that W.R.T. The above mentioned offer and discussions we had with you, we are pleased to issue this purchase order on you for supply of 2000 KVA DG set for our plant at Dahej, Bharuch...... .
11. It is true that the said communication is issued by the respondent company and it is addressed to the petitioner company and it also transpires from the said letter that it is the respondent company who was to issue the purchase order for 2000 KVA DG sets for its plant at Dahej, Bharuch.
11.1 The purchase order of even date is also shown to the Court which appears to have been issued by Meghmani Organics Limited i.e. the respondent herein and it is issued in favour of the petitioner.
11.2 The payment terms under the said purchase order prescribed 90% of the price to be paid by at sight else and 10% to be paid, after commissioning, by way of performance bank guarantee.
11.3 Mr. Hava learned advocate for petitioner also referred to the document at page 26 to 30 and submitted that the said documents have been issued by the said other company however, that was in view of the fact that the respondent company had represented before the petitioner that for their administrative and taxation purpose the respondent would require that the transaction is executed in name of the special purpose vehicle i.e. the other company. While referring to the document at page 37 Mr. Hava learned advocate for petitioner submitted that the petitioner company had forwarded the said letter dated 1.2.2010 to the respondent and the respondent has not denied the details mentioned in the said communication which establishes the fact that it was actually the respondent who had placed the order for the DG sets and it is the respondent with whom the petitioner entered into contract and it is the respondent company for whom the petitioner supplied the DG sets 11.4 Thereafter, Mr. Hava learned advocate for petitioner placed heavy reliance on the reply received by the petitioner in response to its statutory notice dated 21.10.2011. Mr. Mr. Hava learned advocate for petitioner emphasized the averments made in the opening part of the said reply dated 21.10.2011 (in response to petitioner's statutory notice) which read thus :
My client Meghmani Organics Ltd. (MOL) has placed in my hands your notice dated 21.10.2011..... .
11.5 In light of the said averments Mr. Hava learned advocate for petitioner claimed that it is the respondent company who gave reply to the petitioner's statutory notice and that in the said reply the lawyer of the respondent company also averred in para 3 (a) that:
.........my client agreed to purchase two DG sets..........
and further averred that:
........my client was required to open Letter of Credit ..........
and in light of the said averments Mr. Hava learned advocate for petitioner also relied on the averments in paragraph No. 3(c) of the said letter dated 21.12.2011 which read thus:-
Thereafter even after repeated follow ups from my client to your client, the said DG sets were not delivered, there by causing great hardship and financial loss to my client.....
11.6 Mr. Hava learned advocate for petitioner submitted that even in the said communication dated 21.10.2011 it is admitted that it was the respondent company who had agreed to purchase the DG sets. In light of the averemnts in para 3(c) of said letter Mr. Hava learned advocate for petitioner submitted that the said grievance, though incorrect, was made in name of and on behalf of the respondent company and not the other company. According to Mr. Hava learned advocate for the petitioner, that the said aspects and more particularly the communication dated 23.10.2007 and the purchase order dated 23.10.2007, establishes that it is the respondent company who placed the purchase order and thereby entered into agreement with the petitioner company and it is the respondent to whom the petitioner supplied the DG sets in pursuance of the contract / agreement dated 23.10.2007.
11.7 According to Mr. Hava learned advocate for petitioner, the defence raised by the respondent while opposing the petition is contrary to the said communication dated 23.10.2007 and the purchase order 23.10.2007 as well as the reply dated 21.12.2011 and that the respondent's defence before the court for opposing present petition is dishonest and that therefore order of admission of the petition deserves to be granted because the respondent has willfully neglected to discharge its debts by making payment of the amounts due to the petitioners.
On the other hand the respondent has claimed that (a) there is no privity of contract between the petitioner and the respondent company
(b) the respondent company is a distinct legal entity which is different and separate from the said other company i.e. Meghmani Finechem Limited (c) so far as the respondent company is concerned it is not at all financially weak and / or and is not unable to discharge its financial obligation (d) the respondent company is a going and profit making concern and has huge reserves (e) in the facts of the case there is no need of justification of lifting corporate veil inasmuch as not only the two companies are separate and distinct legal entities but even the relevant facts establish that the petitioner raised invoice on and in name of the said other company and it has actually supplied the DG sets to and for the said other company and (f) the petition involves and raises several disputed questions / issues of facts.
12. It is relevant to mentioned that in the reply affidavit the respondent has averred that:-
3.
At the outset, I submit that the petition is false, frivolous and vexatious and not maintainable. I submit that the petition is filed only with a view to pressurize the company to submit to the unreasonable demands of the petitioner and with malafide intention of coercing the respondent to make payment to the petitioner which is not outstanding or due to the petitioner. The petition is an abuse of the process of this Hon'ble Court. There are serious disputed questions of facts involved in the petition and therefore also the petition is not maintainable. At any rate and without prejudice, I submit that the petitioner cannot claim any amount from the company as the FLC and the invoice of M/s. CLLS Power Systems Limited, Singapore ( CLLS for short) for the DG sets on the basis of which the amount was claimed are with reference to Meghmani Finechem Limited ( MFL for short), as stated herein, which is altogether a different company and entity.
4. I say that the respondent is in the business of manufacturing and exporting of pigments and Agro Chemicals since 1986. the respondent is employing about 1500 employees. The respondent is a profit making company. The turn over of the respondent for the year 2010-11 and 2011-12 is Rs.864.92 Crores and Rs.822.08 Crores respectively. The copy of the annual report for the year 2011-12 is annexed hereto as Annexure A . Under these circumstances, there is no question of winding up of the respondent.
5(a) As the petitioner is a dealer for MTU Diesel Generator (for short the DG Sets ) in India, the respondent agreed to purchase 2 DG sets from the petitioner vide purchase order dated 23/10/2007 bearing No. MDU/07-08/PO=II (Copy at Annexure 4 page No.20 to the petition) for the purchase of two units of 2000 KVA, 11 KV DG Sets for Rs.2,92,60,000/-. The respondent was required to open Letter of Credit ( LC for short) for the 90% of the amount of the purchase order. The respondent on 18/1/2008 opened the LC with the date of issue being 30/1/2008 and the last date of shipment being 30/04/2008 (Copy at Annexure B hereto). The petitioner agreed to deliver the DG sets within 7 months from the date of receipt of the purchase order. Therefore, the statement made by the petitioner in paragraph 4 of the petition that the cost of 2 DG sets was agreed to be Euros 5,32,000/- and that the rupee equivalent to Rs.2,92,60,000/- was arrived on the basis of any assumption of the exchange rate of 1 Euro equal to 55 rupees is baseless and not correct. The statement made by the petitioner in paragraph 5 of the petition that the value agreed was in Euros and the Indian Rupee was only indicative is also not correct and the same is denied. I deny that there was any agreement to compensate the petitioner in case of any increase in the exchange rate.
Thereafter in pursuance of the discussion held between the petitioner and MFL, it was agreed that MFL will issue the purchase order for 2 DG Sets with fresh LC in foreign currency to be opened in favour of CLLS. The new purchase order (Copy at Annexure D hereto) shows 100% payment of LC at sight and the total price was agreed to be Euros 4,78,800/-. During the discussion between the respondent and the petitioner, the petitioner was appraised of the fact about tremendous loss having been suffered by the respondent due to delay in delivery at the petitioner's end. The respondent and MFL even suffered the exchange loss because of delay at the petitioner's end and therefore, accordingly, the price was revised and agreed at Euros 4,78,800/-. The copies of emails of the respondent informing regarding delay in supply of the DG sets and about the loss caused due to such delay are collectively annexed herewith as Annexure E hereto. Therefore, the reliance placed by the petitioner on the purchase order referring to Rs.2,92,60,000/- is misconceived. I deny that any payment much less 10% of the value of the DG sets was to be made by the respondent to the petitioner upon commissioning of the DG sets against issuance of the Performance Bank Guarantee ( PGB for short) or that the LC for Euros 4,78,800/0 was for 90% of the contract for supply of the DG sets as alleged or that the balance consideration of Euros 53,200/- was payable to the petitioner. I deny the machines have been commissioned with the respondent by the petitioner. I deny that there was any agreement to cap the exchange rate of Rs.60/- per Euro and therefore there is no question of any agreement that the balance payable would be Rs.31,92,000/-.
With reference to paragraph 17 and 18 of the petition and in view of what is stated above, I submit that no amount is due to the petitioner from the respondent and therefore the question of discharging the alleged liabilities does not arise. I deny that the respondent is commercially insolvent or that it is necessary to wind up the respondent as alleged by the petitioner. I deny that it is just, necessary and expedient to pass the order of winding up for protecting the interest of the respondent, its shareholders and creditors as alleged or at all. I deny that the respondent is perpetuating the fraud on other creditors and shareholders as alleged or at all. I deny that any reliefs prayed for in para 18 of the petition are required to be granted. The company and MFL have a huge claim of Rs.50 Lakhs against the petitioner, by way of damages towards late delivery and bank charges. Even otherwise and without prejudice to what is stated above, I submit that in view of the Arbitration clause in the Terms and Condition of the purchase order (copy at Annexure D hereto) this petition is required to be dismissed summarily.
13. During his submission Mr. Soparkar, learned Senior Counsel referred to the annual report of the respondent company (for the financial year 20011-2012) and submitted that the said report establishes that the said other company is a subsidiary company of present respondent but in any case it is still an independent and distinct company having its separate existence.
13.1 On the strength of the document dated 12.8.2008 at page 89 i.e. the invoice raised by the petitioner Mr. Soparkar, learned Senior Counsel, contended that the petitioner company itself has raised the invoice for the said two DG sets in name of and against the said other company and not in name of or against the respondent company. According to the respondent the said invoice conclusively establishes that if any amount is due or payable to the petitioner then it is by the said other company against whom the invoice was raised by the petitioner and not from the respondent company.
13.2 So as to support the said contentions Mr. Soparkar, learned Senior Counsel also relied on the document at page 66 (annexure-C to the reply affidavit) which is a communication from the petitioner and is addressed to the said other company and not the respondent company. It is claimed that the said communication is the proforma invoice which is raised by the petitioner in name of the said other company. Reliance is also placed on document at page 68 annexure-D to the reply affidavit which is message dated 23.10.2007 which is issued by the said other company in favour of the petitioner.
13.3 According to the respondent company the petitioner has suppressed the said two documents i.e. annexure C and annexure-D to the reply affidavit. It is claimed that the said two documents being the purchase order issued by the other company and the invoice raised by the petitioner against the other company demonstrate and establish that the entire transaction ad privity of contract is between the petitioner and the said other company.
13.4 The respondent has also relied on the document dated 5.10.2007 at page 70 which purportedly contains the terms of the contract and it is signed by the Director of the said other company and the Managing Director of the petitioner.
13.5 The respondent has also relied on the document dated 12.8.2008 at page 89 which purports to be copy of the regular invoice. It is raised by the petitioner for a sum of EUR4,78,800 and it is raised in name of and against the said other company i.e. Meghmani Fine Chem.
The respondent has also relied on the document at pages 90 and 91. It is further claimed by the respondent that even the documents placed on record by the petitioner with its rejoinder affidavit i.e. the documents at page 102 and 104 being the minutes of the meeting dated 6.12.2008 also give out that the meetings were held between the officer of the petitioner and the said other company and it is also signed by the officer of the said other company.
13.6 The respondent has also claimed that though it holds 57% of shares in the said other company, the said other company is still a distinct legal entity and has its own independent and separate plant at Dahej.
14. The above mentioned details related to the factual aspects involved in the matter prima facie suggest that the petitioners disputed claim involves and raises diverse issues which involve disputed facts.
14.1 The petitioner would still claim that all along it was the respondent company who entered into negotiations and discussions with the petitioner company for purchasing the DG Sets.
14.2 On the strength of the documents at page 13, 14, 15, 19, 21, 22, which reflect the address of consignee and place of delivery which is of the respondent company and also reflects name and address of the respondent company as the official address for all correspondence, the learned Counsel for the petitioner would claim that merely because the petitioner accommodated the respondent's request to raise invoice in name of its subsidiary which has actually a special purpose vehicle, the respondent cannot take disadvantage of the said arrangement and cannot deny the liability to pay the dues of the petitioner company. It is claimed that such excuse in garb of defence is actually dishonest defence and to appreciate the said aspect corporate veil should be lifted. On this count learned Counsel for the petitioner relied on the order dated 18.6.2012 by the Court in Company Petitioner No. 154 of 2010 with Company Application No. 406 of 2011 in Company Petition 154 of 2010 being the case between Baader Beteiligungs GMBH vs. Parsoli Motor Works Private Limited.
14.3 In the said decision the Court examined as to whether the defence was genuine or merely an afterthought or a fasad to defeat legitimate claim of the petitioner and court found, as matter of factual details, as recorded in the paragraph Nos. 15.3 and 15.4 of the order that the dispute raised by the defendant spurious, speculative and illusory and was in nature of ingenious mask invented by the defendant.
14.4 In the said decision the Court did not examine the case in light of a defence, by one of the two different and duly incorporated companies having separate and distinct existence in eye of law, on ground of absence of privity of contract or absence of duly concluded contract with it.
14.5 On the other hand the learned Senior Counsel for the respondent company relied on the decision by Apex Court in case between State of U.P. vs. Renusagar Power Co. and other (AIR 1988 SC 1737).
15. In present case it is necessary to decide as to whether the defence raised by the respondent is spurious or speculative and illusory or it is a bonafide defence and genuine dispute.
15.1 For the said purpose if the above mentioned disputes and differences and explanations are put aside for a while (and it is presumed that such defence or contentions are not raised or they are presumed / deemed to have been rejected) and, instead certain other connected and relevant aspects are taken into account then also it appears that there are certain points and issues of genuine dispute between the parties.
15.2 In this context it is relevant to refer to the details mentioned by the respondent company in paragraph No.5 (c) to (f) in the reply affidavit which read thus:-
(c) Thereafter in pursuance of the discussion held between the Petitioner and MFL, it was agreed that MFL will issue the purchase order for 2 DG Sets with fresh LC in foreign currency to be opened in favour of CLLS.
The new purchase order (Copy at Annexure D hereto) shows 100% payment of LC at sight and the total price was agreed to be Euros 4,78,800/-. During the discussion between the Respondent and the Petitioner, the Petitioner was appraised of the fact about tremendous loss having been suffered by the Respondent due to delay in delivery at the Petitioner's end. The Respondent and MFL even suffered the exchange loss because of delay at the Petitioner's end and therefore, accordingly, the price was revised and agreed at Euros 4,78,800/-. The copies of emails of the Respondent informing regarding delay in supply of the DG Sets and about the loss caused due to such delay are collectively annexed herewith as Annexure E hereto. Therefore, the reliance placed by the Petitioner on the purchase order referring to Rs.2,92,60,000/- is misconceived. I deny that any payment much less 10% of the value of the DG Sets was to be made by the Respondent to the Petitioner upon commissioning of the DG Sets against issuance of the Performance Bank Guarantee ( PGB for short) or that the LC for Euors 4,78,800/- was for 90% of the contract of supply of the DG Sets as alleged or that the balance consideration of Euros 53,200/- was payable to the Petitioner. I deny the machines have been commissioned with the Respondent by the Petitioner. I deny that there was any agreement to cap the exchange rate of Rs.60/- per Euro and therefore there is no question of any agreement that the balance payable would be Rs.31,92,000/-.
(d) Even after repeated follow ups, the said DG Sets were not delivered, thereby causing great hardship and financial loss to the Respondent. Thereafter, on 06/06/2008 (Copy at Annexure F hereto) the Respondent out of no other option was compelled to approach MTU India Private Limited, Pune informing about the delay in delivery of the DG Sets and also informing that the Respondent has incurred a loss of more than Rs.40 lakhs in addition to the bank charges. Thereafter, on 19/6/2008 Mr.Ranjit Bhide, Director and CEO of MTU India Private Limited sent an email (Copy at Annexure G hereto) to the Respondent that they have discussed the issue of late deliveries to the Respondent from the Petitioner. I deny that the Petitioner made several requests to the Respondent to release the payment as alleged or at all.
(e) Without prejudice to what is stated above, I submit that MFL has paid an amount of Rs.3,12,66,927/- instead of Rs.2,63,34,000/- and thereby incurring a loss of Rs.49,32,000/-. I submit that the MFL has made the payment of FLC to CLLS at the exchange rate of Rs.65.30 per Euro instead of Rs.55 per Euro. The copy of the proof of payment is annexed hereto as Annexure H hereto.
(f) I deny that an amount of Rs.47,00,000/- or any amount is in arrear by the Respondent. I submit that the Respondent does not owe to the Petitioner and therefore there is no question of withholding any payment by the Respondent. I deny that the Managing Director of the Respondent made any promises or had given any assurance to make the payment of a sum of Rs.31,92,000/- or any amount to the Petitioner as alleged or at all. I deny that the reply dated 21/12/2011 of the Respondent to the notice of the Petitioner is false and dishonest. I deny that the Respondent Company denied its liability to pay 10% of the retention money amounting to Rs.31,92,000/- which were alleged to be payable one year after commissioning of the DG Sets maliciously or dishonestly as alleged or at all. I deny that there is any fraudulent and dishonest intention of the Respondent to avoid making any payments to the Petitioner as no amount is due from the Respondent to the Petitioner. I deny that the Respondent has made any promises much less hollow promises or given any evasive reply to the Petitioner. I deny that the denial of its liability has for the first time come on record in response to the legal notice served upon the Respondent. I deny that the denial is false, frivolous, baseless, malicious or dishonest and is fraudulently raised to avoid payment or that the Petitioner claims to be legally and lawfully entitled from the Respondent as alleged or at all. At any rate and assuming without admitting the DG Sets in question are in order that by itself is no ground to file this winding up petition.
15.3 Thus what emerges is that according to the respondent company some further / fresh negotiations were held with the petitioner pursuant to which the petitioner issued new invoice for total price to the tune of EUR4,78,800.
15.4 On this count it is also relevant to take into account the details related to the price of the two DG sets which are mentioned by the petitioner.
15.5 In paragraph No.4 and 5 of the petition the petitioner has claimed that:-
4) The Respondent Company after considering the Quotation and seeking clarifications etc placed Purchase Order dated 23.10.2007 for the supply of two units of 2000 KVA and 11KVA Diesel Generators for short 'DG Sets . The Respondent also place separate orders for the supply of the accessories and erection thereof. The DG Sets ordered by the Respondent Company were required to be imported from Singapore and the cost of the two sets was agreed at Euro 5,32,000/- and the basis of the Euro was INR 55/- and any variations therein was on purchaser's account. A copy of the Purchase Order dated 23.10.2007 and letter dated 23.9.2007 bearing Reference No.MDU/07-08/PO-11 addressed by the Respondent Company annexing therewith (1) pricing and schedule of quantities, (2) contract term, (3) general terms and conditions and (4) technical specifications is annexed herewith and marked Annexure-4 hereto.
As stated herein above the cost of the Two DG Sets was agreed at Euor 5,32,000/- and Indian Rupee equivalent was arrived at on the basis of the assumption that the exchange rate for one Euro was equal to Indian Rupee 55/-. The Purchase Order on that basis at the then prevailing rate was worked out at Rupees 2,92,60,000/-. It is significant to note that the value of the DG Sets was agreed in Euro and Indian Rupee equivalent was only indicative and it was specific term of contract agreed between the parties that any increase in the exchange rate would have to be compensated by the Purchaser.
15.6 After having said thus the petitioner has then claimed that :-
6) As stipulated in the Purchase Order, the Respondent Company was required to open a Letter of Credit for 90% of the value of the DG Sets and the delivery was to be effected against such LC. The balance 10% of the value of the DG Sets was to be paid to the petitioner Company upon commissioning of the DG Sets, against issuance of Performance Bank Guarantee, guarantying the performance for a period of one year.
It may be noted that the LC opened by the Respondent Company on ________DAY expired and therefore the Petitioner on 28.4.2008 vide email requested them to immediately open a Foreign Letter of Credit for Euro 478,800 being 90% of the value of the contract in name of Assembler of DG Sets namely CLLS Singapore and balance 10% that is Euor 53,200/ against commissioning of the DG Sets. The Respondent Company accordingly by email dated 1.5.2008 requested to supply them Performa Invoice of 90% LC at Sight and 10% against E&C (erection and commissioning) and submitting PBG. The Performa Invoice was accordingly sent to the Respondent Company on 20.5.2008 and the LC was opened on 27.5.2008. A copy of the email of the Petitioner Company making the aforementioned request to the Respondent Company for opening FLC and response thereto both dated 28.4.2008 and 1.5.2008 respectively and a copy of the Performa Invoice are annexed herewith and marked as ANNEXURE-5, 6 and 7 respectively hereto.
15.7 As against the said details the respondent has mentioned above quoted details namely the assertion made in paragraph No.5 (c) to (f).
15.8 The said rival submissions and allegations and counter allegations give out that actually and substantially the dispute arose from or on account of alteration in terms of payment / contract and change in the exchange rate between Indian currency and EURO which means that there is commercial dispute between the parties i.e. dispute related to commercial terms related to / connected with the transaction rather disputed transaction.
15.9 The other cause for the dispute is alleged delay in delivery, installation and commissioning.
The petitioner has accepted that 90% payment of the goods in question is already made. The said payment was made at the outset i.e. at the time of delivery. The balance payment was to be made after installation and satisfactory commissioning as well as performance.
15.10 Thus, even if the petitioner s contentions and submissions or objections against the respondent's dispute as to the privity of contract and against the respondent s denial of liability to make the payment or respondent's defence that the liability, if any, to make the payment is of the other company, are for sake of examining the case, accepted as justified, then also the disputes and diffences which emerge from the petitioner s claim and allegations in paragraph No. 4 to 11 vis a vis the respondents contentions and grounds of defence and / or the factual aspects mentioned in paragraph No.5(c) to 5(f) of its reply affidavit cannot be overlooked or ignored and the said rival submissions reflect that there is genuine and bonafide commercial dispute so far as the petitioner s claim for further payment i.e. in addition to EUR4,78, 800 is concerned.
15.11 The various aspects related to and arising from the said dispute are such which cannot be gone into and examined by the Court in its jurisdiction under Section 433 and 434 of the Act. The said dispute and rival claims are such which would oblige the parties to lead appropriate oral and documentary evidence to establish,
(a) as to what was actually agreed upon and finalized between the parties.
(b) Whether actually there was any subsequent change, as alleged by the petitioner, in the matter of raising the invoice.
(c) If yes, whether it was at the behest of and a per instructions of the respondent; and
(d) Whether it was for the reason alleged / mentioned by the petitioner or for some other reason or in view of the facts stated by the respondent
(e) Whether actually there was any delay on part of the petitioner in delivering and installing and commissioning the D.G. Sets, as alleged by the respondents
(f) Whether the dispute arose in view of change in exchange rate (Rupee & Euro) which necessitated change in price structure.
15.12 The aforesaid are some of the aspects which arise from rival claims, objections, and contentions and demonstrate that this petition involves and raises disputed facts. Having regard to the nature of points of disputes and defences it is not possible to hold that the dispute defence by the respondent is spurious or a facade to frustrate petitioner's claim.
16. The respondent has also raised dispute about the delay in delivering installation and commissioning of the DG sets. of course the petitioner has denied the said claim and contended that the petitioner did not commit any delay either in delivery or in installation or commissioning. The said dispute also can be considered and adjudicated during regular civil trial.
17. Now so far as the petitioner s claim against the respondent company is concerned, it is relevant to mention that the petitioner has placed on record document dated 23.10.2007 (annexure-4 page 19 to 25) purporting to be the purchase order issued by the respondent company.
17.1 On the other hand the respondent has placed on record another document which is also dated 23.10.2007 (page 68 of the petition and i.e. Anexure-D to the reply affidavit) and purports to be purchase order in favour of the petitioner.
17.2 However, the former document i.e. annexure-4 to the petition (page 19 to 25) appears to have been issued by the respondent company whereas the latter document i.e. page 68 of the petition and i.e. Anexure-D to the reply affidavit appear to have been issued by said other company.
17.3 The respondent has claimed that the document at annexure-D to the reply affidavit is the purchase order which is issued on conclusion of the negotiations and parties have acted according to and on the strength of the said document.
17.4 So as to support and justify the said submission the respondent has heavily relied on the invoice dated 12.8.2008 (page 89 of the petition) raised by the petitioner.
17.5 On perusal of the said document it comes out that the invoice is raised by the petitioner and it is raised n name of and against the said other company.
17.6 It is also equally important to note that the petitioner has not placed any invoice on record, raised, if any, by it in pursuance of and on the basis of the purchase order which is placed on record by the petitioner at page 19 (annexure-4 to the petition).
17.7 On this count the petitioner claims that it raised the invoice in the name of the said other company only at the request of the respondent company.
17.8 Now, whether actually it so happened or not is a matter of evidence and the contesting parties will have to establish their respective version in accordance with law by appropriate oral and / or documentary evidence.
18. In face of two different purchase orders which are of the same date but are issued against different companies it cannot be concluded, at this stage and in absence of detailed and complete evidence from both sides, that the version of the respondent is dishonest defence.
18.1 Such a conclusion by this Court in this proceeding and at this stage would amount to premature and unwarranted conclusion unsupported by any cogent evidence.
18.2 It is pertinent that as of now there is no evidence on record that either of the two purchase orders is forged and / or fabricated and if it is so then which one out of the two is forged and / or fabricated.
18.3 Actually, it is not even the case of the contesting parties that any of the two purchase orders is forged or fabricated.
18.4 Thus, when there is no evidence to even suggest that one of the two purchase orders is forged then this Court at this stage cannot record the conclusion that the respondent's defence is not bonafide and the dispute is not genuine, more particularity because the respondent s defence is supported by a purchase order and an invoice (which is raised in the name of and against the said other company and not present respondent).
18.5 From the foregoing discussion and the above mentioned details it emerges that there are several issues which involve disputed facts and for resolution of such dispute and rival claims appropriate and sufficient evidence will be required.
18.6 The aforesaid discussion and above mentioned aspects also clarify that in absence of any cogent evidence it is not possible to hold and record at conclusion at this stage that the respondents defence is speculative or illusory or a mask invented only with a view to defeat the petition.
18.7 Besides the aforesaid facts it also cannot be overlooked that the respondent company is financially not weak but has reserves, large workforce and appears to be profit making concern and therefore it would, otherwise also, not be equitable to order winding of a going and profit making company, which employs large workforce, more so when it is not possible, in absence of any cogent evidence at this stage, to hold that respondents defence is unjustified.
19. In the result, the Court is not inclined to accept and allow the petition at this stage. The petition, therefore stands rejected. No cost.
20. It is however clarified that it would be open to the petitioner, if it so intends and / or if it is so advised, to take out appropriate proceedings by way of ordinary civil remedy.
21. It is also clarified that present order shall not stand in way of the petitioner to initiate and take out such remedy in accordance with law as may be available and as it may be advised.
22. It is further clarified that the court has not expressed any view or opinion as regards the merits of the petitioner's claim and / or merits of the petitioner's version and allegation against the respondent or about the respondents reply and defence.
23. All aspects will have to be considered, examined and decided by the learned trial Court independently and on their own merits, in accordance with law and in light of the material which may be available on record of the Court.
Accordingly the petition stands disposed of.
(K.M.THAKER, J.) Suresh* 28