Delhi High Court
Shivalik Rasayan Ltd./Gharda ... vs Pesto Chem India Ltd. on 14 July, 2005
Equivalent citations: 124(2005)DLT431
Author: A.K. Sikri
Bench: A.K. Sikri
JUDGMENT A.K. Sikri, J.
1. This company petition was originally filed by M/s. Shivalik Rasain Ltd. seeking winding up of the respondent company on the ground that the respondent owed a sum of Rs. 6,21,740/- which the respondent was unable to pay. Petition was admitted on 5th October, 1998 and it was ordered that citations be published in the newspapers Statesman (English), Jansatta (Hindi) and Delhi Gazette for 8th March, 1999. These citations were duly published. After the publication of citations M/s. Gharda Chemicals Limited filed CA 530/99 stating that it was also a creditor and seeking substitution in the petition. This application was allowed vide order dated 30th April, 2003. It may be noted that after the publication of citations respondent started making payments to the original petitioner and the claim of the original petitioner was ultimately settled by the respondent company to its satisfaction. Therefore, while allowing CA 530/99of M/s. Gharda Chemicals, the applicant was directed to be substituted in place of the petitioner. This is how, in this petition, now M/s. Gharda Chemicals is the petitioner who was also directed to file the amended petition. The amended petition was filed to which respondent filed its reply. Therefore, reference shall be made to the amended petition.
2. In this petition, the petitioner states that it is the creditor of the respondent company to the tune of Rs. 9,95,41,358.59. The petitioner is engaged in the business of manufacturing and sale of various insecticides, pesticides and agro-Chemicals. It has been supplying this material to the respondent company as well. According to the petitioner, on or about 29th July, 1996, petitioner sold , supplied and delivered the respondent company 1200 Kgs. of 92% at the rate of Rs. 1,182.20 per kg. and 800 kg. of the said product having purity of 93% at the rate of Rs. 1,195.05 per kg. plus excise duty thereon. Invoice No. 750087 dated 29th July, 1996 for an aggregate sum of Rs. 2614920 was raised on the respondent. 60 days credit period was given during which respondent was to make the payment and there was a stipulation in the invoice that in case payment is not made within 60 days, for delayed period interest @ 24% per annum was to accrue. The petitioner received the amount, but belatedly. However, it did not pay the interest which would come to Rs. 14,94,024.12p from the due date of payment till the date of actual payment.
3. Petitioners state that during the same period that is on or about 29th July, 96 it also supplied 2000 kgs of Cypermenthrin Technical having purity of 92% at the rate of Rs. 1,182.20 per kg and raised invoice no. 750088 dated 29th July, 1996 for an aggregate sum of Rs. 2603600/-. Against this, respondent made following part payments leaving a balance of Rs. 2337613.63p:-
(i) Rs. 69,472.37 on 2nd January, 1999 2,28,309.37 15.06.1998
(ii) Rs. 1,00,000/- on 7th January, 1999 11,500.00 Against R/d Against Inv. 257281 Dated 07.10.1999
(iii) Rs. 1,00,000/- on 11th January, 1999 12,500.00 Against R/d against Inv. 257282 Dated 07.10.1999
(iv) Rs. 1,00,000/- on 18th January, 1999 12,500.00 Against R/d against Inv. 257283 Dated 07.10.1999 1,177.00 Excess payment made by party against Inv. 258012 Dated 15.05.2000
4. The petitioner also supplied on or about 27.8.96, 2000 kg. of Cypermethrin Technical having purity of 94% at the rate of Rs. 1,207.90p. per kg. and raised invoice no. 257012 dated 28.8.96 for an aggregate sum of Rs. 2660200/-- against this, no payment has been received.
5. Details of similar supplies made on subsequent dates and invoices raised against them are mentioned in the petition. It is not necessary to give particulars of all those supplies which were made from 6.9.96 to 11.12.97.
6. According to the petitioner total outstanding amount mounted to Rs. 5.41 crores. As the petitioner realised that the company was defaulting in making payment, a meeting was held between the petitioner's representative Mr. J.P. Somaiya and the representative of the company Mr. Shiv Shankar on or around September, 1997 wherein Mr. Shiv Shankar assured the petitioner that the said company would pay at least Rs. 15 lacs per month in order to clear all the outstanding dues. It was followed by letter dated 5th September, 1997, written by the company to the Petitioner informing that it would try to pay at least 15 lacs per month and that company was trying to sell off its assets. Similar letter was addressed to Dr. Gharda, Managing Director of the Petitioner as well. However, even this commitment was not heeded to and therefore, Petitioner vide its letter dated 25th March, 1998 requested the company to clear at least Rs.2 crores by 30.4.98 and also go give firm schedule of payment. In response, Petitioner received letter dated 15th April, 1998 from the company inter alia stating that he would make payment of Rs. 2.2 crores by the end of June, 1998.
7. However, this proved to be an empty assurance. The petitioner accordingly, sent fax message dated 4.6.98 requesting the company to inform how much amount it would be releasing on weekly basis so that backlog of more than Rs. 1.5 Crore out of Rs. 2 Crores promised to be paid by end of June, 1998 is wiped out. Another meeting was held on 12.8.98 wherein the company assured the petitioner that it would make regular payments. Thereafter, letter dated 14.8.98 was addressed by the company to the petitioner proposing to pay Rs. 20 to 30 lacs by September, 98. However, against the commitment of payment of Rs. 2.2 crores by the end of June,98, only a sum of Rs. 84.38 lacs was paid within the stipulated period and Rs 16.6 lacs thereafter. And thereafter, etter dated 28th October, 1998 was written again reminding the respondent of this commitment and requesting the company to give a firm schedule. It was followed by reminder dated 1.12.98. Vide communication dated 9.11.98, however, the respondent state that it was facing financial crisis due to climatic conditions and other factors and informed that it would be in a position to remit a sum of Rs. 25 lacs by March, 1999 and Rs. 125 lacs in the next financial year. Thereafter, the company sent ten cheues of Rs. One lac each payable over a spread of several days along with their letter dated 3.12.1998, which were encashed between 15.12.98 to 18.1.99. vide letter dated 7.1.99, 10 more s post dated cheques of Rs. 1 lac each were sent as the petitionee treated as a mockery inasmuch as cheques which were also post dated were given against outstanding payment of Rs. 5.5 crores and therefore, the petitioner returned these cheques vide its letter dated 14.1.99. According to the petitioner, as on 31.1.9, total amount due and payable was Rs. 5,97,18,388.71 inclusive of interest. Invoice wise details are given in Annexure P-43 .
8. In the reply filed by the respondent, it has denied liability qua the petitioner. The respondent has stated that the petitioner has supplied total material worth Rs. 8,91,96,276.00 and the respondent had already made payment of Rs. 8,38,36,568.00 during the period 1996-99. According to the respondent there is no established and admitted debt due to M/s. Gharda Chemicals Ltd. hence, no winding up process of the respondent company M/s. Pestochem (I) Ltd. can be initiated under the provisions of law. The respondent also disputed the claim of the petitioner that the respondent company owes an amount of Rs. 9,95,41,358.59p to the petitioner as claimed, in their winding up petition. It was further submitted by the respondent that the petitioner M/s. Ghada Chemicals Ltd. has presented false and incorrect claim before this Hon'ble Court by showing the above said outstanding of Rs. 9,95,41,358.59 from the respondent whereas even as per the bills and statements submitted by the petitioner the transaction between the petitioner and the respondent has been shown from July, 1996 to 1999. Whereas the respondent has clearly stated in their reply that during the period of 1996 to 1999, the respondent purchased the material worth Rs. 8,91,96,276.00 and against that purchase respondent had made payment of Rs. 8,38,36,568.00 and the remaining amount was not paid due to the sub-standard and defective supply of Insoprotuon (Technical) supply by the petitioner during the period 1998.
9. It is also stated that under the garb of this winding up petition, the petitioner is trying to recover its disputed time barred claim. It is also averred that the petitioner also filed a suit for recovery CS(OS) No. 1713/2000 titled as M/s. Gharda Chemicals Ltd. v. M/s. Pestochem (I) Ltd. before this Hon'ble Court and the same suit is still pending and awaiting decision from this Hon'ble Court. The said suit filed by the petitioner is being hotly contested by the respondent on the similar grounds an submissions made by the petitioner in reply to the present winding up petition by the substituted petitioner M/s. Gharda Chemicals Ltd.
10. It is therefore, contended that there are serious and bonafide disputes and winding up is not the remedy available to the petitioner. Respondent has also questioned the statement of the petitioner and has sought to point out various anomalies therein which would be taken note of at the appropriate stage.
11. Learned counsel for the petitioner in support of this plea that debt is not only outstanding but also acknowledged as well and therefore, defense now raised was an after thought and sham, referred to the various communications, which have been noted while stating the case of the petitioner, and pointed out that these letters of the respondent company clearly amounted to acknowledgment of the debt. In fax letter dated 15th September, 1997 while referring to the discussion 'Regarding Outstanding Dus' and stating that the company had to recover payments from its customers in South India and seeking cooperation of the petitioner in getting the said amount recovered, gave following proposal to make the payment:-
"Meanwhile to clear your old outstandings we propose as under:-
1. We shall try to pay at least Rs. 15 lacs per month.
2. We have planned to dispose off some of spare assets but the market is not favorable at present. We hope that market conditions shall improve by the end of this year. Hence, the realisations so made shall be remitted to you.
We hope you will find the above to your satisfaction and shall be kind enough to us by extending your co-operation in recovering the overdues from south. Meanwhile however, you will appreciate that we have cleared around Rs. 100 lacs during the months of April to July, 97 out of your old dues.
Further to above, please note that we are planning to lift around 100 mt. Isoproturon tech. for which we are arranging L/Cs worth Rs. 75 lacs and for the balance quantity we request you to allow us credit against post dated cheques which we assure you to clear on due dates. This arrangement will help us in maintaining our market as usual and our regular sales plan shall not disturb. In this way we would be able to take the full utility of our sales network for recovery of regular dues from the market also."
12. Likewise, in its letter dated 6.11.97, while repeating that it had to recover the dues from its customer the respondent agreed to clear the outstanding as under:-
"However, after considering the present market scenerio, we feel that we would be able to clear you routstandings as detailed below:
1. We shall be able to pay at least 15 lacs every month.
2. We have planned to dispose off some of spare assets but the market is not favorable at present. We hope that market conditions shall improve by the end of this week. Hence the realisations so made shall be remitted to you.
3. As discussed we both shall put all efforts to make the recoveries from the South and we are ready to furnish letters to you in the names of the parties to clear the outstandings directly in your favor on our behalf.
We hope you will find the above to your satisfaction and shall be kind enough to us by extending your co-operation in recovering the overdues from south. Meanwhile however, you will appreciate that we have cleared around Rs. 130 lacs during the months of April to October, 97 out of your old dues."
13. It may be noted that in its letter dated 25.3.98, the petitioner had stated that respondent has 'promised' to clear Rs. 2 crores from the total outstanding approximately Rs. 5.41 crores before 30.4.98. Significantly, although this outstanding amount was mentioned it was on account of principal only, respondent refuted the same. Vide letter dated 14th April, 1998 it promised to make payment of Rs. 2.2 crores by the end of June, 98. However, as respondent did not stick to the promise and made some payent which were much lesser than the commitment given, vide letter dated 4.6.98, petitioner requested the respondent to clear the amount of Rs. 2.20 crores by end of June as promised and also gave definite schedule for payment commencing from July, 1998.
14. The respondent again did not make this payment as promised and instead on 14.8.98 wrote letter stating that for the quarter July,98 to September, 98, it had already made payment of Rs. 40 lacs and would pay further amount of Rs. 25-30 lacs by September, 98. It also stated its problems including disruption in the market which was creating hurdles in clearance of the dues and proposed as under:-
"As such we proposed that in future we should be supplied, for example the material worth Rs. 7 lacs against the payment of Rs. 10 lacs, apart from the materials against L/Cs. Thus we would be able to continue our production/sales and our recoveries would also be maintained to the level without interrupting the business cycle."
15. The petitioner again wrote letters dated 28.10.98 and 1.12.98 stating that respondent was lagging behind and in the letter dated 1.12.98 it was also mentioned that the total outstanding worked out to Rs. 5.82 crores and once again requested for giving firm schedule for remitting the outstanding dues. Vide letter dated 9.11.98 in reply to letter dated 28.10.98 respondent again stated the reason because of which pesticides industry was facing heavy financial crisis and gave the following assurance for mking payments:-
"Anyhow, we are looking into the matter and restructuring our future plannings and shall submit you our firm commitments which could be honoured by us in time. Shortly after we make firm planning regarding our business strategy. Till then we request you to kindly bear with us. Meanwhile, under the prevailing critical conditions we feel and assure you that we would be in a position to remit Rs. 25 lacs up to March, 99 and Rs. 125 lacs during next financial year."
16. Following aspects can be deduced from the aforesaid correspondence:-
1. The petitioner has been informing the amount payable by various letters and vide letter dated 1.12.98 also after receiving various payments giving credit thereof, as per petitioner Rs. 5.82 crores were due inclusive of overdue interest. The respondent has not produced any correspondence disputing the claim of the petitioner.
2. The respondent company has been making promises to clear the outstanding. It has also been giving schedule for making some specific payments. However, payments were not made as per schedule and of the amounts which it undertook to pay from time to time. It would be clear from this that even the amount payment of which was assured (admitting the same payment to be part payment), those were cleared and thus even as per the respondent same payments were due.
3. As per the respondent's contention taken in the reply now, during the period 1996-99 it had purchased material worth Rs. 8,91,96,276.00 and against this, payment of Rs. 8,38,36,568.00 is made. For balance payment it is alleged that nothing is due as the material was defective. However, in none of the correspondence, there is any whisper for alleged defective material supplied. Thus, even as per the respondent also sum of Rs. 53.60 lacs approximately would be due once its contention of defective upplies is rejected.
17. The aforesaid amount of more than Rs. 53 lacs is only towards principal balance due without taking interest component in consideration. The respondent has not been able to dispute that as per the invoices, 60 days' credit was given and/or payments made after 60 days, 24% interest was payable for delayed period. The respondent did not dispute this clause in the correspondence exchanged between the parties when respondent was time and again making assurances to clear the balance and was giving financal difficulties because of which it was not able to clear the dues in time. The petitioner has been informing the specific amounts due from time to time after adding interest and did not dispute the right of the petitioner to charge interest on delayed/ elated payment. Even if 24% interest is not to be paid it can not be denied that some reasonable interest will have to be paid by the respondent to the petitioner.
18. No doubt, according to the petitioner, substantial amount is due as the petitioner has been charging interest @ 24% per annum and much of the amount claimed by the petitioner would represent interest component. I am not going into other disputes and the dues as per the petitioner's claim as the suit is filed, which is pending adjudication. However, without going into any such controversies in any case, a sum of Rs. 53.60 lacs is payable even as per the respondents own showing as the plea of the respondent regarding supply of alleged defective material can not be accepted. Even if interest @ 12% per annum is to be computed for last six years the total amount payable would come to more than Rs. 90 lacs. Prima facie, therefore, I am of the opinion that respondent is indebted to the petitioner and as the amount was not paid in spite of service of statutory notice it would be deemed that it is unable to pay the same. This petition is accordingly admitted. Citations be published in The Statesman' (English) and 'Jansatta' (Hindi), returnable on 30th September, 2005. OL is appointed as the Provisional Liquidator. However this order shall not be operated for a period of eight weeks to enable the respondent to deposit Rs. 90 lacs with the Registrar of this Court. In case, the amount is not deposited the petitioner shall be entitled to take out the citations and OL shall also be entitled to take charge of assets and records of the Company.
19. List on 30th September 2005 for report.