Gujarat High Court
Hiya Overseas Pvt. Ltd.Through Its ... vs Kamili Packers Pvt. Ltd [Amended As Per ... on 21 April, 2023
Author: Ashutosh Shastri
Bench: Ashutosh Shastri
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/O.J.APPEAL NO. 1 of 2016
In R/COMPANY PETITION NO. 245 of 2014
With
CIVIL APPLICATION (OJ) (FOR STAY) NO. 1 of 2016
In R/O.J.APPEAL NO. 1 of 2016
With
CIVIL APPLICATION (FOR PRODUCTION OF ADDITIONAL
EVIDENCES) NO. 1 of 2022
In R/O.J.APPEAL NO. 1 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI Sd/-
and
HONOURABLE MR. JUSTICE J. C. DOSHI Sd/-
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1 Whether Reporters of Local Papers may be allowed to see No
the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
==================================================
HIYA OVERSEAS PVT. LTD.THROUGH ITS DIRECTOR-VIJAY A PATEL
Versus
KAMILI PACKERS PVT. LTD [AMENDED AS PER ORD DTD 20.1.16]
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Appearance:
MR. S.N.SOPARKAR, SENIOR ADVOCATE WITH MR MRUGEN K
PUROHIT(1224) for the Appellant(s) No. 1
MR AS VAKIL(962) for the Opponent(s) No. 1
==================================================
CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 21/04/2023
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI) [1] By way of this appeal under Section 483 of the Companies Act, 1956 a challenge is made to an order dated 06.01.2016 passed by the learned Company Judge in Company Petition No.245 of 2014 whereby the main Company Petition was admitted with consequential direction.
[2] The brief facts leading to the rise of present appeal are that original petitioner i.e. respondent company is incorporated under the provisions of the laws of Kenya and is carrying on the business of exporting grains to various countries, including India. The original respondent Company was incorporated on 18.12.2006, under the provisions of the Companies Act, 1956 (hereinafter referred to as "the Act"). It is the case of appellant Page 2 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 that in the course of business of trading and exporting of food- grains, the orders were placed by appellant company for supply of goods such as Moong, Cow-peas red, various types of beans and from time to time, the original petitioner company i.e. Kamili Packers Pvt. Ltd. exported and shipped the goods from Nairobi and delivered to the respondent Company i.e. present appellant. The appellant original respondent had assured the original petitioner company for payment immediately upon receipt of the goods since on earlier occasion also, the goods were supplied and on account of such relations without insisting on an advance, or even a Letter of Credit in respect of the orders placed, the goods were loaded in the presence of, and under the supervision of, one Mr. Vijay Patel, who is representative of the present appellant Company, the goods were sold and delivered to the respondent Company i.e. present appellant and the invoices were raised for an amount of US$ 1,079,133=00 which approximately equivalent to Rs.6,51,79,633=20. According to original petitioner i.e. present respondent, all the invoices were duly accepted and in response to this transaction, the amount aggregating to US$ Page 3 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 3,019,498=50 was due and payable, against which, the present appellant Company has merely paid to the original petitioner company, an amount aggregating US$ 1,940,365=50 only and despite request having been made for balance payment, the present appellant - original respondent company failed to clear the said amount and as such an amount to the extent of US$ 1,079,133=00, remain outstanding payable to the original petitioner.
[2.1] It is the case of the original petitioner i.e. respondent herein that despite repeated request having been made since the present appellant had neglected to pay the amount, a statutory notice was served on 01.04.2014, calling upon to clear the balance amount, as indicated above and a specific time limit was given of 21 days. It was also indicated that failing to comply with the notice, the original petitioner would be entitled to file winding-up proceedings a3gainst the present appellant. To this statutory notice, a general denial is made by present appellant by way of a communication dated 05.04.2014, denying the averments made in the statutory notice and since without Page 4 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 any justification and also without any bona fides evasive reply was filed and a further communication was also written by original petitioner on 10.04.2014, through the advocate, but no reply was received by the original petitioner from present appellant company which has resulted into filing of the winding- up petition which was numbered as Company Petition No.245 of 2014 before this Court.
[2.2] The said winding-up petition was heard by the learned Company Court i.e. learned Single Judge and after hearing both the sides, learned Company Court was pleased to pass impugned order on 06.01.2016 whereby the Company Petition for winding-up came to be admitted and consequential process was also ordered to be carried out. The operative part of the said order reads as under:-
"29. Hence, the following order:
30. Admit.
31. The Registry is directed to notify the present petition for final hearing on 10.03.2016. The admission of the petition shall be advertised in the English daily newspaper "The Times of India", Ahmedabad Edition and Page 5 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 the Gujarati daily newspaper, "Jansatta", Ahmedabad Edition.
32. The Official Liquidator attached to this Court is appointed as the Provisional Liquidator of the respondent-
Company and is directed to take over the charge and possession of the assets of the respondent-Company inventory of the office and to prepare premises, books an of accounts and all other assets of the respondent-Company, as required.
33. At this stage, a request is made by Mr.Niral Mehta, learned advocate for the respondent-Company that the petition may not be advertised for a period of two weeks. The request is granted in the interest of justice." [2.3] It is this order passed by learned Company Court is made the subject matter of present O.J. Appeal under Section 483 of the Act before this Court wherein initially after taking note of unilateral submissions, the co-ordinate Bench of this Court was pleased to issue notice on the appeal by taking note of primary submissions and in Civil Application (for stay) the impugned order passed by the learned Company Court i.e. learned Single Judge came to be stayed. Following is the initial order since relevant to the notice, the Court deems it proper to reproduce hereunder:-
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C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 "Order in the Appeal:
Draft Amendment is allowed.
Counsel for the appellant, taking us through the reply filed by the appellant Company before the Company Judge, submitted that purchases of foodgrains were made by the appellant Company through one Unisilk Limited of Hongkong and to whom various payments totalling to 9,43,590 US $ have already been made. The claim of the appellant Company is highly exaggerated which, in any case, lie against the appellant Company. The appellant also had disputes about quality of the goods supplied. In view of such disputed questions, learned Company Judge ought not to have admitted the Company Petition for winding up. Let there be NOTICE in the appeal returnable on 17.02.2016.
Order in the Civil Application:
RULE returnable on 17.02.2016. There shall be ex- parte ad-interim stay against operation of the impugned order dated of the learned single Judge.
In addition to service to the respondent, this order may also be sent to the Power of Attorney of the respondent Company through whom the Company Petition has been presented. This shall be done through Speed post at the cost of the appellant."Page 7 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [3] It is with this background, the present appeal has come up for consideration before this Court wherein Mr. S. N. Soparkar, learned senior advocate appearing with Mr. Mrugen K. Purohit, learned advocate for the appellant and Mr. A. S. Vakil, learned advocate appearing for the respondent.
[4] Mr. S. N. Soparkar, learned senior advocate appearing with Mr. Mrugen K. Purohit, learned advocate for the appellant has vehemently contended that the order passed by the learned Single Judge is not only unjust and arbitrary but de-hors the circumstances which were produced and canvassed. It has been further contended that the defence which has been put-forth by present appellant before the learned Single Judge raises clear triable issues and when that we so, such disputed questions of fact cannot be subject matter of winding-up petition as the civil remedy is available to the opponent herein. Mr. Soparkar, learned senior advocate has further submitted that looking to the arrangement with regard to the transaction and the supply of goods, the necessary payment towards the invoices generated have already been made by the present appellant company to Page 8 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 M/s. Unisilk Limited through its the transaction took place and that the learned Single Judge has miserably failed to consider.
It has further been contended that there is no privity of contract between the present appellant company with respondent company and the learned Single Judge has failed to properly appreciate the international business transaction. As per the business practice, the invoice and packing list itself is contract for particular purpose and generally the terms and conditions of the business transaction are stated always in invoice itself and as such, in view of the fact that there is no written contract is required between the parties, the learned Company Judge who raised an inference has erroneously come to the conclusion. In fact, according to Mr. Soparkar, learned senior advocate, there is no outstanding amount payable to the respondent company by present appellant and as such the order passed by the learned Company Court to admit the petition deserves to be recalled and set aside.
[4.1] Mr. Soparkar, learned senior advocate has further submitted that apart from the fact that there is no amount due Page 9 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 and payable towards the transaction and as such simply because in earlier reply to the notice the fact is not specifically pointed out no inference could have been raised by the learned Single Judge. In fact there was mutual oral agreement between the parties and in due compliance of the said oral understanding the appellant has already made the payment to M/s. Unisilk Limited and if the M/s. Unisilk Limited has not transmitted money to present appellant, the appellant cannot be compelled to make double payment under the threat of winding-up. Mr. Soparkar, learned senior advocate has submitted that the learned Company Court has failed to appreciate that respondent company was merely a consignee and because of the agreement between petitioner company and M/s. Unisilk Limited, the original petitioner company delivered the goods to the respondent. However, there was no privity of contract between the petitioner company and the respondent company. M/s.
Unisilk Limited and the respondent company i.e. Kamili Packers Pvt. Ltd. have made such arrangement to save the expenses of switching BLIT cost and as per notified party the definition consignee has all right to sell and deliver the cargo and this Page 10 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 intricacy has not been properly construed by the learned Single Judge and thereby has passed an order which has got a far reaching consequence upon appellant company.
[4.2] According to Mr. Soparkar, learned senior advocate, the company is a viable company and has not lost its sub-stratum and as such there is no question of winding-up of company. It has further been contended that taking of plea in the written statement is always permissible, even if it is inconsistent and as such the learned Single Judge ought not to have raised any inference simply because there might be some inconsistency and the reply to the notice as well as the written statement filed opposing the Company Petition. These entire circumstances which are stated about factum of payment to M/s. Unisilk Limited requires a detail trial and adjudication and that can be ascertain only by way of leading evidence. Mr. Soparkar, learned senior advocate with a view to substantiate his submissions drawn the attention to the sample invoice reflecting on page 13 of the appeal compilation and has submitted that notified party is a M/s Unisilk Limited. Further the statement of Page 11 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 account, which has been attached, reflects that the payment has already been made by the appellant. In fact a comparative chart with invoice numbers if to be looked into, it clearly depict that amount of each invoices, seven in numbers, have already been made and as such since this material aspect having not been properly construed by the learned Single Judge, the order impugned deserves to be quashed and set aside as the same is contrary to material on record.
[4.3] Mr. Soparkar, learned senior advocate has further submitted that simply because, at length, the statutory notice has not been dealt with by submitting reply in exhaustive form but when in the petition adequate material has already been supplied indicating factum of payment and there is hardly any justification for the learned Single Judge to pass the impugned order. Winding-up of a company is a serious consequence upon a viable unit and if that be allowed, it will have a serious consequence upon the image and resultant adverse effect on the business of company. Despite the fact that full payment has been made the original petitioner company i.e. respondent Page 12 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 herein has unilaterally submitted the petition for pressuring present appellant to make the payment since M/s. Unisilk Limited might not have remitted the amount to opponent company but for which cause the present appellant cannot be pressurized. This armed twisting method which has been adopted by filing winding-up petition upon the appellant ought to have been seriously viewed by the learned Single Judge and having not done so, the order is unsustainable. Mr. Soparkar, learned senior advocate has also submitted that these issues which have been raised are seriously in dispute and the usual remedy which is otherwise available is certainly not the petition under Sections 433 and 434 of the Act. The element of neglecting of payment which is the basic foundation when completely missing there is hardly any justifiable reason to entertain the petition more particularly when each of the invoices have been cleared by making payment and so far as eighth invoice is concerned, the payment was received in the form of adjustment to the other by making payment to father in a sum of Rs.50,000 dollars and when that we so, the order passed by the learned Company Court deserves to be quashed.Page 13 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [4.4] Mr. Soparkar, learned senior advocate has further submitted that it is trite law then the disputed version and the stand cannot formed the subject matter of winding-up petition and under the threat of winding-up no armed twisting method be adopted. The element of Sections 433 and 434 of the Act are required to be established prima facie which circumstance is completely missing looking to the voluminous record placed before the Court. Hence, in no case the petition would have been entertained.
[4.5] To strengthen his submission, Mr. Soparkar, learned senior advocate appearing for the appellant has made a reference to few of the decisions to canvass the proposition.
Following are the decisions referred to by the Mr. Soparkar, learned senior advocate. The said decisions will be considered at appropriate stage in the present order:-
(i) IBA Health (India) Private Limited versus INFO-Drive Systems SDN. BHD. reported in (2010) 10 SCC 553.Page 14 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023
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(ii) Excel Generators Private Ltd. versus Meghamani Organics Ltd. reported in 2013 SCC OnLine Guj 4982.
(iii) Tata Iron and Steel Company Limited versus Micro Forge (India) Limited reported in 2000 (0) GLHEL-HC 212951.
(iv) Polyrec Processors Pvt. Ltd. versus Polyline Limited reported in 2012 SCC OnLine Guj 5189.
[4.6] To make a submission with more emphasis, a chart has been prepared and presented to indicate that the very same invoices which were seven in numbers have been met with and remittance has also been effected and when the appellant company has made full payment to each of the invoices, there is hardly any grievance left for opponent company to sustain the petition for winding-up and by referring to this chart and the payment details, a submission is reiterated to allow the appeal by setting aside the impugned order passed by the learned Single Judge dated 06.01.2016. No further submissions have been made.
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C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [5] As against this, Mr. A. S. Vakil, learned advocate appearing for the opponent company has vehemently objected to the stand taken by learned senior advocate appearing for the appellant. It has been submitted that a sham and bogus defence is tried to be generated before the Court and can be culled out from the defences which have been taken inconsistently time and again in the present proceedings.
[5.1] Mr. Vakil, learned advocate has further submitted that a statutory notice was given and served upon the appellant company on 01.04.2014 reflecting on page 14 and it has been clearly mentioned in the said notice that goods were duly shipped from Nairobi and delivered at the destinations as required by appellant company which is well within the knowledge of Mr. Vijay Patel happened to be one of the Director of the appellant company. At this stage, according to Mr. Vakil, learned advocate there was a first available opportunity for the appellant company to disclose if genuinely the payment could have been made to the M/s. Unisilk Limited. A perusal of reply Page 16 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 to the said notice dated 05.04.2014, reflecting on page 21 in which no such clarification is made that payment has already been made but in fact a general denial is made with regard to the account supplied along with the notice. Except this brief dispute, no stand is taken either of quality of goods or payment to M/s. Unisilk Limited already made nor any such defence which is right now tried to be projected by learned senior advocate. So at first available opportunity just evasive reply has submitted. Further even in a communication dated 10.04.2014, it was specifically pointed out that all statements made in the reply are inconsistent general denial and dishonest and motivated averments to avoid the settlement of legitimate dues and as such it was clearly conveyed that original petitioner i.e. original opponent is willing to justify every entry in the account by supporting documents and as such, 21 days time was given. Now, at this stage also, in fact no reply is submitted by the appellant company.
[5.2] Mr. Vakil, learned advocate has further submitted that thereafter when an affidavit-in-reply has submitted to the Company Petition yet another opportunity was available to the Page 17 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 company to clarify the factum of payment but the assertions which are made in the reply clearly indicates that defence is tried to be taken clearly inconsistent with the reply to the notice and as such, at this stage also, no genuine defence is taken. In fact, a defence is tried to be raised to the effect that the statement of account prepared by original petitioner company is not genuine but in fact there is no material and just a bald assertion that payment has been made to each of the invoices. For the first time a defence is tried to be created that numbers of disputes such as the quality, price, timely shipment, damages, demurrages etc. are involved in the present case which was never the case prior in point of time but still by raising this, a submission is made that proper course is to file a Civil Suit for recovery at the best. A clear assertion is made in this affidavit so on 11.03.2015 by submitting that respondent company i.e. present appellant is running profit making unit and also paying all other statutory dues, commercial liability etc. without any default and therefore it may not be said that the company is not above to pay its dues and as such winding-up proceeding is not a answer. But this averment, made on oath, is false and Page 18 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 frivolous and made with an intent to misguide the Court. In fact, according to Mr. Vakil, learned advocate, as on that day, when the affirmation of affidavit took place, the State Bank of India was already after the appellant company which had already issued Notice under Section 13(2) of the Securitization Act on 18.05.2015 not only that but even original application was also submitted by State Bank of India against present appellant before the Debt Recovery Tribunal, Ahmedabad which was numbered as O.A.No.433 of 2015 and as such a clear misstatement on oath is made by appellant company to misguide the Court. All these issues have been examined by learned Single Judge at great length and thereafter the order impugned came to be passed and as such there is no irregularity, no perversity, nor manifest error reflecting from an order which may be interfered with and as such this possible view, which has been taken by the learned Company Court, may not disturb in the absence of any distinguishable material. [5.3] Mr. Vakil, learned advocate has then taken the Court to yet another assertion of the appellant company that to M/s. Unisilk Limited the payment has already made somewhere in Page 19 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 the months of March and July, 2013 but had that been so when they received the statutory notice on 01.04.2014, the normal reaction would be to contend that payment has already been made but this unnatural behaviour of not disclosing the fact of payment even if raises serious doubts and as such also, the learned Single Judge has rightly appreciated and thereby passed an order. Looking to the invoices and the particulars contained therein, it is quite clear that the defence tried to be raised is not a genuine one and there is clearly not only inability but neglect of payment of the amount which would clearly attracts the ingredients of Sections 433 and 434 of the Act and as such a conjoint effect of material on record would indicate that a futile attempt is made to divert the attention from the core issue. By filing further affidavit, the opponent company has also submitted details with regard to the State Bank of India since that was stand taken by appellant company that no statutory dues of any authorities are pending but then this is misguiding in assertion is clearly refuted by the further affidavit which has been filed on 15.07.2016. So considering overall material on record and according to Mr. A. S. Vakil, learned Page 20 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 advocate, the order is a well reasoned order after due consideration to the relevant material on record and after critical analysis of stand of either side only thereafter an order is passed which in no uncertain term can be said to be either suffering from vice of perversity or material irregularity in any manner.
[5.4] From the chart submitted by Mr. S. N. Soparkar, learned senior advocate appearing for the appellant, it has been pointed out by Mr. A. S. Vakil, learned advocate for the opponent that invoices which are reflecting of M/s. Unisilk Limited the payment consideration was CAD i.e. Cash Against Delivery and if the date of invoices to be compared with the remittance date given by the present appellant, it would clearly indicate that the payment upon delivery has not been made or affected by the appellant and therefore, this self contradictory factum which is reflecting would clearly indicate that defence is not appearing to be genuine and the same will be examined at an appropriate stage since the main Company Petition is already admitted and awaiting appropriate adjudication on merit in accordance with law.
Page 21 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [5.5] Apart from this there is no material except this remittance date given by the appellant that actual payment has been made and if the delivery has taken place through M/s. Unisilk Limited some amount by way of either commission or anything also must have been paid but that is also completely lacking in the stand of the appellant and as such the main matter since awaiting final disposal requires to be considered in its true latter and spirit. Mr. Vakil, learned advocate with a view to substantiate his submission has further submitted that there is no iota of evidence with regard to the mutual arrangement which has been tried to be projected to avoid the responsibility and there is no material worth the name about so called mutual arrangement and the said mutual arrangement is also not evidently reflecting from material on record or from even conduct of either party and as such this defence which has been tried to be projected is a sham and without any substance which cannot be said to be a genuine defence and therefore, the learned Company Judge has rightly exercised the discretion and this possible view on the very same material may not be substituted since this being an appeal under Section 483 of the Act. Page 22 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [5.6] Mr. Vakil, learned advocate has further submitted that it is trite law that while exercising appellant jurisdiction, a possible view or a batter view may not be substituted and the view taken by the learned Single Judge deserves no considerations in the absence of any distinguishable material and as such has requested that this being an appeal, the stand may not be entertained as already been examined by the learned Single Judge. Hence, appeal being meritless, the same deserves to be dismissed.
[5.7] At this stage, Mr. Vakil, learned advocate has placed reliance upon few decisions delivered by the various Courts and the same are as follows and these decisions will be dealt with at an appropriate stage in the present order:-
(i) Madhur Food Refrigeration versus Roadmaster Foods Limited reported in 1998 SCC OnLine P & H 500.
(ii) Calcast Ferrous Limited versus SRC
Steels Pvt. Ltd reported in 2017 SCC OnLine
Calcutta 135.
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(iii) Venkatesh Coke and Power Ltd. versus
Simplex Concrete Pils (India) Ltd. reported in 2004 (78) DRJ 567.
(iv) Nirmala Devi Saraf versus Maheshwary Ispat Ltd. reported in 2014 SCC OnLine Calcutta 22752.
(v) Bhavana Infra Projects Pvt. Ltd. versus Bagpet Paper Pvt. Ltd. reported in 2019 SCC OnLine Gujarat 4342.
(vi) Shital Fibers Ltd. versus Indian Acrylics Limited reported in 2021 SCC OnLine SC 281.
(vii) J.P.Srivastava and Sons (Rampur) Pvt. Ltd. versus Gwalior Sugar Company Limited reported in 2004 (0) AIJEL-SC 12182.
[6] Having heard the learned advocates appearing for the respective parties and having gone through the material on record, few circumstances deserve to be noted while coming to an ultimate conclusion in the present matter. [7] First of all the transaction with regard to the supply of Page 24 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 goods is not in dispute. Further in response to the statutory notice which has been given by the respondent company to present appellant except general denial, factum of payment to M/s. Unisilk Limited is not asserted at all. Even at the stage when another communication was sent to clarify and to make the payment vide communication dated 10.04.2014 through the advocate has not been responded to. So immediate natural reaction is completely missing in the stand of present appellant company when they had a clear opportunity to clarify that payment with respect to seven invoices was already made to M/ s. Unisilk Limited.
[8] Further the invoices if to be looked into which indicates that one of the terms of delivery and payment is CAD i.e. Cash Against Delivery and these invoices and the date of remittance by appellant company to M/s. Unisilk Limited if to be compared, the same is not matching. These invoices can be seen from page Nos. 61 and 88 etc. and as such the stand has not been accepted by the learned Company Court while passing the order of admission of a Company Petition.
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C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [9] In addition to this, as a part of later defence which is tried to be projected that there was an oral understanding in the form of agreement as to in what manner the goods to be supplied. Now this defence which is tired to be projected about oral arrangement is not appeared to be genuine enough even by the Company Court while passing the impugned order and that in view of the fact that the said stand was not supported by the documentary evidence or even by attendant circumstances. [10] Yet another circumstance which was initially mentioned at the stage when the reply came to be filed as indicating in paragraph 4, the petitioner failed to supply the items as per the standard quality but on account of business relation with the petitioner, the respondent could sell those standard items by reducing price. In fact, this was never the subject matter of controversy nor the material substantiating the same and as such this version which has been tried to be projected was not found favour with the appellant company even by the learned Single Judge.
Page 26 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [11] The most material on record is that at the initial stage appellant company came out with a stand that there is no other statutory liability or responsibility is outstanding by virtue of which it can be informed that company has not able to pay its dues but the said fact if to be perused the company is facing a rough financial weather. On the contrary, the State Bank of India has already initiated the proceeding in the form of original Application No.433 of 2015 against the appellant company and prior to it not only the notice was issued under Section 13(2) of the Securitization Act but the possession notice was also issued on 18.05.2015. Of course, the aspect about this liability of State Bank of India is tried to be clarified but it is culled out from the record that the stand that there is no statutory liability is ill- founded from the record. The original application which has been attached on page 144 being O.A. No.433 of 2015 the outstanding amount indicated therein has also got its preface. The enforceable and equitable mortgage which was created was that of 30.08.2010 and the liability was already acknowledged by executing a Revival Letter on 11.09.2013. Be that as it may, the said circumstance may not relate to the respondent Page 27 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 company but nonetheless the stand taken by the appellant company is quite in conflict with the relevant record and as such a conjoint effect of this record has led the learned Company Court to pass an order as defence is not found to be worthy of acceptance.
[12] In addition to it, in affidavit-in-rejoinder of the original petitioner there was a clear dispute with regard to the payment having been made even to M/s. Unisilk Limited in respect of seven invoices which were mainly the subject matter which led the original petitioner to submit the petition for winding-up. The appellant company had only produced copies of invoices containing the very same description, very same quantity, very same rate and value of good supplied and by creating such defence on the contrary he was found to be a fabricated and got up material an collusion with M/s. Unisilk Limited and this aspect has also been gone into examined by the learned Company Court. In fact, in paragraph 4(ii) on page 49, it was clearly asserted that appellant company has conveniently not chosen to annex its purported Invoice No.10019 and out of the Page 28 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 other six invoices annexed to the reply only one invoice i.e. Invoice No. 000020 is used by M/s. Unisilk Limited, Hongkong whereas remaining five invoices, namely, Invoices No.10022, 10021, 10020, 10033 and 10043 are issued by M/s. Unisilk Limited, Dubai. It appears that M/s. Unisilk Limited, Dubai as also M/s. Unisilk Limited, Hongkong are said to be associate companies of present appellant company since original petitioner was instructed by the appellant respondent company itself to mention the name of M/s. Unisilk Limited as "Notify Party" in the shipping document and Notify party is a party, whom the carrier is supposed to notify regarding the arrival of the Vessel. The Notify Party is then responsible for arranging the arrival formalities of the Vessel. As such, a conjoint effect of such issue has been explained to be prima facie not the invoices genuine enough on the contrary, fabricated and got up documents not relevant to the determining the liability of present appellant company to the original petitioner and then by explaining each of the invoices, a stand was taken that defence raised by the appellant company in the original proceeding is prima facie found not genuine and after considering these Page 29 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 issues at great length, the learned Single Judge has found not in favour of the appellant company and the detail conclusion based upon critical analysis of material on record is an example of clear application of mind while taking such a course against the appellant and as such the Court deems it proper to refer to the said conclusion arrived at by the learned Single Judge i.e. Company Court while passing the order impugned:-
"21. From the submissions advanced by learned counsel and the material on record, there does not appear to be any dispute regarding the fact that business transactions did took place between the petitioner and the respondent-Company for which certain payments had to be made by the respondent - Company. In that sense, by the therefore, there is no denial by the respondent- Company regarding the dues to be paid to the petitioner in respect of the transactions referred to in the petition. The stand that is now being adopted by the respondent- Company is that the payments due to the petitioner were made by the respondent-Company to M/s.Unisilk Limited and it was for M/s.Unisilk Limited to have further transmitted those payments to the petitioner.
22. It may be noted that the petitioner has mentioned the details of the payments due to it in the statutory notice by annexing the Statement of Account, detailing the the relevant invoices. In its reply to the statutory notice dated 05.04.2014, the respondent-Company has only Page 30 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 stated that the allegations against it are not specifically admitted by it and that the petitioner has not given a correct version of facts and the notice is vague. It is further stated that the notice is concocted and fabricated and is, therefore, disputed and not accepted by the respondent Company. There is no denial in the said reply, of the transactions between the parties or the payments due to the petitioner-Company on account of those transactions. Nor has it been stated that the respondent- Company has already made the payments to M/s.Unisilk Limited, for further onward transmission to the petitioner. The stand now being taken by the respondent-Company in the oral submissions and the pleadings before this Court is, therefore, at divergence with the stand taken in the statutory notice.
23. The respondent-Company claims to have a turnover of rupees one hundred crores in the year 2014-
15. Though no balance-sheet or other documents are produced to substantiate this claim of the respondent- Company, even if the statement of the respondent- Company is taken at its face value, one would expect that a Company with such a huge turnover would, at least, put into writing any agreement for payment of dues involving a huge amount between it, the petitioner and M/s.Unisilk it, Limited, into writing. No such agreement has been produced before this Court to substantiate the claim of the respondent-Company, that it was mutually agreed between it, and the petitioner that the dues for the goods received directly by the respondent from the petitioner would be made to M/s.Unisilk Limited, which would, in Page 31 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 turn, transmit the payment to the petitioner. Where commercial transactions of such huge proportions are involved, it is difficult to believe that there was a mutual oral agreement to this effect between the parties. Even if that had been the case, the respondent-Company would have adverted to this aspect in its reply to the statutory notice, which has not been done. The entire defence of the respondent-Company, therefore, rests on the so-called mutual agreement between it, the petitioner and M/s.Unisilk Limited. There is no communication or document of M/s.Unisilk Limited to the effect that such an agreement took place and that it was acting as a conduit for payments between the respondent-Company and the petitioner.
24. Insofar as the genuineness and authenticity of the invoices produced by the respondent-Company is concerned, this Court would not, at this stage, advert to the said issue. However, it does appear from the material on record that the respondent-Company is indebted to the State Bank of India and public notices have been issued by the said Bank to this effect in addition to proceedings being launched under the SARFAESI Act and RDDB Act. In this background, the bald assertion on the part of the petitioner that the respondent-Company is capable of discharging its liabilities, prima-facie, rings false.
25. The aspect that certain dues of the other creditors amounting to rupees fifteen to fifty lakhs have been paid by the respondent-Company would not detract from the fact that it is unwilling, or unable, to pay the dues of the petitioner-Company.Page 32 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
26. One more glaring aspect is that, though the respondent-Company claims to have a turnover of rupees one hundred crores in the year 2014-15, it has not produced any documents to this effect on the record of the petition. Moreover, there is no material on record to show that the respondent-Company has filed its annual financial statements for the financial year 2014-15 on the for portal of the Ministry of Corporate Affairs, as required.
27. In the above background, on the basis of the material on record, the petitioner has succeeded, in prima-facie establishing its case, especially, as the respondent-Company has not denied that it was liable to make the payment for the goods supplied by the petitioner which, according to it, was made to M/s.Unisilk Limited.
28. Considering all the above aspects and as no material has been produced on record substantiating the claim of the respondent-Company regarding the mutual agreement between the parties to make the payment through M/s.Unisilk Limited, in the view of this Court, the petition deserves to be admitted."
[13] In view of aforesaid background of fact and the conclusion arrived at by the learned Company Court and attempt which has been made substantially would indicate that payment has already made by the appellant company to M/s. Unisilk Limited and the original petitioner has to ponder after M/s. Unisilk Page 33 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 Limited for reimbursement is a defence, was not acceptable by the learned Single Judge and as such on the basis of very same material and in the absence of any distinguishable material, the appellate court is not in a position to substitute the said possible view which has been taken by the learned Single Judge. On the contrary, the conclusion arrived at by the learned Single Judge is a probable and possible view of the material on record and the very fact that remittance dates and the delivery of goods are not matching clearly since the terms of the payment of Cash Against Delivery, this Court is not in a position to safely conclude that defence projected by the appellant company in the Company Petition is genuine and the worthy of acceptance to drag the original petitioner to an ordinary Civil Suit for the recovery of money or to ventilate the grievance. Hence, we are not in a position to interfere with the conclusion arrived at by the learned Single Judge and the impugned order cannot be said to be suffering from either material irregularity or patent illegality or the conclusion is not in a position to be branded as perverse. Hence, that be so, the appeal lacks merit. Page 34 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 [14] In the light of aforesaid situation which is prevailing on record, the judgments which have been cited by the Mr. Soparkar, learned senior advocate appearing for the appellant company on the issue of exercise of jurisdiction in winding-up proceedings no doubt the principles propounded therein are not in dispute but in a situation like this, peculiar in nature on record of the case, we are unable to apply the said principles as a straitjacket formula. Had there been any substantial genuine dispute which has not been found by the learned Single Judge and it is difficult for this Court to disturb the finding based on material on record and come to a different conclusion. The conduct, material, invoices and the terms contained therein and absence of the natural reaction and self contradictory stand taken by the appellant company right from the stage of reply to the first notice, it appears that the dispute raised deserves adjudication as defence is not found to be substantial in nature with regard to liability and it is said that the defence must be substantial one and not mere moonshine. Had there been any bona fide dispute with regard to liability, the court would have considered the stand but the facts and the material on record Page 35 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 are quite clear wherein defence raised is not possible to be worthy of acceptance and it is also not possible to conclude that a petition for winding-up is a mode adopted to pressurize to make the payment. Hence, in the absence of these elements, the ratio laid down by the decisions cited by learned senior advocate for the appellant are not of any assistance to the appellant company.
[15] Mr. Soparkar, learned senior advocate has then made a valiant attempt to persuade us by yet another decision delivered by Gujarat High Court in case of Polyrec Processors Pvt. Ltd. (supra) in which it has been propounded that in a winding-up proceedings a Company Court cannot be reduced as a debt collecting agency or as a means of bringing improper pressure on the company to pay a bona fide disputed debt and for that purpose, reference is made to paragraph 18 of the said judgment. But here in view of the inconsistent stand and in view of uncorroborated defence which is tried to be projected, we found that the ratio laid down by the said decision is in a different background of facts which may not be possible to be Page 36 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 applied here as straitjacket formula. We are conscious about the fact that winding-up proceedings cannot be allowed to be used as a lever to utilize as a recovery proceedings but then we are unable to come to a definite conclusion when facts are very peculiar in nature on the case on hand and as such the stand of the learned senior advocate for the appellant is not possible to be accepted.
[16] No doubt a litigant can take an alternative plea or inconsistently as well but then the natural reaction to meet and response is also a relevant circumstance which cannot be ignored as has been visible from the present case on hand. Hence, taking the circumstances prevailing on record on overall consideration, we are of the view that appeal filed by the appellant company is not possible to be entertained. [17] At this stage, while going through each of the decisions cited by learned senior advocate for the appellant, as narrated above, few decisions which are also brought to the notice of us by Mr. A. S. Vakil, learned advocate appearing for the respondent company are also taken into consideration and Page 37 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 having gone through, we found that stand taken by the appellant company is consistently in consistent and an attempt is made to divert the attention and as such keeping the said circumstances on record, we are of the opinion that the judgments cited by learned senior advocate are of no assistance to appellant.
[18] Principle is vogue in respect of winding-up issue that the principles on which the Court acts are firstly that the defence of the company is in good faith and one of the substance and secondly the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. That principle has been laid down in case of Madhusudan Gordhandas & Co. versus Madhu Woollen Industries reported in (1971) 3 SCC 632 which has been considered by Punjab and Haryana High Court in its decision reported in (1998) SCC OnLine Punjab and Haryana page 500 and then the stand was not accepted against the winding-up.
[19] Further the stand taken by appellant company in its reply Page 38 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 to the notice is absolutely vague and in general form whereas later on the stand which has been tried to be taken is scrutinized by the learned Single Judge and found to be not worthy of acceptance and as such the said defence was appearing to be not bona fide and just with a view to avoid the liability and in paragraph 8 of the decision delivered by the Calcutta High Court in case of Nirmala Devi Saraf (supra) appears to be relevant to the issue.
[20] Yet another decision which has been tried to be pressed into service by Mr. A. S. Vakil, learned advocate in case of Bhavana Infra Projects Pvt. Ltd. (supra) wherein also in paragraphs 15 and 16 various judgments have been considered and then having found no valid defence, the petition was admitted. The said observations contained in paragraphs 15 and 16 are reproduced hereunder:-
"15. In view of this above facts, in my opinion, the judgement relied upon by learned advocate Mr.Mehta in the case of Oswal Machinery Ltd. (supra) would cover the present case. Relevant paragraphs of the said judgement, read as under:Page 39 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 "14. The position with reference to the disputed claim is considered by the Apex Court in case of IBA Health (India) Private Limited reported in (2010) 10 SCC 553. The Apex Court has, observed thus:
"20. The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt."
(emphasis supplied) 14.1. The Apex Court has, in the aforesaid case of IBA Health (India) Private Limited (supra) also observed that:
"31. Where the company has a bona fide dispute, the petitioner cannot be regarded as a creditor of the company for the purposes of winding up. "Bona fide dispute" implies the existence of a substantial ground for the dispute raised. Where the Company Court is satisfied that a debt upon which a petition is founded is a hotly contested debt and also doubtful, the Company Court should not entertain such a Page 40 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 petition. The Company Court is expected to go into the causes of refusal by the company to pay before coming to that conclusion. The Company Court is expected to ascertain that the company's refusal is supported by a reasonable cause or a bona fide dispute in which the dispute can only be adjudicated by a trial in a civil court."
(emphasis supplied) 14.2. Thus, the Court is required to decide whether the grounds of defence are substantial or not and they do not "consist of some ingenious mask invented to deprive a creditor and is not a mere wrangle".
14.3. The company Court is also expected to go into the causes of refusal by the company and to also ascertain that the refusal is supported by a reasonable cause or a bonafide dispute.
15. When the question of examining the defence on the ground that the claim is disputed arises and it becomes necessary to determine whether the dispute is bonafide and substantial or not, then, in view of this Court, one of the tests is to find out as to whether the dispute was raised contemporaneously (i.e. immediately when the ground or cause of dispute allegedly arose)or not; or the dispute came to be raised only when the demand for payment came to be made or the statutory notice came to be served and whether it is in nature of afterthought? 15.1. If it emerges from the facts that the grounds on which the defence is raised and the claim is being disputed were never raised at the relevant Page 41 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 point of time and/or until the demand came to be raised or statutory notice came to be served and then suddenly the dispute is raised for the first time upon claim being pressed and upon service of notice, then such belated dispute may, in the facts of the case and in light of the conduct of the parties, lead the Court to the belief that the dispute and defence which are raised for resisting the petition and the order of admission are raised by way of afterthought.
15.2. The grounds of dispute should not, as observed by the Apex Court, "consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle".
16. So far as judgement rendered in the case of Tata Iron and Steel Company (supra) is concerned, Division Bench has examined the defence raised by the respondent company in that case, which suggests that several correspondences have taken place between the parties about change of nature of contract and came to the conclusion that there was valid defence and therefore, company petition was not entertained. The decision dated 06/11/2017 rendered by Division Bench of this Court in the case of Vinayak Projects (supra) would not be applicable to the present case as in that case, the company petition with regard to poor workmanship was filed. Facts of the case of Mediquip Systems (P) Ltd. would not be applicable since there were several suits between the parties and Page 42 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 subsequently company petition was filed. Facts of the present case are different than the facts of aforesaid cases. Hence, this petition requires consideration. Therefore, this Court is inclined to admit this petition. However, the Court considers it appropriate that before making order admitting the petition and permitting publication of advertisement it would be in fitness of things and also appropriate to grant an opportunity to the respondent company to deposit the remaining amount with regard to the invoices raised by the petitioner before this Court. Hence, following order is passed:
"Respondent company is granted time of four weeks from the receipt/ service of a copy of this order. The Court will consider the petitioner's request for order or admission and publication of advertisement on or before 18/12/2019."
[21] With regard to the quality of goods which was raised as a stray reference in reply is also not the defence to be taken into consideration as except bald assertion there is no relevant circumstance projected which may persuade us to accept the said stand. Considering thereafter yet another decision of the Hon'ble Apex Court in case J.P.Srivastava and Sons (Rampur) Pvt. Ltd. (supra), we are of the opinion that the defence which is tried to be projected as if full payment is made to meet with the liability of the respondent company is not digestable even from chronology of events. Had there been any such circumstance Page 43 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 sufficient to corroborate, the oral arrangement which has been tired to be projected, the Court might have even thought it fit to examine further but in the absence of any other corroborative material it is not possible for this Court to dislodge the conclusion arrived at by the learned Single Judge sitting in an appeal on the basis of very same circumstance more particularly when the order does not suffer from any perversity or material irregularity.
[22] Considering the aforesaid facts situation which are prevailing on record, we are of the opinion that present appeal lacks merits does not deserve to be entertained. Accordingly, same stands dismissed. Notice is discharged. Interim relief, granted earlier, stands vacated forthwith. [23] All pending applications stand consigned to records.
Sd/-
(ASHUTOSH SHASTRI, J.) Sd/-
(J. C. DOSHI, J.) DHARMENDRA KUMAR Page 44 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023 C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023 Further order After pronouncement of judgment, Mr. Amit Thakkar, learned advocate appearing for Mr. Mrugen Purohit, learned advocate for the appellant has submitted that interim relief in the present proceeding is operative since the year 2016 and as such with a view to avail appropriate remedy before higher forum, said interim relief may be extended for some reasonable time. Though, it is formally objected by Mr. A. S. Vakil, learned advocate appearing for opponent but we deem it proper to extend interim relief only for a period of FOUR WEEKS since same is continuing right from the year 2016.
Sd/-
(ASHUTOSH SHASTRI, J.) Sd/-
(J. C. DOSHI, J.) DHARMENDRA KUMAR Page 45 of 45 Downloaded on : Thu Apr 27 20:33:23 IST 2023