Punjab-Haryana High Court
Luxmi Industrial Gases Private Limited vs Punjab Chemi Plant International Ltd. on 19 November, 1998
Equivalent citations: [2001]103COMPCAS429(P&H)
Author: Swatanter Kumar
Bench: Swatanter Kumar
JUDGMENT Swatanter Kumar, J.
1. It is the case pleaded by Luxmi Industrial Gases Private Limited that Punjab Chemi Plant International Limited (hereinafter referred to as the respondent-company) is liable to be wound up, as it is unable to pay its debts. To fortify its claim, it is averred in the petition that upon the confirmed orders of the respondent-company various items in relation to erection of power plant undertaken by the respondent-company were supplied at the sites in district Murshidabad (West Bengal) and Kahalgaon, district Bhagalpur (Bihar). The project manager of the respondent-company Shri B.K. Bose is stated to have issued a certificate dated January 15, 1996, a copy of which is annexed to the petition as annexure P-1, that the respondent-company was liable to pay a sum of Rs. 2,15,873. While on account of supplies made at Bhagalpur (Bihar), the petitioner relies upon annexure P-2 annexed to the petition, a statement of reconciliation which has been signed by the representative of the respondent-company, i.e., Mr. M. Pahari and Mr. Sarvan Singh, project manager and site in-charge, wherein it is stated that supplies to the extent of Rs. 13,75,628.66 ps. were received by the respondent-company and that amount is payable to the petitioner. Vide letter dated July 4, 1996, issued by the vice president (project) of the respondent-company, a copy of which is annexed to the petition as annexure P-6, the respondent-company had agreed to the make the payment in the following manner :
"Date, amount to be paid on July 10, 1996, Rs. 3 lakhs ; August 10, 1996, Rs. 3 lakhs ; and September 10, 1996, Rs. 3 lakhs. The balance payment of Rs. 4,5 lakhs was promised to be paid in five monthly instalments thereafter."
2. In furtherance of this, only Rs. 2 lakhs was paid by the respondent-company on July 26, 1996, leaving balance of Rs. 11,75,628.66 ps. excluding interest at 24 per cent. per annum. It is also stated that in spite of various reminders, even this payment has not been released. The petitioner-company claimed to have supplied more material worth Rs. 45,744.07 ps. to the respondent-company at Kahalgaon project against bills. The petitioner-company, therefore, claimed the following amounts from the respondent-company :
"That the total amount due from the respondent-company to the petitioner-company as on date is :
(Rs. P.) (A) Farakka project balance outstanding (as detailed in para. 5 above) 2,15,873.00 (B) Kahalgaon project (as detailed in para 6. above) 11,75,628.66
(i) Balance amount after reconciled and accepted by respondent officials at Kahalgaon site as on March 31, 1996 13,75,628.66 Received on July 26, 1996 2,00,000.00 11,75,628.66
(ii) Supplies made during April 30, 1996, to November 30, 1996, as detailed in para. 7 above.
45,744.07 Total 14,37,245.73
3. Thereafter, the petitioner served a notice under Sections 433 and 434 of the Companies Act, 1956, on October 10, 1997, copy of which is annexed as annexure P-19 to the petition, which was sent by registered acknowledgment due as well as under certificate of posting. In spite of due service of the notice on October 13, 1997, as is clear from the copy of annexure P-21 annexed to the petition, the respondent-company has failed to pay the dues of the petitioner, thus compelling the petitioner to approach this court by means of the present petition.
4. Notice to show cause why the petition be not admitted was issued by the court on January 16, 1998. On February 27, 1998, learned counsel appeared for the respondent-company and sought time to file reply. The petition was contested by the respondent and a detailed reply was filed.
5. In the reply/written statement filed on behalf of the respondent-company, it is contended that the winding up petition is not maintainable and even requisite notice under Section 434 of the Companies Act has not been issued in accordance with law. On the merits, it was stated that there were transactions between the petitioner and the respondent-company but disputes have been raised with regard to the rates. It is stated that the petitioner-company increased the rates unilaterally and, therefore, the said rates were not payable. A statement of variation in rates of supply has been filed on record as annexures R-2 and R-3 by the respondent-company. On these controversies, it is stated that as the amount is seriously disputed, the winding up would not be appropriate remedy to be invoked by the petitioner-company. While admitting the transactions and maintenance of the running account between the parties, the petitioner-company has denied the fact that Mr. B.K. Bose was the technical consultant and could at all verify the statements on behalf of the respondent-company. Similar stand is taken with regard to the averments made in relation to annexure P-6. It was stated that annexure P-6 is not a correct document and its original should be ordered to be produced in the court.
6. Replication was filed to the reply/written statement reiterating the stand taken in the main petition. During the course of hearing, original documents including the original of annexure P-6 were produced in the "court.
7. There could be no dispute as to the legal proposition that the disputed questions requiring detailed and varied evidence may not be gone into by the company court while entertaining the petition for winding up of a company, as it could not be treated as an alternative for a regular suit but it is an equally well-settled principle of law that the defence of the respondent-company including in relation to the maintainability of the petition must be bona fide and should not be an effort to mislead the court by mere denial or giving an improbable story for the purposes of evasion of its liability. In the present case, the respondent-company has not disputed that they were dealing with the petitioner-company at both their sites as indicated in the petition and materials were supplied by the petitioner-company. The basic dispute is as to the rates and settlement of the account, which was admittedly a running account. As such all the stands of the respondent-company have to be seen in the light of the basic admitted facts. In this regard, reference to the following portions of the written statement filed on behalf of the respondent-company would be relevant :
"However, a running account was being maintained and the respondent-company has been making the regular payments to the petitioner. Shri B.K. Bose was never authorised nor has he admitted the outstanding balance as it was never due. The respondent-company has been maintaining a joint account for both the sites for the material supplied by the petitioner-company and there was no question of the account being separately maintained and due payments had been made to the petitioner-company. It is also clear from the subsequent communication addressed to the respondent-company that the accounts had never been settled.
It is submitted that the petitioner-company has not stated the correct facts and even in the various communications which have been annexed with the petition various amounts have been stated to be due from the respondent-company. The accounts were not settled. The petitioner-company ought not to have rushed in filing the winding up petition. It is denied that letter dated July 24, 1997, was received by the respondent-company. It is clear that the petitioner-company has not settled the accounts with the respondent-company as they have been claiming in the various letters different amounts and had never cared to settle the matter or their outstanding with the respondent-company. Only an amount of Rs. 3.74 lakhs is outstanding as per the respondent-company. The respondent-company cannot be held liable to pay for the rental charges or the different rates that the petitioner charged and had submitted in the bills for various items. It was never agreed between the parties and the respondent had never admitted or accepted the said amount."
8. As is clear from the aforestated pleadings of the respondent-company even an amount of more than Rs. 3 lakhs is admitted but no effort whatsoever was made by the respondent-company to pay this admitted liability even during the pendency of this petition for considerable period during' which this winding up petition has been pending before this court. Reference to certain documents which have been filed would also be necessary. Vide letter dated January 15, 1996, Mr. Bose on behalf of the respondent-company had confirmed the supplies as well as the liability. Statement of amount outstanding as prepared by the petitioner dated March 31, 1996, were duly confirmed and verified by the representative of the respondent-company with the following remarks :
"Amount reconciled 13,75,628.66 (thirteen lakhs seventy-five thousand six hundred twenty-eight and paise sixty-six only).
(Sd.) By representative.
March 31, 1996."
9. Another note dated July 4, 1996, has been placed on record, which refers to the consent of the respondent-company to repay the amount to the extent of Rs. 13.5 lakhs in instalments indicated therein. The most important document is the minutes of the meeting recorded between the companies on July 15, 1996. The document mainly refers to the facts averred in the petition and as noticed above. But pertinent to note at this stage that each of the points of the meeting has been explained and affirmed in the handwriting of the representative of the respondent-company. It was clearly consented therein that the dues of the petitioner would be paid.
10. The original of the aforestated documents have been placed on record and the bare reading of these documents do not indicate any interpolation or over writing which could create a doubt as to the genuineness of these documents. The documents apparently have been executed in the normal course of business and it is primarily the difficulties of the respondent-company because of which it could not clear the dues for all this time and had been assuring the petitioner that the dues will be cleared within a short period.
11. The bona fides of the stand taken by the respondent-company are doubtful and it is clear from the record that the respondent-company on flimsy excuses is trying to evade its liability, which otherwise stands established on record. By merely averring that the case requires evidence, the company cannot be permitted to frustrate the proceedings under the Companies Act. The provisions of the Companies Act would certainly come to the rescue of the petitioner whose liability is admitted by the respondent or is established on record by documentary evidence. Lack of bona fides in the defence of the respondent-company itself is a ground for admission of the petition. In any case, the respondent-company is indebted to the petitioner to the extent of Rs. 3 lakhs which it ought to have paid without protest and demur. Admitted default of payment and lack of bona fides in the stand taken by the respondent-company would fully justify the admission of this petition.
12. The other contention raised on behalf of the respondent-company that the notice has not been served in accordance with the provisions of Section 434 of the Companies Act, is also misconceived. No doubt the notice, in question, was addressed to the managing director but as the managing director of the respondent-company. It may be true that the notice ought to be addressed to the respondent-company and not to the managing director but that would be true if the receipt of the notice on the respondent-company was not proved or not admitted. In the present case, the receipt of the notice has been duly proved. The written statement has also been filed on behalf of the respondent-company. In paragraph No. 12 of the reply/written statement filed on behalf of the respondent-company, it has been admitted that the notice was served and received by the managing director of the respondent-company. Admission of this fact cannot be ignored for the purposes of determining this controversy. Once notice is received by the respondent-company, may be through its managing director, and this fact is admitted, there would be substantial compliance of the provisions of Section 434 of the Companies Act. The notice served under Sections 433 and 434 of the Companies Act had clearly given all the facts. The period of 21 days was also specified in the notice and it was specifically averred that in default a petition for winding up would be filed. It is also not disputed in the reply that the registered office of the respondent-company is at the address, on which the notice was sent.
13. Keeping in view the aforesaid facts, I am of the opinion that a valid notice under Sections 433/434 of the Companies Act had been served upon the respondent-company and the present petition is not liable to be rejected for that reason.
14. For the reasons aforestated, I order admission of this petition. Notice be published in accordance with law in The Tribune, Jan Satta, and the Gazette of Punjab, giving 14 days clear time prior to the next date of hearing, that this petition for winding up.
15. List this matter for direction on December 16, 1998.