Andhra HC (Pre-Telangana)
Color Coats, Sultan Bazar, Hyderabad vs Venkataramana Hotels Ltd, Banjara ... on 11 February, 1998
Equivalent citations: 1998(2)ALD496, [1998]94COMPCAS630(AP), AIR 1999 ANDHRA PRADESH 16, (2001) 2 BANKCLR 674, (1998) 94 COMCAS 630, (1998) 2 ANDHLD 496, (1998) 2 ANDHWR 62
ORDER
1. This is an application under Section 433E and 434(1)(A) read with Section 439 of the Companies Act, 1956 for winding up the respondent-company.
2. The admitted facts in short are that the petitioner company carries on the business of painting work and at the request of the respondent company it had done painting work amounting to Rs. 16,91, 167-42 ps. and the respondent company paid an amount of Rs.12,53,634.98 ps. in 25 installments.
3. The case of the petitioner company in brief is that on 11-5-1991 the respondent company had paid a sum of Rs. 50,000/-and thereafter it did not pay any amount. Therefore, on 21-9-1991 the petitioner company sent a letter demanding the outstanding amount, to which the respondent company replied vide tetter dated 21-10-1991 that within a months time the claim would be settled. Again on 25-10-1991 and on 13-1-1992 demands were made through demand notices. But the respondent company did not reply. Therefore, on 12-8-1994 the petitioner company sent a statutory notice demanding Rs.4,37,532-44 ps. This notice was neither replied nor complied. Therefore, the petitioner - company demands that the respondent company should be wound up.
4. The respondent company denied the allegations and alleged that on 16-3-1987 an amount of Rs. 15,000/- was paid through cheque. Similarly on 14.4.1988 an amount of Rs.1,00,000/- was paid through cheque. On 16-4-1988 another amount of Rs.50,000/- was paid through cheque. In addition to this amount of Rs. 1,65,000/-, the respondent company had also paid from time to time an amount of Rs.2,100/-, 60,000/, 10,000/-, 15,000/- and 29,000/-. If further submitted that work amounting to Rs.26,913/- was done by other company and not by the petitioner company. Thus according to the respondent company nothing remained to be paid as on 23-3-1991 and therefore, the petition is liable to be dismissed. It also alleged that the claim is barred by limitation, because the petition has been filed beyond the period of three years therefrom, and the letter dated 21-10-1991 is not an acknowledgment of debt. It lastly urged that no statutory notice as required under Section 434 of the Indian Companies Act was ever served on the respondent company.
5. I will consider the last objection first. On perusal of the letters dated 12-8-1994 it appears that the demand for payment of Rs.4,37,532-44 Ps. has been made being the outstanding amount of painting charges and it was further requested that the amount should be paid within a period of 15 days. Under Section 434 of the Indian Companies Act, only a demand is to be made for the debts due, and in case the payment is not made within a period of three weeks from the date of receipt of notice it is to be presumed that the respondent company is unable to pay the dues. The notice may be sent under registered cover with acknowledgment due and it should be signed either by the creditor or his agent or his legal advisor. It is not the requirement of Section 434 of Indian Companies Act that it should be necessarily be mentioned in the notice that in the event of non compliance the creditor will take steps to apply for the windingup. It is also not necessary that the notice should specifically mention that it is sent under Section 434(1)(A) of the Companies Act. No form is prescribed for sending the notice under Section 434 of the Indian Companies Act. Under these circumstances, it is difficult to accept the submission of the learned Counsel for the respondent company that the notice is invalid merely because it does not contain any indication that in the event of default the petitioner company would take action under Section 433 of the Indian Companies Act. It does not appear that notice under Section 434 is a condition precedent for initiation of action under Section 433 of the Indian Companies Act.
6. The second objection of the respondent company is that the claim is barred by limitation. Admittedly, the last payments was made on 11-5-1991 for an amount of Rs.5p,000/-. Thus the claim becomes barred by limitation on 11-5-1994. The petition has been filed on 19-10-1994. The petitioner company claims that through letter dated 21-10-1991 the respondent company has requested a months time to settle the claim. This was done before the expiry of three years and this amounts to an acknowledgment of liability and therefore, it has extended the period of limitation.
7. On 21-9-1991, the petitioner company has demanded an amount of Rs.4,37,532.44 ps. alleging that against the outstanding debt of Rs, 16,91,167.42 the respondent company had paid only an amount of Rs.12,53,634.98 ps. In answer to notice on 21-10-1991 the respondent company had replied that the staff Engineers were away from Hyderabad and therefore, they are unable to confirm the balance amount of Rs.4,37,532.44 ps. and had requested for a months time to arrive at the correct sum of rupees due to the petitioner company and settle its claim as early as possible.
8. It is held in Shapoor Freedom Mazda v. Durga Prosad Chamaria, which is extracted here under:
"It is thus clear that acknowledgment as prescribed by Section 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the Court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally Courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or farfetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in Section 19, and there is really no substantial difference between the parties as to the true legal position in this matter.''
9. Testing the facts of the case on the principle laid down in Shapoor Freedom Mazda v. Durga Prosad Chatwria (supra) it is revealed that the respondent company while accepting the jural relations of debtor and creditor has accepted its liability to pay the amount subject to verification by the staff Engineers who were then not available in Hyderabad. On fair construction of the contents of the letter in the light of the above circumstances it appears that the respondent company has admitted that it has to pay substantial amount against the bill by the petitioner company. The petition has been filed ^ within a period of three years from the acknowledgment of liability through letter dated 25-10-1991 and therefore, it cannot be said that the claim is barred by limitation and therefore, the second objection raised on behalf of the respondent company is also rejected. It is pertinent to note that in the reply affidavit the petitioner company has admitted that it had received an amount of Rs.15,000/-through cheque dated 16-3-1987, an amount of Rs. 1,00,000/- through cheque dated 14-1-1988 and Rs.50,000/- through cheque dated 16-4-1988, in total an amount of Rs. 1,65,000/-. It is alleged that these payment were brought to light on the security of the entire records and therefore the amount of Rs. 1,65,0007- should be deducted from Rs. 44,37,532.44 and balance of Rs.2,72,532.42 ps. is yet to be recovered.
10. In the light of the admission made by the petitioner company that it has failed to adjust an amount of Rs. 1,65,000/- though paid in three installments through cheques, the defence of the respondent company that it has repaid the balance amount also appears to be a bona fide dispute. It has alleged that through cheque dated 16-3-1987 an amount of Rs.2,100/- had been paid. Similarly, on 10-1-1991 an amount of Rs.60,000/-through cheque had been paid. The last payment of Rs. 29,000/- was paid through cheque dated 6-1-1992 and an amount of Rs. 15,000/- was paid by hand through two receipts. He has also filed the receipts. Whether the person who has signed the receipt was authorised by the petitioner-company to accept the payment or not is a disputed question of fact. In the statement of accounts prepared on 4-2-1992 by the Bank of the respondent-Company, a debit entry of Rs.29,000/- is shown under the head 'particulars' paid to the petitioner-company. Whether the cheque was encashed by the petitioner-company or not is a debatable question which can be decided only on assessment of the oral and documentary evidence to be filed on record. The allegation of the petitioner-company that certain amounts were paid by the respondent-company, for the work done for the residential accommodation, of its Managing Director, is also a disputed question of fact. The aforementioned disputed questions of fact cannot be decided until oral evidence is recorded during trial.
11. For the reasons stated above, I reach the conclusion that there is a bona fide dispute regarding the claim of the petition-Company that an amount of Rs.2,72,533.42 ps. is recoverable from the respondent- Company. The bonafide dispute regarding the liability of the respondent-Company can be decided only in the Civil Court after full trial. There is also no material to infer that the respondent- Company had become commercial insolvent
12. In the result, the Company petition is dismissed at the admission stage itself However, in the circumstances of the case, I leave the parties to bear their own costs.