Calcutta High Court
Raj Engcon Projects (India) Limited vs Sahara India Finance Corporation ... on 8 June, 2007
Equivalent citations: 2007(3)CHN730
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
JUDGMENT Bhaskar Bhattacharya, J.
1. This Letters Patent appeal is at the instance of an applicant for the Judges' Summons and is directed against order dated February 20, 2007 passed by a learned Single Judge of this Court in C.A. No. 789 of 2005 in connection with C.P. No. 484 of 2004 thereby rejecting the prayer of the appellant.
2. The facts giving rise to the filing of this appeal may be epitomised thus:
(a) The respondent herein filed an application for winding up of the petitioner "company and ultimately, by an order dated July 7, 2005, P.C. Ghose, J. disposed of the said application with the following order: "Hence, it would be proper at this stage for me to direct the company to pay to the petitioning creditor the said sum of Rs. 10,00,000/- along with interest from the date of granting such loan until the application is being filed before this Court at the rate of 10% per annum and further the interest will be calculated at the rate of 8% per annum from the date of filing of this application till the date of the order and thereafter until the payments are being made by the company to the petitioning creditor, the amount shall carry interest at the rate of 6% per annum. Since the instalments have been prayed before me I direct that the company shall go on making payment at the rate of 2,00,000/-per month along with interest thereon to be calculated as stated hereinabove on the reducing balance month by month to the petitioner creditor. The first of such instalments to be paid on or before 1st August, 2005 and thereafter on the first day of each succeeding month until the full payment is being made by the company to the petitioning-creditor. In default of payment of any one or the last instalment, the petitioning-creditor shall be at liberty to publish advertisement once in The Statesman and once in Anand Bazar. Publication in the Calcutta Gazette is dispensed with. The matter will be returnable before the Court four weeks after such publication. This application is thus disposed of. All parties are to act on a xerox signed copy of this dictated order on the visual undertaking."
(b) Pursuant to the aforesaid order passed by His Lordship, the appellant sent a bank-draft dated July 26, 2005 for Rs. 3,17,118/- and also a schedule of payment of instalments through its learned Advocate's letter dated July 27, 2005 which was duly received by the learned Advocate for the respondent and the respondent duly accepted the payment of the first instalment and the calculation of interest as shown in the schedule and its annexure enclosed therein without raising any objection.
(c) Thereafter, the second instalment along with the interest thereof was also paid by the appellant to the respondent in the similar way and the same was accepted by the respondent without raising any objection.
(d) In similar way, all the five instalments along with interest were accepted by the respondent and thus, a total amount of Rs. 15,79,810/- including the interest had been duly paid by the appellant to the respondent within the time fixed by the order dated July 7, 2005 passed by His Lordship.
(e) According to the appellant, it is bound under the provisions of the Income-tax Act to deduct the amount of TDS and accordingly, the same was deducted year-wise before the date of the filing of the winding up application and such fact had been admitted by the respondent in the application for winding up and the certificate of TDS issued by the appellant had been annexed to the application for winding up for the purpose of getting benefit of the extension of time under the Limitation Act.
(f) By filing the Judges' Summons, the appellant prayed for recording that the appellant had duly complied with the order dated July 7, 2005 passed by His Lordship in C.P. No. 484 of 2004 by making payment of the amount together with the interest to the respondent and prayed for direction upon the respondent to issue receipts in respect of the instalments in terms of the order passed by the learned Single Judge.
(g) The said Judges' Summons was contested by the respondent thereby contending that the appellant was not entitled to adjustment of any amount paid towards TDS prior to the passing of the order dated July 7, 2005 and therefore, the appellant did not comply with the order passed by His Lordship by not paying the amount of Rs. 10 lakh with interest at the specified rate by way of instalments as stipulated therein.
(h) A learned Single Judge by the order impugned herein has accepted the submission of the respondent that the payment by way of deduction of TDS under the provisions of the Income-tax Act could not be lawfully adjusted against the amount directed to be paid by the order dated July 7, 2005 and accordingly, dismissed the application filed by the appellant thereby holding that the order dated July 7, 2005 was not duly compiled with.
3. Being dissatisfied, the appellant has come up with the present Letters Patent appeal.
4. Mr. Jayanta Kumar Mitra, the learned Senior Advocate appearing on behalf of the appellant has made three-fold submission in support of this appeal.
5. First, Mr. Mitra contends that the learned Single Judge erred in law in holding that deduction of interest by way of TDS cannot be adjusted towards the amount payable by the appellant pursuant to the conditional order disposing of the winding up petition. According to Mr. Mitra, the provisions contained in the Income-tax Act, 1961, having made it compulsory to a debtor to deduct interest payable to a creditor in advance and such amount so deducted being treated as the payment of money on behalf of the creditor to the revenue, his client was by operation of law entitled to claim adjustment of the amount paid to the Income-tax Authority by way of the TDS.
6. Secondly, Mr. Mitra submits that at the time of making first instalment, his client having specifically disclosed in details the accounts showing adjustment of TDS and in spite of full knowledge of such claim and the proposed payment of his client, the respondent having accepted the amount without any protest; it should be presumed that the respondent had waived its right to dispute the legality of the payment.
7. Thirdly, Mr. Mitra vehemently contends that his client having paid the amount after conveying its intention to make payment according to the calculation indicated at the time of making first instalment, and the respondent not having raised any objection, at least, his client should be given an opportunity to make payment of the balance amount, if his earlier two contentions, are found to be not tenable in the eye of law. Mr. Mitra, therefore, contends that this Court should set aside the order passed by the learned Single Judge and allow the appeal.
8. Mr. Abhrajit Mitra, the learned Advocate appearing on behalf of the respondent has, however, opposed the aforesaid contentions of Mr. Jayanta Mitra and has contended that the original order passed by P.C. Ghose, J., having attained finality, the learned Single Judge, the successor of P.C. Ghose, J., rightly refused to disturb the original order conditionally disposing of the application for winding up. According to Mr. Mitra, P.C. Ghose, J., having specifically assessed the amount payable by the appellant to be Rs. 10 lakh with interest payable on that amount determined by His Lordship, there was no scope of variation of that order by way of a Judges' Summons. Mr. Mitra contends that the plea now sought to be agitated before this Court was very much available to the appellant at the time of disposal of the application for winding up before P.C. Ghose, J., but such point, not having been raised, is now concluded by the principles of res judicata. Mr. Mitra contends that no plea of adjustment is permissible if such adjustment is claimed on the basis of payment prior to the passing of the original order. Mr. Mitra in this connection by relying upon the provisions contained in Order 21 Rule 2 of the Code of Civil Procedure contends that payment by way of TDS prior to the passing of the original order does not come within the purview of the said provision. According to Mr. Mitra, the order of the Company Court directing the debtor to pay off the admitted due amounts to a money decree, and in support of such contention, he relied upon the decisions of various Courts in this regard. Mr. Mitra, therefore, prays for dismissal of the present appeal.
9. Mr. Jayanta Mitra, the learned Senior Counsel appearing on behalf of the appellant in reply contends that the principles of Order 21 of the Code of Civil Procedure has no application in the facts of the present case inasmuch as if we read the order passed by P.C. Ghose, J., it will be clear that in default of payment of the amount fixed, His Lordship merely directed admission of the winding up application by giving advertisement in two newspapers. According to Mr. Mitra, the effect of the original order disposing of the winding up petition with the direction of payment of some amount with a default clause of publication of the advertisement in the newspapers inviting claims from the creditors did not amount to a money decree so as to invoke the provisions of the Order 21 of the Code of Civil Procedure. In support of such contention, senior Mr. Mitra distinguished the decisions cited by junior Mr. Mitra by pointing out that in all those decisions the amount found to be due was treated to be a money decree whereas in the present case no such direction was given.
10. Therefore, the first question that falls for determination in this appeal is whether the appellant is entitled to get adjustment of the amount paid by way of TDS before the Income-tax Authority on behalf of the respondent prior to the passing of the conditional order disposing of the winding up petition.
11. After hearing the learned Counsel for the parties and after going through the materials on record including the provisions contained in the Income-tax Act, we find substance in the contention of senior Mr. Mitra, the learned senior Advocate appearing on behalf of the appellant that any amount deducted by way of TDS should be deemed to be paid on behalf of the creditor and in such a situation, ordinarily, a debtor can lawfully claim adjustment of such amount towards the debt payable to the creditor. At the same time, we cannot ignore the submission of junior Mr. Mitra, the learned Advocate appearing on behalf of the respondent, that the plea now sought to be raised on behalf of the appellant was very much available to it at the time of passing of the original conditional order while disposing of the winding up application. After the passing of the original order passed by P.C. Ghose, J., the appellant did not challenge the order by preferring any appeal nor did it file any application for review before His Lordship and therefore, the said order attained finality. In our view, it is rightly contended on behalf of the respondent that the plea of adjustment of such amount was available at that stage but now the same is barred by the principle of constructive res judicata. Once we hold that such plea is barred by the principles of constructive res judicata, the question whether the order of the Company Court in this case "directing payment of admitted dues in default direction for advertisement" amounted to a "virtual money decree" or whether such pre-decree payment can be adjusted against the decretal dues or not becomes academic and we do not intend to enter into such superfluous questions.
12. We, therefore, find no substance in the first contention raised by Mr. Mitra, the learned Senior Counsel appearing on behalf of the appellant in the facts of the present case.
13. We now propose to conjointly deal with the second and the third contentions of the appellant as those are interlinked to some extent.
14. It appears from the materials on record that the appellant before making the payment of the first instalment gave details of the account and also indicated the proposed instalments and in such account, specifically claimed adjustment of the amount by way of TDS although such payments were made prior to the passing of the original order. It appears that the respondent did not raise any objection and went on receiving the instalments as if they had no objection in the proposed payment by taking into consideration the fact that "pre-order' payment by way of TDS was adjustable. Even if, at that stage, the respondent raised any objection refusing to accept such instalments in violation of the original order, the appellant could make payment of instalment strictly in accordance with the order disposing of the winding up petition and there would have been no occasion of non-compliance of the order passed by P.C. Ghose, J. Therefore, the respondent cannot evade its liability of the role it played which led the appellant in committing default in payment of the amount as per the original order.
15. Therefore, the conspicuous silence on the part of the respondent and the acceptance of all the five instalment without protest although may not have the effect of the waiver on the part of the appellant in foregoing the benefit of the due assessed by P.C. Ghose, J., the appellant should at least get an opportunity of making payment of the balance amount fixed by the original order by way of extension of time for their bona fide mistake so that it can avoid the consequence of the default.
16. It is now settled law that an opportunity to pay off the admitted amount of debt by way of instalments in a proceeding for winding up of the company, although does not strictly come within its purview, has nevertheless, been considered to be an equitable relief. (See: Nopany and Sons Pvt. Ltd. reported in 1991(70) Company Cases 262 at 264). If in exercise of such discretion, a Company Court has passed any direction to liquidate the admitted due fixed by it by way of instalments with interest as a condition precedent for dismissal of such application with further direction that in default of such payment, the advertisement would be issued, and the debtor for bona fide reason makes default in payment of such instalments, the Court can definitely extend the time of making such payment by instalments without disturbing the original order assessing the amount payable or the interest fixed. In such a situation, the Company Court will not be required to review the earlier order on merit but will only consider whether the circumstances pleaded for not complying with the earlier order was sufficient enough for condonation of the lapses. An order extending the time of making payment does not amount to either the review of the original order nor does it amount to a fresh order on the application for winding up. In this connection reference may be made to a decision of the Supreme Court in the case of Sandhya Rani Sarkar v. Sudha Rani Devi , where in a suit for specific performance of contract for sale of a property, the Trial Court granted a decree on condition that the plaintiff should deposit the balance consideration amount within a specified period and in default, the suit would stand dismissed. Subsequently, the plaintiff applied for extension of time and the Trial Court allowed such prayer by extending the time for deposit of the consideration amount. The defendant initially did not prefer any appeal against the original decree but actually filed the appeal after the Court extended the time for deposit of the consideration money and contended that by extension of time, the original decree was amended by way of review and therefore, her appeal should be held to be filed against the amended decree and within the period of limitation and no application for condonation of delay was required to be filed as the date of decree should be treated to be that of the amended decree. The Supreme Court, however, negatived such contention by making the following observations in paragraph 4 of the judgment:
Similarly, it is also not possible to entertain the contention that the orders extending the time to deposit the balance of consideration would result in amending the decree and as the appeal is preferred after such last amendment the appeal would be in time.
17. Therefore, it is clear that the Supreme Court refused to accept the mere extension of time to deposit the amount as per conditional decree as the amendment of the decree on an application for review.
18. The law is equally settled that although a particular relief has not been prayed for by a party in an application, the Court can, based on materials on record, mould the relief and grant appropriate respite to the party, which the Court thinks fit. At this juncture, it will not be out of place to refer to the following observations of the Supreme Court in the case of U.P. State Brassware Corporation Ltd. and Anr. v. Uday Narayan Pandey at paragraph 40 of the judgment:
It is one thing to say that the Court interprets a provision of a statute and lays down a law, but it is another thing to say that the Courts although exercise plenary jurisdiction will have no discretionary power at all in the matter of moulding the relief or otherwise give any such reliefs, as the parties may be found to be entitled to in enquity and justice. If that be so, the Court's function as Court of justice would be totally impaired. Discretionary jurisdiction in a Court need not be conferred always by a statute.
19. Therefore, in the case before us, the learned Single Judge rightly refused to adjust the amount of TDS towards the amount fixed by the original order because such plea was barred by the principles of constructive res judicata but having regard to the fact that the respondent did not raise any objection against the wrong calculation and accepted all the instalments paid according to the bona fide belief of the appellant, the learned Single Judge ought to have given an opportunity to pay the balance amount by a "one time payment". In our view such opportunity should be given to the appellant provided it makes such payment with interest at the enhanced rate of 12% per annum of the deficit amount instead of the rate fixed by His Lordship in the original order from the date the same became payable i.e. the date of the fifth and the last instalment became due till the actual payment.
20. We, accordingly, allow the appeal, modify the order passed by the learned Single Judge, and extend the time to make the payment of the balance amount within one month from today with the enhanced rate of interest mentioned above. In default of such payment, the appeal will stand dismissed. In the facts and circumstances, there will be, however, no order as to costs.
Kishore Kumar Prasad, J.
21. I agree.