Calcutta High Court
For The vs Siemens Ltd on 17 July, 2018
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
C.P. No. 462 of 2015
M/s. Calprin Ads Pvt. Ltd
And
M/s. K.C. Exim (P) Ltd.
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
For the petitioner: Mr. U.S. Menon, Advocate
Mr. Swarup Banerjee, Advocate
For the respondent : Mr. Soumabho Ghose, Advocate
Judgement on : 17.07.2018
Ashis Kumar Chakraborty, J.
In this application under Sections 433,434 and 439 of the Companies Act, 1956 (in short "the Act of 1956") the petitioner has sought for winding up of the company for non- payment of its dues.
The petitioner is the dealer of ITC Ltd. and is the supplier of diverse products manufactured by ITC Ltd. like, coated folding Box Board, Long Grain Cyber XL Premium Board etc. of different size and specification. The method of selling the material by the petitioner to its buyers is called as "E-1" sale under the taxing system of the sales tax where the petitioner is called as the 'Dealer', the buyer/customer is called the 'Consignee' and ITC Ltd. is called the 'Consignor'. As per the system of "E-1" sale the petitioner, as the dealer, upon orders placed by its buyer instructs ITC Ltd. the Consignor to supply the materials to the buyer, the consignee directly. The ITC Ltd. would accordingly, deliver and supply required materials directly to the customers of the petitioner as per their order. Thereafter, the petitioner would raise "E-1" sale bills on the buyer as per the norms and practice of the "E-1" sale system and would realise the payment thereof.
The company issued purchase orders upon the petitioner for obtaining supply of diverse quantity of materials, namely, coated folding Box Board, Long Grain Cyber XL Premium Board of different size and specification (hereinafter referred to as "the said materials"), inter alia, on the term that the company would pay the price of the materials sold within 45 days from the date of delivery or submission of the bills whichever is later. According to the petitioner, in between May 21, 2013 and January 15, 2015 pursuant to various orders placed by the company it caused supply of diverse quantity of the said materials manufactured by ITC Ltd. to the company. In the premises, from time to time, the petitioner raised its bills/invoices which were received and accepted by the company without any objection whatsoever. Although, the company made payment of the invoices raised by the petitioner on account of supplies made until May, 2014 but it defaulted to make payment of twelve bills/invoices dated between August 04, 2014 and January 15, 2015 for the total amount of Rs. 76,67,533/-. In the petition, the petitioner has disclosed the relevant purchased orders, invoice cum delivery challans issued by ITC Ltd., "E-1" sale invoices raised by it upon the company. Out of the said twelve invoices for the sum of Rs. 76,67,533/-, the company later on paid Rs. 82,354/- against the invoice dated August 04, 2014 leaving the outstanding balance of Rs. 75,85,179/- on account of eleven invoices dated between September 25, 2014 and January 15, 2014. Subsequently, on or about February 25, 2015 by a payment voucher dated March 31, 2015 the company forwarded a post dated cheque dated March 31, 2015 of Rs. 25 lakh in favour of the petitioner towards part payment of its dues. When the company, without clearing the outstanding payment, demanded further supply of materials by an electronic mail dated February 28, 2015 the petitioner informed the company of its inability to resume any further supply unless payment of the outstanding dues is made. According to the petitioner, since it refused to supply any further materials without payment of its entire outstanding dues the company by its electronic mail dated March 28, 2015 made false allegations against the petitioner and requested the petitioner to return the said cheque dated March 31, 2015. Since the company had issued the said cheque for payment of its outstanding dues, the petitioner deposited the same on the due date but the same was returned by its banker with a remark "exceeds arrangement". The petitioner has instituted a complaint case under Section 138/141 of the Negotiable Instrument Act against the company before the ACJM Court at Bidhannagar, Kolkata which is pending. The petitioner has also claimed that the company even did not furnish the requisite sales-tax declaration forms (C-Forms) against the supplies made by the petitioner and, as such, the company is liable to pay Rs. 7,44,026.55/- to the petitioner in lieu of sales tax declaration forms, together with interest thereon at the rate of 18%, per annum. After giving credit for the sums paid, as on June 15, 2015 Rs. 90,41,593/- fell outstanding from the company to the petitioner on account of the principal amount of materials sold and delivered and on account of non-furnishing of C- Form, together with interest thereon at the rate of 18 per cent, per annum. On April 9, 2015 the petitioner issued a notice under Section 434 of the Act of 1956 upon the company. By a letter dated April 29, 2015 the company, through their advocate, replied to the said statutory notice alleging that the materials supplied by the petitioner were not as per the orders placed by it and the invoices raised by the petitioner between May 21, 2013 and January 15, 2018 were reverted/adjusted by way of debit notes raised by the company due to the defective/unacceptable materials supplied by the petitioner. The company further alleged that as the materials delivered were required to be returned the question of paying sales tax or C-Form does not arise. It also alleged to have filed a civil suit before learned Civil Judge (Senior Division) at Sealdah, being Title Suit No. 53 of 2015, inter alia, for a declaration that the petitioner herein has no right or authority to claim and realise any amount for the materials as per the invoices mentioned in the schedule to the plaint ignoring the debit notes. According to the petitioner, the allegations made by the company in its letter dated April 19, 2015 are baseless and frivolous allegations, even the suit filed by the company is thoroughly misconceived, speculative, mala fide and afterthought and the company has failed to raise any bona fide defence to its claim in the application.
The company has filed its affidavit-in-opposition disputing all material allegations made against it in the petition. According to the company, the supplies of the said materials by the petitioner were not as per the specification mentioned in the purchased orders, the petitioner failed to follow the time schedule which was the essence of contract and there was even short supply by the petitioner. It has been alleged that the factum of short supply of the said materials by the petitioner is evident from the minutes of the meeting held on September 06, 2014 between the representatives of the parties. In its affidavit the company has also disclosed four debit notes dated November 22, 2014, December 15, 2014, December 30, 2014, January 30, 2015 and March 28, 2015 raised on the petitioner. It has further alleged that in spite of failing to discharge its obligation, by an electronic mail dated January 29, 2015 the petitioner demanded payment from the company. By an electronic mail dated January 31, 2015 the company informed the petitioner of defective supply of materials by it. Copies of the said electronic mails dated January 29, 2015 and January 31, 2015 issued by the petitioner and the company, respectively have been disclosed in the affidavit-in-opposition. By another electronic mail dated March 28, 2015 the company has alleged that it suffered huge financial damage due to thickness variation and other quality parameter relating to the materials supplied by the petitioner and that the issue of thickness variation of the material had been inspected and agreed by the petitioner's representative. A copy of the plaint filed in Title Suit No. 53 of 2015 before a learned Court of Civil Judge, (Senior Division), at Sealdah (hereinafer referred to as "the said suit") on April 29, 2015 has also been disclosed by the company. In its affidavit in reply the petitioner reiterated the case made out in the petition.
Mr. U.S. Menon, learned counsel appearing in support of the application submitted that in the petition, the petitioner has disclosed all the relevant purchase orders issued by the company upon the petitioner for obtaining delivery of the said materials, as well as the copies of invoice cum delivery challans issued by ITC Ltd., "E-1" sale invoices raised by the petitioner and the consignment notes and it is not the case of the company that it has not received the same or there is any mistake in any of the said documents. He further submitted that in paragraph 12 of the application the petitioner has specifically mentioned about the eleven invoices dated between September 25, 2014 and January 15, 2015 against which payment of Rs. 75,85,179/- remains outstanding and even in its plaint filed in the said suit the company has not disputed the receipt of the said invoices.
With regard to the debit notes dated November 22, 2014, December 15, 2014, December 30, 2014, January 20, 2015 and March 21, 2015 Mr. Menon submitted that neither of the said debit notes were received by the petitioner and the company has not disclosed any documentary evidence to the contrary. He further argued that in support of the defence to the petitioner's claim the company has relied upon its electronic mail dated January 31, 2015 and even in the said electronic mail there is no whisper by the company about issuance of any of the purported debit notes upon the petitioner. Therefore, according to the petitioner, the defence sought to be set up by the company in the present case on the basis of the said alleged debit notes lacks bona fide. It was further argued that when the company has failed to substantiate any defence to the petitioner's claim on the basis of the purported debit notes, the filing of the said suit challenging the fourteen invoices, including the eleven invoices giving rise to the petitioner's present claim, is misconceived and filing of the said suit cannot be construed as a bona fide defence of the company in this application. Relying on the unreported decision dated January 14, 2013 passed by the learned Single Judge of this Court in the case of Chemgen Pharma International Pvt. Ltd. - vs - Siemens Ltd. published in 2013 SCC Online Cal 618 and the Division Bench judgment of this Court published in 2013 SCC Online Cal 4741 upholding the said decision of the learned Single Judge Mr. Menon submitted that in the present case, when the company failed to prove receipt of any of the purported debit notes by the petitioner the said suit is nothing but an attempt to create some confusion and to prop up a mdicum of defence to the petitioner's claim in this application. Urging these facts he pressed for admission of this appication.
On the other hand, Mr. Soumabho Ghose, learned advocate appearing for the company submitted that the company has no liability to make payment of the said sum of Rs. 75,85,179/- or any part thereof on account of the eleven invoices raised by the petitioner. Referring to the minutes of meeting dated September 06, 2014, being Annexure-"A" to the company's affidavit-in-opposition, he submitted that from a perusal of the said minutes it is evident that the materials supplied by ITC Ltd. not only had various defects but there was short supply also. He further argued that once the company has filed the said suit against the petitioner claiming a declaration that it has no obligation to make payment of any of the fourteen invoices, including the eleven invoices involved in this application by ignoring the debit notes, the company has disclosed bona fide defence to the claim of the petitioner. Therefore, according to the company, the present winding up application filed against it is not maintainable.
I have considered the materials on record and the arguments advanced by the learned counsel appearing for the respective parties. It is well settled law that while dealing with an application under Section 433(e) of the Act of 1956, the Court has to consider three principles firstly, that the defence of the company is in good faith and one of substance; 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. This view is fortified by the decision of the Supreme Court in the case of Madhusudan Gordhandas and Co.-vs- Madhu Wollen Industries Pvt. Ltd. reported in AIR 1971 SC 2600.
In the present case, the petitioner's claim against the company is on account of the 11 invoices dated between September 25, 2014 and January 15, 2015 particulars whereof are mentioned in paragraph 11 of the petition. In this connection, it may be noted that by a typographical mistake the last of the eleven invoices has been mentioned in 11 of the petition to be dated January 15, 2014 when from a copy of the said invoice disclosed at page 93 of the petition it is clear that the same is dated January 15, 2015 and even the company in the schedule to its plaint filed in said suit has mentioned the said invoice is dated January 15, 2015. Neither in this application, nor in the plaint filed in the said suit the company has denied receipt of the said eleven invoices issued by the petitioner for a sum of Rs. 75,85,179/-. The petitioner has disclosed the payment voucher dated March 31, 2015 issued by the company forwarding the cheque for Rs. 25 lakh to the petitioner. The issuance of the said payment voucher dated March 31, 2015 has not been denied by the company. A bare reading of the said payment voucher makes it evident that the company had issued the said cheque dated March 31, 2015 for Rs. 25 lakh in favour of the petitioner towards payment of the five invoices bearing nos. KCE/E- 1/14-15/11, KCE/E-1/14-15/13, KCE/E-1/14/15, KCE/E-1/14- 15/15, KCE/E-1/14-15/16, KCE/E-1/14-15/14 forming part of the eleven outstanding invoices mentioned in paragraph 11 of the application. The said six invoices were dated between September 25, 2014 and November 29, 2014. In view of the clear admission in the said payment voucher that the said cheque dated March 31, 2015 for Rs. 25 lakh was issued to the petitioner on account of the aforementioned six specific invoices dated between September 25, 2014 and November 29, 2014 any explanation of the company for not being liable to honour the said cheque lacks bona fide. Further, until its reply to statutory notice issued by the petitioner under Section 434 of Act, in none of the correspondence issued to the petitioner the company ever alleged to have issued any debit note upon the petitioner on the ground of defective or short supply of materials. The reliefs claimed in the said suit filed by the company on the date of the reply to the statutory notice depend upon the alleged debit notes issued by itself copies whereof have been disclosed in the affidavit-in-opposition filed in this application. However, neither in its affidavit filed in this application nor in the plaint filed in the said suit the company has disclosed any document to substantiate receipt of any of the purported debit notes by the petitioner. It is interesting to note that none of the purported debit notes of the company does not mention any particular invoice of the petitioner. Further, when the petitioner's claim against the company in this application relates to the eleven invoices dated from September 25, 2014 the minutes of the meeting held between the representatives of the respective parties on September 06, 2014 relied upon by the company is of no significance. Even the invoices mentioned in the electronic mail dated March 28, 2015 disclosed by the company as Annexure-"D" to its affidavit are different invoices and do not form part of the petitioner's claim in this application.
Further, but for the said purported debit notes, the liability of the company to pay Rs.7,44,027 for non issuance of the Sales Tax C-Form to the petitioner as claimed in this application is not in dispute. Now, I have already found that the company has not been able to prove receipt of any of the said purported debit notes by the petitioner. Therefore, the company has to pay the claim of the petitioner for not issuing the "C" Forms.
In the facts of the present case, I find that the said suit filed by the company is nothing but an attempt to create some confusion and the same has been filed in an desperate attempt to set up a defence to the petitioner's claim in this application. It has been held by a learned Single Judgde of this Court in the case of Chemgen Pharma International Pvt. Ltd. - vs - Siemens Ltd. published in 2013 SCC Online Cal 618 mere filing of a suit by the company to prop up a modicum of defence to the petitioning creditor's claim cannot be construed as bonafide defence to refuse admission of the winding up application against the company. The said decision of the learned Single Judge has been upheld by the Division Bench of this Court Chemgen Pharma International Pvt. Ltd. - vs - Siemens Ltd. published in 2013 SCC Online Cal 4741.
Considering the facts of this case as discussed above I find that the defence sought to be put up by the company against the petitioner's claim are not in good faith and the same do not fulfil the conditions laid down by the Supreme Court in the case Madhusudan Gordhandas (supra).
For the reasons as aforesaid, the winding up application against the company is admitted for Rs. 83,29,206/- (Rs. 75,85,179/- on account of the outstanding eleven invoices plus Rs. 7,44,027/- on account of non-furnishing of C-Forms) with interest thereon, at the rate of 8 per cent, per annum from the date of the statutory notice, that is, April 09, 2015 till payment is made.
The petitioner is directed to publish the advertisement of this application once, in the English newspaper 'The Statesman' and once, in the Bengali newspaper 'Bartaman'. The advertisements should indicate that the matter will appear before Court on the first available working day after the expiry of a period of three weeks from the date of the publications being made. However, publication in the official gazette will stand dispensed with.
Urgent certified photostat copies of this judgment, if applied for, be made available to the parties subject to compliance with all requisite formalities.
[AHIS KUMAR CHAKRABORTY,J.]