Gujarat High Court
Contigrain International vs Gokul Refoils And Solvent Ltd on 9 February, 2015
Author: N.V.Anjaria
Bench: N.V.Anjaria
O/COMP/129/2014 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION NO. 129 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA
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1 Whether Reporters of Local Papers may be allowed to see YES
the judgment ?
2 To be referred to the Reporter or not ? YES
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, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ? NO
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CONTIGRAIN INTERNATIONAL....Petitioner(s)
Versus
GOKUL REFOILS AND SOLVENT LTD....Respondent(s)
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Appearance:
MR. S. M. GOHIL, ADVOCATE for the Petitioner(s) No. 1
MS AMRITA M THAKORE, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 09/02/2015
CAV JUDGMENT
The petitioner herein has filed this petition praying for an order of winding up of the Page 1 of 23 O/COMP/129/2014 CAV JUDGMENT respondent-Gokul Refoils and Solvent Limited, under Section 433 and 434 of the Companies Act, 1956. The petitioner in the name and style of M/s.Contigrane International, is a firm carrying on business of supply chain solution and marketing service/brokerage. The respondent is a company registered under the provisions of the Companies Act.
2. The case of the petitioner is that under three different contracts, the petitioner sold the goods being Indian Rapeseed Extraction Meal to a foreign based buyer one M/s.Ramak General Trading LLC, Dubai and that in the said transaction, the petitioner acted as broker. It is the further case of the petitioner that the consignment was shipped on 21st September, 2011 from Kandla Port to Bandarabbas, Iran in a buyer chartered vessel M.V. Azalea on Free on Board (FOB) Terms. The total consignment was covered under four different Bills of Lading. According to the petitioner,the Grain and Feed Trade Association Contract for Shipment for Feedingstuff in Bulk-GAFTA No.100 is applicable and binding to the respondent, stating it stipulates about the term of brokerage and the time frame of its payment. Reliance was placed on condition No.4 of the said GAFTA No.100 dealing with brokerage.
2.1 It is the case and claim of the petitioner further that all problems related to the transaction came to be settled amicably and there is no complaint about the quality and quantity by both the buyer and the seller. It is stated that respondent also Page 2 of 23 O/COMP/129/2014 CAV JUDGMENT dispatched the original documents to the buyer. It is the case that the respondent was required to pay the brokerage to the petitioner and the dues towards that amounted to Rs.20,80,000/- are not paid. The petitioner sent a Debit Note dated 10th January, 2012 claiming its marketing commission. It is the say of the petitioner that the respondent evaded payment, therefore petitioner was required to issue notice dated 15th September, 2013 asking the respondent to pay the amount of Rs.20,80,000/- with interest as per the Debit. The same was replied to by the respondent on 28th September, 2013. Therein, in the said reply, the respondent company asked the petitioner that it was require to fulfill the obligations which were to be discharged by the buyer as per the contract. The respondent instructed the petitioner that only thereupon the commission to it would become payable.
3. According to the petitioner, his relationship with the respondent was as broker and the brokerage was payable to the petitioner as per the contract and that the brokerage was automatically payable once the contract was performed and it was over. According to the case of the petitioner, the respondent received the payment under the contract and it had "settled" the contract with the said buyer, resultantly, the said dues of the petitioner towards brokerage commission had become automatically payable. The said payment having been withheld by the respondent company without any good ground, the company was liable to be wound up under Section 433(e) read with Section 434 of the Companies Act, 1956.
Page 3 of 23 O/COMP/129/2014 CAV JUDGMENT3.1 From the facts stated in the petition and the copies of the documents annexed, it is revealed that the parties entered into contractual relations whereunder said foreign buyer-Ramak General Trading LLC, Dubai purchased total 15,000 of Indian Rapeseed Extract Meal from the respondent. The transaction for sale of aforesaid total quantity of goods comprised in contacts dated 28th July, 2011 for 8,000 MTs, dated 04th August, 2011 for 2,000 MTs and dated 14th September, 2011 for 5,000 MTs. The purchase of goods was agreed at the rate of USD 193 per MT inclusive of USD 3 per MT being commission payable in respect of the first two transactions; and in the third transaction dated 14th September, 2011, at the rate of USD 189 Per MT which included USD 2 per MT as commission.
3.2 The consignments were sent Free on Board (FOB) from Kandla Port. All the three sale contracts entered into between the said foreign buyer and the respondent-seller as per the copies produced contained virtually similar terms and conditions. It also transpires that the petitioner acting as an intermediary, confirmed the said three purchases by email letters dated 28th July, 2011, 04th August, 2011 and 16th September, 2011. In respect of 2000 MT confirmed as above by the petitioner, the respondent company under the terms of the contract, received USD 77,00 being 20% of the sale consideration in advance. For the purchase of 5000 MT, USD 94,500 being 10% of the sale consideration, received in advance.
Page 4 of 23 O/COMP/129/2014 CAV JUDGMENT3.3 The respondent-Gokul Refoils and Solvent Limited filed affidavit-in-reply. It was inter alia stated by the Company in its reply that in the contractual relations entered into between the parties, the petitioner acted on behalf of the foreign party, accepted the offer of the respondent with regard to sale of total 15,000 MTs of goods. It is the say of the respondent that upon the acceptance of the terms by the petitioner the transactions was carried out, and formal sale contracts were executed by the respondent and the said foreign party. The price included petitioner's commission payable upon receipt of payment in the respondent's bank account. Broadly stated, it is the say of the respondent that the petitioner acted as an agent on behalf of the foreign party, was bound to discharge all the commitments of the said buyer before it could enforce its claim for commission and further that the commission payable to the petitioner formed part of sale price. The facts stated in the reply affidavit as part of defence raised are gone into in their details in the succeeding paragraphs.
4. Learned advocate for the petitioner Mr.S.M. Gohil submitted that as per the terms and conditions incorporated in the contract, GAFTA No.100 was applicable, to which the respondent company was bound and the brokerage was payable to the petitioner as per condition No.4. It was submitted that under the said condition the brokerage bacame due and payable on the day the shipping documents are exchanged or if the Page 5 of 23 O/COMP/129/2014 CAV JUDGMENT goods are not appropriated, then the brokerage shall be beyond 30 consecutive day after the first day of appropriation. He submitted that the buyer had made payment to the respondent and the receipt of payment was responded to by the respondent who thereafter send back the original documents. Learned advocate for the petitioner further submitted that the petitioner's relationship with the respondent one was of broker only for which the brokerage was payable as per the above conditions. He seriously disputed the claim of the respondent that he was required to discharge obligations of the buyer. It was submitted that no such contract existed or could be culled out vis-à-vis the respondent.
4.1 Learned advocate for the petitioner submitted that the role of the petitioner was that of broker only and no additional role beyond acting as broker would be culled out. According to his submission, no where in the correspondence, such role was describable, nor the word "agent" was mentioned. It was further submitted that as a broker, it was an independent contract wit the respondent. He emphatically submitted that the respondent company could not have withheld or denied the payment of commission on the ground that it was required to perform the obligations of the buyer in the dispute between the buyer and the respondent. Learned advocate further submitted that the respondent admitted in this communication dated 28th September, 2013 that he had settled the account with the buyer.
Page 6 of 23 O/COMP/129/2014 CAV JUDGMENT4.2 By referring to the counter submission made in affidavit-in-rejoinder filed by the petitioner, it was contended that the contract squarely stipulated that the same was under the risk and authority of the respondent and that the condition as to the applicability of GAFTA-100 was also explicit whereunder the brokerage became due on the day the shipping documents were exchanged. He submitted with reference to paragraph 5 of the reply affidavit that it was erroneous on part of the respondent to suggest that the shipment was not intended for final destination at Iran and the documents bear out the Iran to be the final destination.
4.3 Learned advocate for the petitioner further submitted that in any case, the petitioner settled the aspect of payment with the foreign buyer. In this regard, he relied on the averments made and the documents produced in the additional affidavit filed by the petitioner. It was submitted that the invoice was raised on 24th September, 2011 which was subsequently revised and in invoice dated 4th August, 2011, the quality allowance was given; the Company agreed to reduce the amount as per the revised invoice. Learned advocate vehemently submitted that the said conduct on part of the respondent amounted to discharging the buyer. He therefore submitted without prejudice to other contentions, in any view no dispute could be said to have remained and the Company having been paid and received the price consideration, no excuse, much less a tenable ground existed for not paying the commission to the petitioner.
Page 7 of 23 O/COMP/129/2014 CAV JUDGMENT4.4 Learned advocate submitted that no cause remains, if at all it was there, to withheld the payment of commission. It was submitted that the defence raised was illusory and moonshine in nature. Learned advocate for the petitioner relied on decision in IBA Health (India) Pvt. Ltd. Info-Drive Systems Sdn. Dhd. [(2010) 10 SCC 553]. He submitted that thus, the debt due to the petitioner is an undisputed, sans the defence and that the respondent company may be ordered to be wound up under the provisions of the Companies Act for its inability to pay the debt due.
4.5 Learned Senior Counsel Mr. Mihir Joshi with learned advocate Ms. Amrita Thakor, resting his submissions with reference to the affidavit-in-reply filed, highlighted the sequence of happenings and the chain of events which took place in pursuance of the transaction amongst the parties. They are put-forth as part of the defence sought to be raised by the respondent company against the claim of the petitioner. Therefore, with relevance, they are summarized as under,
(i) In pursuance of the aforesaid agreement and contract, the respondent-company supplied stipulated quantities of Indian Rapeseed Meal after necessary fumigation and also issued fumigation certificates and veterinary certificates to the effect that the cargo was free from infection. The certificate of origin, fumigation certificate and veterinary certificate are produced on record.
Page 8 of 23 O/COMP/129/2014 CAV JUDGMENT(ii) The respondent-company sent the cargo to Kandla port for loading onto the vessel. However, for several days, the vessel did not arrive at the port and/or did not load the cargo which caused delay in loading at Kandla, on account of which the respondent had to incur a huge amount towards charges for storing the cargo at Kandla as well as other costs.
(iii) On 24th September, 2011 when the cargo was finally loaded and reached its destination at Jabel Ali, Dubai, the consignments were inspected by the foreign party at Jabel Ali and no dispute with regard to the cargo or quality thereof was raised at that time.
(iv) On 24th September, 2011 and 29th September, 2011, thereafter, during the last week of September, 2011, the respondent raised 3 invoices in respect of the consignments for USD 15,44, 000, USD 3,08,800 and USD 8,50,500 being the balance amount due under the aforesaid 3 contracts respectively.
(v) On 02nd October, 2011, immediately, thereafter, the respondent received an email from the petitioner forwarding an email containing an allegation that the cargo contained infected and rotten bags, woods, bottles, etc. This was the first time that a dispute was raised about the quality of cargo. It is the further contention of the respondent that the vessel containing cargo was taken to an Iranian Port and only after the cargo reached Iran, the dispute was raised, even though no such dispute Page 9 of 23 O/COMP/129/2014 CAV JUDGMENT was raised when the cargo reached Dubai. In October 2011, meeting was held for resolution of the matter and the correspondences were exchanged.
(vi) In the letters dated 01st November, 2011 and 02nd November, 2011 addressed by the respondent, it was made clear that entire payment was required to be released immediately.
(vii) The part payment being USD 15,44,000 and USD 8,50,457 was made on 14th September, 2011 and 19th September, 2011 which were much belated after the date by which they were required to be paid. It is therefore the case of the respondent that it became entitled to claim the interest on the delayed payment, over and above the balance sale consideration amounting to USD 3,08,800 wrongfully withheld.
(viii) Claiming the said amount, the respondent addressed letters dated 10th November, 2011 and 25th November, 2011. On 30th November, 2011, the respondent appointed its arbitrator as there was no response.
(ix) On 02nd December, 2011, instead of making payment or complying with the said letters, the foreign party addressed an e-mail demanding refund of the advance payment of USD 77,200 and also demanding a further amount of USD 1,71,379 from the respondent.
(x) It is further stated that all of a sudden, the foreign party offered to "settle" the matter by making further purchase from the respondent. The respondent was in a precarious situation since the Page 10 of 23 O/COMP/129/2014 CAV JUDGMENT cargo had been transported to Iran from where it was impossible to retrieve or sell the same and it was also extremely difficult to recover the balance unpaid amount.
(xi) Having realized that they had an upper hand, the petitioner and the foreign party connived with each other and pressurized the respondent to let go an amount of USD 75,000 and threatened that, unless the respondent let go of the said amount of USD 75,000, no further payment would be made.
(xii) Thereafter, on 16th October, 2011, the respondent received further amount of USD 2,33,757 from the petitioner which was also much delayed as per the case of the respondent.
(xiii) The respondent addressed a letter dated 02nd January, 2012 to the foreign party that it had suffered losses to the tune of USD 1,46,901 which included the amounts towards wrongful deduction in invoice value, interest loss and carry over cost for delay in shipment at Kandla.
4.6 The events and correspondence thereafter may be noted to complete the narration of facts. On 23rd March, 2012, the respondent addressed an e-mail to the petitioner stating that there could be no question of payment of commission till settlement of respondent's dues and losses suffered by the respondent totaling to USD 1,46,901/- and asking the petitioner to ensure payment. The petitioner was informed that the respondent would initiate appropriate proceedings Page 11 of 23 O/COMP/129/2014 CAV JUDGMENT against the petitioner if the petitioner failed to ensure payment of the respondent's legitimate dues and compensation for losses. Thereafter, the correspondence ensured between the petitioner and the respondent. These correspondence included letter dated 15th September, 2013 and respondent's reply dated 28th September, 2013 which are mentioned in the initial paragraphs of this judgment. Respondent's case in reply dated 28th September, 2013 was that the petitioner had stood as broker for the performance of the contract and was liable to arrange payment of entire sale consideration due to the respondent and also to make good the damages. The petitioner insisted that he was entitled to be paid Rs.20,80,000/- towards his commission and brokerage and was not liable for any contractual disputes between the respondent and the foreign buyer. The petitioner issued statutory notice dated 15th November, 2013 under Section 433 of the Companies Act.
4.7 It is required to be further noted that the respondent company filed Civil Suit No.5 of 2014 before the City Civil Court at Ahmedabad against the petitioner in December, 2013, claiming amount of Rs.1,19,66,535/- along with interest. It is stated that the petitioner is served with the summons of the said Suit and the same is pending.
4.8 Learned senior counsel, cruising his contentions on the basis of the above facts and aspects in the affidavit-in-reply submitted that in the entire transaction, the petitioner acted as an Page 12 of 23 O/COMP/129/2014 CAV JUDGMENT agent for the respondent. It was submitted that the buyer was an Iran-based foreign party and the petitioner acted as an agent of the buyer and was under obligation to discharge the contractual obligation on behalf of the said buyer. Learned advocate relied on the e-mail letters, for instance at page-20 of the petition to buttress his contention that the petitioner acted for the foreign buyer. Learned Senior Counsel submitted that at a subsequent stage, the foreign party, in order to evade the payment, started raising dispute as to the quality of the cargo which was inspected and was Okayed at Dubai. It was submitted that the subsequent events showed that the buyer asked for refund and wanted to squeeze the respondent. It was submitted that instead of pursuing the said foreign buyer, with litigation in the foreign country for recovery of the sale price, which was to be too expensive and nearly impossible, the company thought it fit to receive the amount paid by the said party. It was submitted that the arbitration is pending and is not given up. He submitted that the petitioner cannot disown his obligations and cannot claim his commission/brokerage, answering to the case of the petitioner that the company had discharged the buyer.
4.9 Learned senior counsel for the respondent further submitted that the Company is a running concern and employs hundreds of employees. He placed reliance on paragraphs 4 and 5 of the affidavit-in- reply to demonstrate that it is a large and profitable concern and a growth oriented Company having sizable Page 13 of 23 O/COMP/129/2014 CAV JUDGMENT business. He then proceeded to summarise the aspects thus, (a) The Petitioner had accepted the respondent's offer and had thereby entered into contractual relations with the respondent in regard to the aforesaid transaction, (b) Hence, the petitioner was equally liable to arrange payment of the entire sale consideration in respect of the goods supplied by the respondent, (c) Failure to arrange the same resulted in a huge loss to the respondent not only in terms of reduced invoice value but also interest on delayed payments and carry over cost for the delay in shipment, (d) The petitioner has committed breach of its contractual commitment and liability to the respondent and moreover, it has actively connived with the foreign party to cause huge losses to the respondent, (e) In the circumstances, the petitioner was liable to pay to the respondent the total amount of such losses and damages along with interest. In view of this, there could be no question of the petitioner having any legitimate right to claim any commission from the respondent, (f) Even assuming without admitting that the petitioner has any legitimate claim in regard to commission, it is clear from the aforesaid that the commission formed part of the sale price and that the petitioner was not entitled any amount unless and until the entire sale consideration was received by the respondent,
(g) There could be no question of paying any amount to the petitioner unless the petitioner arranged to make payment of the balance unpaid sale consideration as well as the compensation for the loss incurred by Page 14 of 23 O/COMP/129/2014 CAV JUDGMENT the respondent. Since the petitioner failed to do so, the respondent was entitled to adjust the commission amount against the balance unpaid sale consideration.
5. Section 433 in Chapter-II of the Companies Act says about the circumstances in which company may be wound by the court. Sub clause (e) of the Section provides that a company may be wound up by the court if the company is unable to pay its debt. Section 434 of the Act is about when the company is deemed to be unable to pay its debt. In IBA Health (I) Private Limited Vs Info-Drive Systems Sdn. Dhd. [(2010) 10 SCC 553], the Apex Court elaborated the principles and parameters which would inform the exercise of winding up jurisdiction or the Court. It was reiterated that where a bona fide and substantial dispute is coming- forth from the company, the company cannot be ordered to be wound up. It was reiterated that a winding up petition is not a legitimate means of seeking to enforce payment of debt which is bona fide disputed by the company.
5.1 As to the dispute which could be said to be substantial in its nature, the Supreme Court stated thus.
"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 Page 15 of 23 O/COMP/129/2014 CAV JUDGMENT 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."
(para 20) 5.2 The Court referring to and relying on its earlier decisions in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. [(1971) 3 SCC 632], in Mediquip Systems (P) Ltd. Vs Proxima Medical System GmbH [(2005) 7 SCC 42] as well as in Vijay Industries Vs NATL Technologies Limited [(2009) 3 SCC 527], stated, "The principles laid down in the above mentioned cases indicate that if the debt is bona fide disputed, there cannot be "neglect to pay" within the meaning of Section 433(1)
(a) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts is not substantiated and non-payment of the amount of such a bona fide disputed debt cannot be termed as "neglect to pay" so as to incur the liability under Section 433(e) read with Section 434(1)(a) of the Companies Act, Page 16 of 23 O/COMP/129/2014 CAV JUDGMENT 1956." (para 23) 5.3 In that case the respondent had filed winding up petition alleging that the appellant company has failed to discharge its liability to pay under Deed of Settlement and the High Court ordered publication of advertisement in newspaper for settling dispute between the parties. The Supreme Court adverting to the nature of controversy and the dispute between the parties, taking a view that it required interpreting and applying relevant terms and conditions of the Deed of Settlement and found that a bona fide defence was coming out. It was held that 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 existence of substantial ground for the dispute raised. It was observed that if the Company Court is satisfied that a debt upon which the petition is founded is a hotly contested debt, Company Court should not entertain such a petition. It was further observed that the Company Court is expected to go into the causes of refusal by the Company to pay and it is expected also 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.
5.4 The Apex Court pointed out and observed as under with reference to the case before it.
"On a detailed analysis of the various terms and conditions incorporated in the deed of settlement as well as the compromise deed Page 17 of 23 O/COMP/129/2014 CAV JUDGMENT and the averments made by the parties, we are of the considered view that there is a bona fide dispute with regard to the amount of claim made by the respondent company in the company petition which is substantial in nature. The Company Court while exercising its powers under Sections 433 and 434 of the Companies Act, 1956 would not be in a position to decide who was at fault in not complying with the terms and conditions of the deed of settlement and the compromise deed which calls for detailed investigation of facts and examination of evidence and calls for interpretation of the various terms and conditions of the deed of settlement and the compromise entered into between the parties." (Para 29) 5.5 In Mediquip Systems (P) Limited (supra), the Supreme Court mentioned the principles on which the Court acts in the winding up jurisdiction, to be (i) defence of the company is in good faith and is one of substance, (ii) the defence is likely to succeed in point of law, and (iii) the company adduces prima- facie proof of the facts on which the defence depends. At the same time the above parameters are to be applied prima-facie.
6. Therefore the acid test to judge as to whether the defence put forth by the company sought to be wound up is based on substantial grounds and it is bona fide taken. The grounds raised can be said to be a substantive defence if they have the tenability in law when prima-facie considered. They must be grounds which would deserve an opportunity to be established on evidence in an action. At the same time the Company Court is not concerned with the likelihood of ultimate success of the defence on merits and the final Page 18 of 23 O/COMP/129/2014 CAV JUDGMENT acceptability or otherwise thereof.
7. Applying the above parameters, when the defence raised by the respondent company is appreciated, the case is that the petitioner performed as an agent on behalf of the foreign buyer. The buyer was based at Iran and therefore an arrangement was entered into through contract where the petitioner purchased the goods on behalf of the said buyer. The contracts were confirmed by the petitioner in the e- mail letters dated 28th July, 2011, 04th August, 2011 and 14th September, 2011 mentioned above, which all were similar in their contents. In this regard, for instance, the first e-mail confirming the contract, was relied on which read as under.
"Subject: CONFIRMATION OF BUSINESS Dear Mr.Modi, We confirm having bought 8,000 M/Tons (+2%) sellers option Indian Rapeseed Meal Extraction in bulk on behalf of following buyers at US$ 193.00 M/T FOB ST Kandla Port, India with US@ 3.00 as our commission payable upon receipt of payment in sellers bank account. Buyer's full styles as follows :
RAMAK GENERAL TRADIND LLC P.O. BOX 4091 DUBAI (UAD) Conditions:
As per your office all terms agreed with specific clause on penalty in contract as under A penalty of US$ 10.00 M/T from either side in the case of any default in contract terms to be settled within 2 weeks by party default.
Seven working days from 03.08.11, as all banks in Dubai are closed on Fridays and Saturdays in Dubai, are required for opening L/C Veterinary Cert. and Microbiological Certificates have to be issued outside L/C in the name of the company in Iran.
Please have the contract issued and scan attached by today.Page 19 of 23 O/COMP/129/2014 CAV JUDGMENT
Since today is Thursday, and Ian is closed, the signed contract would be sent back on Saturday.
Thanks for the business.
Warm regards,"
7.1 The petitioner stated in the aforesaid confirming communication inter alia "we confirm having bought ..... on behalf of following buyers", and the buyer was named. A reference was made by learned counsel for the respondent Company to Section 230 of the Indian Contract Act, 1872, which is a worthy aspect to judge the substantive nature of defence of the Company. The said Section says that in absence of any contract to that effect, an agent cannot personally enforce contract entered into by him on behalf of the principal, nor is he personally bound by them. The Section however proceeds further and mentions the presumptions to the contrary and the same is relevant in the context of controversy herein. It provides that such contract shall be presumed to exist in the cases where, (i) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad, (ii) where the agent does not disclose the name of his principal; (iii) Where the principal, though disclosed, cannot be sued. In the developments which took place in course of execution of the contracts, where initially at Dubai the cargo was tested and no dispute was raised as to the quality but the same was raised at subsequent point of time, claim of the petitioner for refund, etc., the related correspondence took place between the parties reflected the role of the petitioner as an agent, as per the case put forth by the company.
Page 20 of 23 O/COMP/129/2014 CAV JUDGMENTWhether the role of the petitioner was as broker only or that he acted as an agent and intermediary on behalf of the said foreign buyer and if so, the petitioner could be held bound to discharge the obligations of the foreign buyer arising out of contract, are the questions, the decision of which would depend upon the consideration as to what was agreed between the parties. This was again, in the facts of the case, would require an exercise of culling out and interpreting the terms and conditions emanating from the correspondence between the parties and the totality of facts and circumstances forming the agreement. The defence raised by the respondent company could not be branded as bald defence.
7.2 With regard to the case of the petitioner that the Company raised invoice and thereafter raised revised invoice, received amounts, gave concession and thus discharged the buyer, the case of the respondent is that, that by itself do not amount to abandoning the cause of action against the buyer. It was submitted that payments were made after due dates and the buyer by its conduct wanted to avoid and defeat the payment, he thus demanded refund which the respondent Company refused to accede to. The Company's stand in the affidavit-in-reply evinces thus, "on coming to know of this, all of a sudden, the foreign party offerd to "settle" the matter by making further purchases from the respondent. As stated earlier, the respondent was in a precarious situation since the cargo had been transported to Iran from where it was impossible to retrieve or sell the same and it was Page 21 of 23 O/COMP/129/2014 CAV JUDGMENT also extremely difficult to recover the balance unpaid amount. Realising that it had an upper hand, the petitioner and the foreign party connived with each other and pressurised the respondent to let go an amount of USD 75,000 and threatened that, unless the respondent let go of the said amount of USD 75,000, they would not make any payment. In this situation and under this kind of pressure, the respondent was compelled to accept the situation so as to atleast be able to realise a part of the unpaid amount.". The defence was plausible one and could not be discarded as spurious. Again the dispute and the controversy existed prior to the point of time of issuance of statutory notice by the petitioner, whereby it was sought to be shown that the defence was not got up or afterthought.
8. The aforesaid are some of the forthcoming aspects which could be immediately noted from the total defence raised by the company. Considering them and the features and factors cumulatively coming out from the stand of the respondent against the claim of the petitioner, it is not possible to hold that the defence is not bona fide or that it is moonshine or one which is raised for the sake of it to evade and avoid the payment of dues. The grounds of defence has the tenability in law. They raised bona fide and substantive defence.
9. However, it is made clear that the observations made in this judgment and aspects of defence of the respondent elaborated shall not be Page 22 of 23 O/COMP/129/2014 CAV JUDGMENT treated as an expression on merits thereof. The same will not prejudice the case of either party before the appropriate foram or court in an action which may be instituted; which, if initiated, would be decided in accordance with law.
10. The present winding up petition being devoid of merits, the same is hereby dismissed.
(N.V.ANJARIA, J.) Anup Page 23 of 23