Karnataka High Court
Rhein Chemie Rheinau Gmbh vs Standard Oil Additive Pvt. Ltd. on 15 June, 2005
Equivalent citations: I(2006)BC114, [2005]128COMPCAS13(KAR), ILR2005KAR3228, [2005]63SCL434(KAR), 2005 AIR - KANT. H. C. R. 2108, 2005 CLC 1441 (KAR), (2006) 1 BANKCAS 114, (2005) 128 COMCAS 13, (2006) 3 COMLJ 62
Author: Ram Mohan Reddy
Bench: Ram Mohan Reddy
ORDER TO INVOKE THE EXTRAORDINARY JURISDICTION OF THIS COURT FOR WINDING UP OF THE RESPONDENT COMPANY - HELD- In the absence of relevant material constituting substantial legal evidence of a determined, ascertained, undisputed debt by the respondent company, it would be too for fetched for this Court, to assume that the respondent is due to the petition the sum of money claimed. There is not a titre of evidence as regards the incorporation of the respondent company under the Act, within the State of Karnataka. Also it is not forthcoming from the balance sheet of the respondent company to support the allegation that it has become commercially insolvent and is incapable of paying its debt. It is not the case of the petitioner that the respondent has abandoned the objects of business or that the substratum of the company is gone since there is no allegation much less proof. In these circumstances it cannot be held that the respondent company is unable to meet its outstandings. Company Petition dismissed. ORDER Ram Mohan Reddy, J.
1. The petitioner M/s Rhein Chemie Rheinau GmbH, is said to be a company registered under the laws of Germany carrying on business in the manufacture and marketting of various types of chemical products for sale within and outside the country.
2. The respondent, it is stated is a company incorporated under the Companies Act, 1956, for short the Act, having its Registered Office at 1629, 1st cross, 16th Main, Banashankari II Stage, Bangalore-560 070, with an authorised share capital of Rs. 1,00,00,000 divided into 1,00,000 equity shares of Rs. 100/-each. The issued, subscribed and paid up share capital of the company is said to be Rs. 30,00,000/- equity shares as on 31st March, 2003.
3. The petitioner claims to be a leading manufacturer of various chemical products and a division of Lanxess India Pvt. Ltd., formerly known as Bayer Rubber Chemicals Pvt. Ltd., an indenting agent in India for canvassing the sale of chemicals and chemical products of the petitioner. Lanxess India Pvt. Ltd., is said to have imported lubricant additives from the petitioner Company and in particular, under invoice Nos. 91186651 and 91186653 both dated 29.8.2002 imported chemical products valued at Euro 22168.60. At paragraphs 7(a) to (y), of the petition is stated the facts relating to the transactions between the petitioner and the respondent. It is the allegation of the petitioner that under the invoices A1 and A2 dated 20th June, 2003, supplies were made to the respondent, who acknowledged the same, but failed to make payment within the time stipulated and hence, the respondent company is indebted to the petitioner in a sum of Euro 22072. To the statutory notice, the respondent caused a reply Exhibit E denying its liability. Failure to pay the amount, according to the petitioner, the respondent is commercially insolvent and incapable of paying its debts, which has resulted in this petition for winding up of the respondent company.
4. Having heard Sri T.S. Amarkumar, Learned Counsel for the petitioner and perused the averments set out in the petition and the Exhibits the only question for decision making is "whether the petitioner has made out a case of a debt which is determined, ascertained, definite and undisputed which the respondent company has failed to pay in order to invoke the extraordinary jurisdiction of this Court for winding up of the respondent company?".
5. Exhibits A1 and A2 are the alleged invoices said to evidence supplies of the chemicals and acknowledgement of the same by the respondent. An examination of Exhibits A1 and A2 discloses the address of the respondent company, the details of the chemicals and its value but does not disclose any acknowledgement by the respondent company for having received the materials. Although the petitioner claims that M/s Lanxess India Pvt. Ltd., is an Indenting Agent in India, the said indenting agent's name is not forthcoming either from Exhibit Al or Exhibit A2. The alleged purchase orders of the respondent company are not placed before the Court. The petitioner having elaborately stated facts as regards the alleged transaction between itself and the respondent, the alleged compromise, discussion, the amounts due and payable by the respondent company to the petitioner, are not supported by documents. The mere statements in the statutory notice as regards the purchase order, invoice and supply of material of a particular value, while calling upon the respondent company to pay the amount, though denied by the respondent in its reply, do not constitute prima facie evidence of a commercial transaction. So also the production of a copy of the invoice, without an acknowledgement of the materials by the respondent does not establish factum of supply. The documents Exhibit Al to D relied upon by the petitioner in support of its case do not disclose a determined and undisputed debt. If the respondent had in fact received the goods supplied by the petitioner, there ought to have been no difficulty for the petitioner to produce relevant material. In the absence of relevant material constituting substantial legal evidence of a determined, ascertained, undisputed debt by the respondent company, it would be too far fetched for this Court, at this stage, to assume that the respondent is due to the petitioner the sum of money claimed.
6. There is not a titre of evidence as regards the incorporation of the respondent company under the Act, within the State of Karnataka. Also is not forthcoming from the balance sheet of the respondent company to support the allegation that it has become commercially insolvent and is incapable of paying its debt. It is not the case of the petitioner that the respondent has abandoned the objects of business or that the substratum of the company is gone since there is no allegation much less proof. In these circumstances it cannot be held that the respondent company is unable to meet its outstandings.
7. Sri T.S. Amarkumar, Learned Counsel for the petitioner, places reliance upon a decision of this court in the case of Divya Export Enterprises v. Production Private Ltd., ILR 1990 KAR 1610. It is not possible to see how this ruling furthers the contention of the petitioner. In the said judgment, a Learned Single Judge of this Court held that the discretion exercisable under the Act is like any other judicial discretion and that a mere assertion of a debt payable is not sufficient to attract the discretion of this Court. The principle laid down therein is that a prima facie case must be made out by the petitioner by which the respondent company should shoulder the onus of disproving it, by showing that its defence is in good faith and one of substance. In the facts and circumstances of this case, the petitioner has only asserted a debt payable by the respondent which is insufficient to attract the exercise of discretion under the Act.
8. The observations of the Apex Court in the case of Picup v. North India Petro Chemicals Ltd., in the circumstances of the case is apposite.
"An order under Section 433(e) is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under the Section must be a determined or a definite sum of money payable immediately or at a future date. The inability referred to in the expression 'unable to pay its dues', in Section 433(e) should be taken in the commercial sense. In that, it is unable to meet current demands. It is plainly and commercially insolvent - that is to say, that its assets are such, and its existing liabilities are such as to make it reasonably certain-as to make the Court feel satisfied-that the existing and probable assets would be insufficient to meet its existing liabilities".
The machinery for winding up will not be allowed to be utilized merely as a means for realizing debts due from a company.
9. On an examination of the contentions of the petitioner I find the whole edifice of its case to be built upon non-existent foundation and all arguments stems from fallacious assumptions. The petitioner without placing relevant material before this Court, which might throw light upon the matter in question seeks to obtain a decision in the absence of material and information, which a properly informed decision requires, in short to obtain a decision on improper knowledge. The extreme impropriety of such a course could not be made too plain.
The petition is not maintainable and is accordingly rejected.