Andhra HC (Pre-Telangana)
M/S. Electro Flame Ltd. vs M/S. Mittal Iron Foundry Pvt. Ltd. on 9 February, 1998
Equivalent citations: 1998(2)ALD594, 1998(3)ALT252, [1998]93COMPCAS420(AP), AIR 1998 ANDHRA PRADESH 203, (1998) 31 CORLA 417, (1999) 1 BANKCAS 696, (1998) 2 ANDHLD 594, (1998) 3 ANDH LT 252, (1998) 2 APLJ 6, (1998) 93 COMCAS 420, (1998) 3 COMLJ 464, (1999) 4 CURCC 189
Author: Umesh Chandra Banerjee
Bench: Umesh Chandra Banerjee, P. Venkatarama Reddi
ORDER Umesh Chandra Banerjee, C.J.
1. This appeal is directed against the order of the learned single Judge admitting the Company Petition filed by the respondent -petitioner under Section 433 of the Companies Act, 1956. The only defence raised before the learned single Judge is the plea of limitation. There cannot possibly be any doubt that the plea of limitation would be a substantial defence in an application for winding up provided, however, it has its sustenance from the factual score.
2. On the wake of the aforesaid, let us advert to the factual aspect of the matter briefly at this juncture : Admittedly, the respondent - Company had supplied C.I. castings, fan body, bottom covers etc., to the appellant - Company in the month of August, 1992 under two separate bills i.e., for Rs.98,268.77 ps. and Rs.l,32,939.46 ps., totalling Rs.2,31,298.23 ps. The petitioner before the learned single Judge did serve a legal notice on 3-08-1995 and thereafter a statutory notice under Section 434 of the Companies Acton 27-08-1996. The appellant
- Company, however, thought it prudent not to reply to any of the notices as above and by reason of which, the petitioner before the learned single Judge filed an application for winding up of the appellant - Company under Section 433 of the Companies Act. Before the learned single Judge, it has been the specific contention of the appellant herein, being the respondent therein, that since the claim of the petitioning creditor, being the respondent herein, is barred by the laws of limitation, there is no existing debt and, therefore, the question of failure on the part of the appellant to pay the debt does not and cannot arise. While it is true that there ought to be a debt existing, and a barred debt cannot be termed to be a debt existing but the factual context shall have to be assessed so that the contention in regard thereto may be considered in its proper spirit. The records depict that as late as March, 1995 the appellant
- Company has furnished sales-tax declaration forms by way of C-form in respect of the self-same transaction to the petitioning creditor. This submission of C-form, in our view is a significant element in itself inasmuch as the same admit of the existence of a jural relationship between the parties. In this context, the observations of the Supreme Court in the case of S.F.Mazda v. Durga Prasad, ought to be noted The Supreme Court in no uncertain terms has observed that though a plea of acknowledgment ought to relate to a present subsisting liability but an exact nature or specific corrector of the said liability may not be indicated in words and in the event the words used indicate the existence of jural relationship between the parties such as that of debtor and creditor and the statement is made with the intention to admit such jural relationship, question of the claim being barred does not arise. The Supreme Court went on to observe that the intention to admit jural relationship can also be inferred by implication from the nature of the admission and need not be expressed in words and if the statement is fairly clear, then, and, in that event intention to admit jural relationship may be implied from the same.
3. As noted above, the appellant -Company did furnish sales-tax declaration form regarding the self-same sale transaction between the parties. Does it not mean and imply that there has been an intention on the part of the appellant - Company to admit the existence of a jural relationship between the parties such as that of debtor and creditor in regard to the debt in question - in our view, the answer cannot but be in the affirmative. As such, the plea of limitation in the contextual facts, on the basis of the law laid down by the Supreme Court, as noted above, cannot be sustained.
4. The learned advocate appearing for the petitioning - creditor, however, also drew our attention to some of the documents annexed to the appeal viz., statements of balance of accounts confirmed by the appellant - Company. It appears that for three consecutive years i.e., for the years 1993, 1994 and 1995 there are balance confirmation letters which stand certified by putting a rubber stamp of the appellant -Company with an initial thereon and contended that by reason of such a balance confirmation, question of the claim being barred by the Laws of Limitation does not and cannot arise. It has been contended that as a matter of fact the balance confirmation cannot but be termed to-be a definite acknowledgment of liability within the meaning of the Limitation Act. As such the question of the debt being barred by the Laws of limitation does not and cannot arise.
5. The learned Advocated appearing for the appellant - Company, however, submitted that though it has been signed by the Office Manager of the Company, the Office Manager is not an authorised person to sign on behalf of the appellant - Company. Significantly, however, this very Office Manager has been authorised by the appellant - Company to sign in matters pertaining to excise matters involving the Company. In any event, though the Office Manager cannot be termed to be a principal officer of the Company within the meaning of the Companies Act - but he cannot but be termed as a responsible officer for the purpose of making an acknowledgment of liability for and on behalf of the company. On the factual score, therefore, also there is no merit as regards the plea of limitation.
6. The learned Advocate for the appellant-Company did place reliance on the decision of this Court in K. Appa Rao v. Sarkar Chemicals P. Ltd., (1985) 84 Comp. Cases, wherein the learned single Judge of this Court has observed that "in cases where the Company has a prima facie sustainable defence or a bona fide dispute of its obligations to discharge the alleged debts or liabilities, the Court may not entertain proceedings for winding up". No exception, however, can be taken to the observations of the learned single Judge, but the contextual facts herein depict, however, a different story and as such no assistance can be had by the appellant - Company to the observations of the learned single Judge in the above decision. The two notices served by the petitioner -Company on the appellant - Company, including the statutory notice under Section 434 of the Act, went unheeded and there was no attempt on the part of the appellant - Company to explain as to why such notices were not replied to. The plea of limitation by itself without scrutiny of facts cannot be termed to be a defence, far less a bona fide defence, so as to resist an application for winding up. It is a duty incumbent on the person contending and availing of such a plea to satisfy the judicial conscience of the Court as regards the substance of it upon proper assessment of the facts of the matter under consideration and in the event facts turned otherwise, question of drawing sustenance there-from does not and cannot arise. The defence must be a bona fide defence and not sham, illusory or moon-shine.
7. On the wake of the observations as above, we are unable to record our concurrence with the submissions of the learned advocate appearing for the appellant - Company. In that view of the matter, this appeal fails and is dismissed. There shall, however, be no order as to costs.