Punjab-Haryana High Court
Chhabra Steels Strips (P.) Ltd. vs Haspa Wheels Pvt. Ltd. on 7 March, 1996
Equivalent citations: [1996]86COMPCAS703(P&H)
JUDGMENT G.C. Garg, J.
1. Chhabra Steel Strips Private Limited, later on converted into Chhabra Steel Strips Limited, with effect from June 30, 1994, has, through one of the directors, filed the present petition under Sections 433 and 434 read with Section 439 of the Companies Act, 1956 (for short "the Act") for winding up of the respondent-company. As per the averments made in the petition, the respondent-company is engaged in manufacturing bike and auto bike wheels whereas the petitioner-company is manufacturing and supplying CR strips. The respondent-company had been placing orders for the supply of CR strips of different sizes and during the period November, 1993, to September, 1994, in pursuance of the various orders placed by the respondent-company, goods worth Rs. 17,18,480,39 were supplied by the petitioner-company. However, against the aforesaid amount which represents transactions between the parties, the respondent-company paid only an amount of Rs. 12 lakhs and thus an amount of Rs. 5,18,480.39 is still outstanding against the respondent-company. The petitioner-company had been supplying goods to the respondent-company even without prior demand in writing as the two companies had been dealing with each other for many years. The petitioner-company vide its letter dated September 28, 1993, copy at annexure P-1, made it clear to the respondent-company that in future the payment of the bills be made through post-dated cheques for 15 days at the time of delivery of the goods. The petitioner-company by its letter dated January 19, 1994, copy at annexure P-3 requested the respondent-company to release the payment of Rs. 2 lakhs and regarding the remaining outstanding amount, a request was made to issue 4/5 post-dated cheques against the supplies already made. The payment was, however not made. Thereafter the petitioner-company had been pressing the respondent-company to make payment of the outstanding amount. The respondent-company issued two post-dated cheques dated January 31, 1994, and February 4, 1994, worth Rs. 1,05,000 and 1,45,000 respectively, in favour of the petitioner-company but when the said cheques were tendered in the bank, the same were not encashed and rather returned by the bank with the remarks "it exceeds arrangement". The petitioner has placed on record copies of the two cheques, annexures P-8 and P-9 and a communication from the Union Bank of India, annexure P-10. Besides the petitioner also placed on record a statement of pending "C" forms, annexure P-12/A, and statement of transactions, annexure P-15, that took place between the parties during the period November, 1993, to September, 1994. When in spite of repeated requests the respondent did not make any payment of the outstanding amount, the petitioner-company served a notice under Sections 433, 434 and 439 of the Act, copy annexure P-16 on the respondent-company which was received by it on May 31, 1995. In notice, annexure P-16, it was clearly mentioned that as on September 14, 1994, a sum of Rs. 5,18,480.39 was outstanding against the respondent-company and since the amount has not been paid despite several demands, the respondent is also liable to pay interest thereon.
2. In response to the notice issued, the respondent-company filed a reply. By way of preliminary objections it was pleaded that the petitioner has concealed facts from the court. The material supplied by the petitioner-company was of poor quality and the same was rejected. On the merits, it was stated that all the old accounts were settled and the parties decided to start fresh dealings vide letter dated September 13, 1994, annexure R-2. The respondent denied the averments as contained -in the petition and specifically stated that no amount was due from it to the petitioner and though the petitioner supplied material worth Rs. 44,215.30 to it on September 13, 1994, but the same were found defective. According to the respondent, no notice under Sections 433, 434 and 439 of the Act was ever received by it. It was thus prayed that the winding up petition was not competent and was liable to be dismissed. The petitioner also filed replication to the written statement controverting the stand taken therein.
3. I have heard learned counsel for the parties and perused the record. Undisputedly, the parties had business dealings with each other. The petitioner-company had been supplying material/goods to the respondent-company as per the requirement and orders placed by the latter. From the perusal of letters, annexures P-1, P-2, P-3, P-G and P-7, written by the petitioner to the respondent-company, it is quite clear that the respondent had been placing orders for supply of material as per its requirement and the petitioner had been insisting from time to time for payment of the outstanding amount due to it on account of supply of the goods. It is crystal clear from letter, annexure P-5, written by the respondent to the petitioner that the former had been requesting the petitioner-company for supply of material. Further, after having a glance at annexures P-8 and P-9 there remains no doubt that these two cheques were issued by the respondent in favour of the petitioner-company and these cheques could not be encashed by the bank on account of inadequate funds in the account of the respondent-company as is evident from the letter annexure P-10 issued by the bank. Not only this, as noticed above, the respondent-company made a request for supply of material vide its letter dated August 1, 1994, annexure P-5 and this fact stands further proved from the respondent's own letter dated August 22, 1994, addressed to the petitioner whereby a pay order in the sum of rupees one lakh towards the supply ordered on August 1, 1994, was sent by it to the petitioner. From a minute reading of the correspondence placed on the record, it is further evident that the petitioner had sent details of pending "C" forms to the respondent requesting that the same be got signed and returned so that the cases of final assessment of sales tax could be expedited. In almost every letter written by the petitioner to the respondent, a request was made for release of outstanding payment at the earliest and even on one occasion, the petitioner, vide its letter, annexure P-13, was compelled to say that the payment had become too old which was beyond their testing patience and in the interest of their business relations, the payment be released soon lest the petitioner may be forced to resort to other remedy. Annexure P-15 is the statement of transactions made by the petitioner with the respondent-company. The correctness of this document has not been specifically denied by the respondent. The contents and details contained in the statement of transactions are quite in consonance with the averments made in the petition. A perusal of this document would go to show that during the period November, 1993, to September, 1994, total transactions of Rs. 17,18,480.39 took place between the parties out of which a sum of rupees twelve lakhs was paid by the respondent on different occasions and as on September 14, 1995, a sum of Rs. 5,18,480.39 is outstanding against the respondent. The factum of issuing two cheques in the sum of Rs. 1,45,000 and Rs. 1,05,000 by the respondent in favour of the petitioner-company, apparently for payment towards the outstanding amount stands established from entry dated July 26, 1994 of annexure P-15. The said entry further shows that the cheques were not encashed and were returned by the bank. Thus, from what has been noticed above, it is clear that the respondent-company did not clear its debts despite repeated requests and reminders.
4. Learned counsel for the respondent, however, submitted that all the pending accounts were settled between the parties on September 13, 1994, and, thereafter, the parties decided to start fresh dealings. In support of this stand, learned counsel referred to a letter dated September 13, 1994, annexure R-2 written to it by the petitioner. This contention cannot be accepted, for annexure R-2 does not in any way show that all the outstanding accounts between the parties stood settled and, thereafter, fresh dealings started. All that comes out from annexure R-2 is that vide this letter the petitioner-company acknowledged the receipt of a pay order for Rs. 50,000 towards adjustment of the outstanding amount.
5. Learned counsel for the respondent further submitted that the goods supplied by the petitioner were of poor and unmarketable quality and as a consequence thereof, a considerable financial loss was caused to the respondent. Again, this contention has no merit and is bound to fall to the ground. There is not even a single instance available on the record which may suggest that the respondent ever made a complaint to the petitioner regarding quality of the goods supplied. Rather from annexures P-6 and P-7, the letters written by the petitioner to the respondent it is clear that the petitioner had been requesting the respondent to depute its man for inspection of the material. These letters are dated August 2, 1994, and August 4, 1994, and, thereafter, the respondent vide its letter dated August 22, 1994, annexure P-11 sent a pay order for rupees one lakh in favour of the petitioner-company for payment towards the outstanding amount. Thus, from the mere fact that the respondent issued a pay order in the sum of Rs. 1 lakh in favour of the petitioner as part payment of the outstanding amount, it can be easily concluded there was no complaint whatsoever regarding quality of goods. Thus, in the absence of any proof on the record in this behalf, the contention of learned counsel cannot be accepted.
6. Lastly, learned counsel for the respondent submitted that no notice under Sections 433, 434 and 439 of the Act was ever received by the respondent. This submission also has no merit. During the course of hearing, learned counsel for the petitioner produced on record a postal receipt evidencing the fact that on May 26, 1995, a registered letter was sent to the respondent-company and from the acknowledgment which was also produced by learned counsel, it is clear that a registered letter, apparently containing a notice under Sections 433, 434 and 439 of the Act as per averments in the petition, was received by the respondent-company on May 31, 1995. The acknowledgment bears signatures of somebody who received the registered letter on behalf of the respondent. The acknowledgment also carries an impression of stamp of the respondent-company. This has not been disputed by learned counsel for the respondent.
7. Now, adverting to the question of liability on the part of the respondent to make payment of amount to the petitioner and the failure of the respondent to clear its debts, it may be mentioned here that in winding up proceedings the court is not required to determine the amount that remains to be paid. However, all that is required to be seen is that the respondent is liable to pay to the petitioner an amount exceeding Rs. 500 and which has not been paid despite demand. In the present case, though the petitioner has pleaded that an amount of Rs. 5,18,480.39 is outstanding against the respondent which was not paid despite numerous demands and the respondent has denied its liability to pay the said amount, yet in para. 12 of the written statement it has been admitted by the respondent that the petitioner supplied to it the material worth Rs. 44,215.30 on September 13, 1994. It is, however, stated that the said material was found defective. But the respondent has not been able to bring any material on record either to show that the payment of the said amount was made by it or that the respondent lodged any complaint to the petitioner regarding defect in the quality of the material supplied on September 13, 1994. In the wake of this fact it can unhesitatingly be concluded that the respondent did not make the payment of the aforesaid amount and it can, in other words, be held liable for payment thereof. The payment of Rs. 50,000 by the respondent that finds mention in annexure R-2 cannot in any way be said to be the payment for the material supplied by the petitioner on September 13, 1994, as in the letter, annexure R-2, it has been recorded that "we acknowledge the receipt of a Pay Order No. 886711, dated September 13, 1994, for Rs. 50,000 payable on SBI, Ram Darbar, Chandigarh. This amount stands adjusted according to the understanding already arrived at mutually. The material against your order is being supplied today". Thus from what has been stated above, it can safely be concluded that the defence raised by the respondent is neither bona fide nor plausible. The fact remains that the respondent has failed to make the payment of the amount due from it to the petitioner and, therefore, it is held that the respondent-company is unable to pay its debts.
8. For the foregoing reasons, this petition is admitted and ordered to be published at least 14 days prior to the date of hearing, in the Indian Express, the Punjabi Tribune and the Punjab Government Gazette.
9. To come up on April 18, 1996, for further proceedings.