Delhi High Court
Rama Tube Company And Sanjay Steel Tube ... vs Jay Rapid Roller Ltd. on 20 December, 2002
Equivalent citations: 102(2003)DLT672, [2003]44SCL555(DELHI)
Author: Vikramajit Sen
Bench: Vikramajit Sen
JUDGMENT Vikramajit Sen, J.
CP 332/2000
1. This winding-up petition has been filed on the allegation that the Petitioner, who is engaged in the business of steel pipes, M.S. Pies and various other steel items, had been supplying these items to the Respondent, who is engaged in the manufacture of rubberized and steel rollers consumed in the printing, textile and paper industries. In paragraph six of the petition it has been pleaded that - "On account of the supply of the material, a current and running account was being maintained by the petitioner in respect of all the transactions had with the respondent-company". It is the Petitioner's case that payments were to be made within thirty days failing which interest at the rate of 21 per cent per annum would be chargeable. The Statement of Accounts has been filed as Annexure 'A' showing an amount of Rs. 27,62,585.03 due and payable on account of principal amount of Rs. 31,01,934/- towards interest, aggregating to Rs. 58,64,520 outstanding in favor of the Petitioner and against the Respondent as on 30.6.2000. It is averred that as a partial payment of its liabilities, the Respondent had issued a cheque post-dated to 12.7.2000, bearing No. 714205 in the sum of Rs. 25,00,000/- and had promised to clear that remainder shortly after 20th July, 2000. When this cheque was presented for encashment it was dishonoured by the Respondent's bankers with the endorsement "payment stopped by Income-tax authorities". The statutory notice dated 21.7.2000, demanding payment of Rs. 58,64,520 along with future interest at the rate of 21 per cent per annum was served on the Respondent Company who neglected to send any reply and failed to elicit any response indicating the Respondent's defense to the claims made therein. The Petitioner has pleaded that the Respondent has become commercially insolvent.
2. The defense to the winding-up petition is to be gathered from the following paragraphs of the petition.
"2. That five cheques (with subject instrument being one amongst them) were 'reported lost' by the replying respondent, near its work precincts at Daruhera, which event finds itself duly recorded and contemporaneously so, with the concerned police station at the same very place.
The blank, albeit signatured instruments (bearing numbers as 714201, 714202, 724203, 71404 and 714205, all drawn on the State Bank of India, Padam Singh Road Branch, Karol Bagh, New Delhi) were journeying from the latter's premises at East Patel Nagar in New Delhi to its work premises at Daruhera in Haryana, when the ill-fated occurrence culminated into existence and with it, the necessity to ledge a corresponding report with the local police station.
3. That proving terminally instrumental regarding deciphering the fate of instruments 'reported lost' were summons issued from the Court of Metropolitan Magistrate, Delhi in complaints filed against the replying respondent for offences under Section 138 of the Negotiable Instruments Act, 1881. Shockingly, the complaints under preceding reference (the subject matter whereof is borne by instruments 'reported lost'), originated at behest of the petitioner company, albeit more intriguing and 'investigation starved' respects the methodology deployed and contrived by the latter, who constitutes 'no stranger' to the replying respondent (and used to practice regular business dealings) towards materialising the misadventure indulged in by it.
.....
6. That the replying respondent wishes to reiterate the proposition sought to be asserted vide contents appearing in the foregoing paragraphs, significantly one, respecting the former owing to the petitioner, no liability of any nature whatsoever. Admittedly, the litigants were having with each other, regular business dealings and transactions but conducting the preceding aspect with impugned outstandings, present sheer misadventurism, courtesy facts in nature dwelled upon afore".
3. On 11.2.2002 the following Order was passed:
"CP. 332/00 & CAS.1301-02, 1878/01 Mr. Manan, the learned counsel appearing for the respondent has again been explained the Order dated 30.1.2002 which directed the respondent to file a copy of the audited accounts Along with affidavit including the list of the sundry creditors for the last 8 years with advance copies to learned counsel for the petitioner. Let the needful be done by the respondent on or before 20th of February, 2002. Response to the affidavit be filed before the next date.
Copy of the criminal complaint, said to be filed by the respondent shall also be filed in this Court Along with the affidavit.
List on 25.2.2002".
(Emphasis supplied)
4. By orders dated 18-9-2001, the Respondent Company was directed to pay the Petitioner the admitted amount in terms of its Balance Sheet within four weeks.
5. Time to file the Audited accounts commencing from 1992-1993 till eight years thereafter was extended on 25.2.2002 but the said Order has not been complied with till date, despite several intervening dates of hearing. These documents have been certified by the Respondent Company and not by its Auditors. Eventually learned counsel for the Respondent had stated that it may be presumed that the amounts claimed in this petition has been shown in the list of sundry Creditors.
6. On 14.11.2000 an F.I.R. was lodged by the Respondent with the S.H.O., Police Station, Daruhera, Rewari, Haryana stating that the said five cheques were stolen from the Respondent's factory Accounts Office, Daruhera by Shri Sanjay Aggarwal, one of the partner of the Petitioner, and this statement has also been repeated in a Complaint filed before the Additional Chief Metropolitan Magistrate, New Delhi under Section 200 Cr.P.C. for alleged offences under Sections 379/411/420/468/471/34 IPC. It appears that whilst the Complaint is still pending without notice to the Petitioner, the Police authorities have initiated proceedings under Section 182 against the Respondent for making a false complaint, in terms of the F.I.R. dated 14.11.2000. With regard to cheque No. 714205 for Rs. 25 lakhs the Respondent's version that it, along with four other cheques, was lost or stolen by Shri Gupta, is not possible to accept. The five cheques were obviously in the possession of the Respondent's employee Shri Mahesh Kumar Sharma on 28.2.200 since they had allegedly "fallen near old Bus Stand Dharuhera on 28.2.2000". This story is later on changed to the cheques being stolen. If they were stolen, it is difficult to explain why they should have been presented for encashment after four months. There are other unexplained features, but since the matter is receiving the attention of the appropriate legal forum, I shall desist from going into details.
7. According to the Petition, the following Table will clarify the dealings between the parties:-
"COMPARATIVE STATEMENT OF ACCOUNT As per Petitioner (Rs.) As per: Respondent (Rs.) Total material supplied 50,61,512.70 50,57,322.10 Payment received 38,00,235.00 37,60,235.0.0 Payment made by cheques by Petitioner to Respondent.
15,85,235.00 1 ,85,235:00 Debit notes 83,927.20 14,82,322.10"
8. The Respondent has pleaded, if I have understood the following passages correctly, that after the adjustment of a number of Debit Notes, no payments are outstanding in favor of the Petitioner:
"That containments foregoing and documents annexed in support thereto make it more than manifestly clear respecting an all pervasive failure overwhelming books of accounts maintained by petitioner company. The failure thus referred, courtesy reasons best understood by and known to petitioner company, if consolidated, works out to a magnitudinal figure of Rs. 12,89,000.00 odd. A fate, no different than foregoing is chershed by instrument, a reference whereto is elucidated by page number 6 of the affidavit under reply. Not to be read disjunctively with proposition preceding, is an otherwise intriguing fact of the instrument thus referred, tendered by a party who deserved to receive payments against material supplied and not the converse of proposition just cited illustrated unequivocally from a certified copy of answering respondent's statement of account (annexed at Annexure R-XIV to the present affidavit), wherein the instrument thus particularised finds no revelation, the proposition foregoing attains an irrebuttable standpoint.
That succinct as could be, the ensuing conclusion may appear as an epilogue to containments foregoing. The present company petition seeks to recover Rs. 27,60,000.00 odd by way of principal sum. Appropriate against it, the sum of two figures elucidated in much vivid details in preceding section of the present affidavit and the recovery contemplated garners a reduction of enormous proportions. further adjust, figures against debits effected vide notes, accumulating an undisputed accession on part of petitioner company and the result emerging coincides with a closing balance of Rs. 0.00 in answering respondent's books (vis-a-vis the petitioner's account).
9. It is the Petitioner's contention that the Respondent's claim that Debit Notes aggregating Rs. 14,82,322.10 instead of Rs. 83,927.20 is belied by the fact that 'C' Forms in respect of these transactions have been duly supplied to the Petitioner by the Respondent, and in some cases, even after three years of the concerned transaction. Further, there is no proof that the Debit Notes produced by the Respondent have been served on the Petitioner, who has denied them as fraudulent. In my view, since 'C' Forms have been issued by the Respondent, it cannot now be argued that defective supplies were effected by the Petitioner to it, drawing strength from the decision in Mittal Iron Foundry (P) Ltd. v. Elektro Flame Limited, (2000) 1 CLJ 192(AP). This version of the existence of Debit Notes for the large sum of Rs. 14,82,322.10 cannot be countenanced because of the absence of any mention of it in the Reply to the Petition. Apart from the legal formality of note traveling beyond pleadings, it is simply incredulous that a party would fail to mention such a large adjustment as this at the very first instance.
10. There is another disturbing feature of the Respondent's conduct in these proceedings. In the Statement of Accounts of the Petitioner filed by the Respondent, there is no mention of a sum of Rs. 14,00,000/- received by it from the Petitioner by cheque dated 18.3.1995. The Respondent has also failed to mention a payment of Rs. 40,000/- allegedly made by it to the Petitioner on 26.6.1999. The Respondent's counsel has contended that this amount was not reflected in its statement because it was separate and unrelated transaction in which the Respondent had advanced Rs. 15,35,235/- to the Petitioner which was squared off by the Petitioner by the said cheque for Rs. 14,00,000/- and another of Rs. 1,35,235/-. However, in the affidavit of Shri Sukhbir Singh Paintal dated 25.2.2002 the following deposition has been made on behalf of the Respondent.
"3. Vide the present affidavit, the deponent seeks the indulgence of this revered institution to extend a much chershed perusal to documents enclosed herewith. The enclosures embrace a significant aspect, hitherto unexplained. They beget a revelation respecting values lying unaccounted for (in statement emphasized by the petitioner company) against materials returned for rejections occasioned out of inadherence to specifications ordered, shortcomings in quality and like reasons. Interestingly, the values, against aspect foregoing surpasses as otherwise formidable figure of Rs. 14,00,000.00 (Rupees fourteen lacs only). The balance respecting the alleged 'principal amount' embodies no less concoctions, fabrications and manipulations, an aspect demonstrated unequivocally from documents accompanying affidavit filed pursuant to orders of this Hon'ble Court dated the 11th of February, 2002.
4. That least, the afore particularised petition requires an outright dismissal with an imposition of exemplary costs in an attempt to curtail and dissuade such frail and frivolous litigation in future."
11. In the enclosed Statement of Accounts, which appears to be a computer print out, whilst the sum of Rs. 15,35,235/- and Rs. 1,35,235/- has been shown, the sum of Rs. 14,00,000/- is missing altogether, which sum cannot be denied because of a certification dated 17.8.2002/25.9.2002 by the Respondent's Bankers, Oriental Bank of Commerce available on record at the initiative of the Petitioner. It is to the effect that this cheque of the Petitioner was duly encashed but was not routed through the Respondent's operative account. Instead, on the Respondent's instruction an FDR for this sum was directly made in favor of the Respondent. Once this sum of Rs. 14,00,000/- is introduced into the Statement of Accounts filed by the Respondent, the immediate effect would be that the Respondent would be indebted to the Petitioner to this extent. There has thus been a deliberate suppression of material facts, and prima facie, the preparation and filing of false documents. Since the Statement of accounts filed in February 2002 stops inexplicably and abruptly on 16.12.1997, the payment of Rs. 40,000/- on 26.6.1999 cannot be counter checked.
12. Mr. Rastogi has laboured the point that the Winging-up Petition was in respect of time barred debts and should not be entertained on this short ground. It must immediately be noted that the Respondent has not specifically denied the averment in the Petition that a current and running account was maintained by the parties, as can be seen from the Reply inter alia to paragraph 6 of the Petition. The Objection as to the Petition being barred by limitation on the argument of Article 1 of the Limitation Act not being applicable is overruled for this reason. Even otherwise, the decision of the Apex Court in The Hindustan Forest Company v. Lal Chand and Ors. , [(1960(1)] Supreme Court Reports 563 in which several payments had been made in liquidation of the sale price of one purchase is of little assistance to the Respondent. In the case in hand, since there are several sale transactions in which on account payments were made, Article 1 the relevant provision to the applied. The transaction of Rs. 14 lakhs, which was stated by the Respondent to be separate and distinct from other dealing of purchase, would bring into existence reciprocal dealings. In the circumstances of this case, the argument that it is Article 14 of the Limitation Act that applies is untenable. The decision in Jiwanlal Achariya v. Rameshwarlal Agarwalla, , runs counter to the argument projected by Mr. Rastogi. The majority of their Lordships had opined that "where a post-dated cheque is accepted conditionally and it is honoured, the payment for the purposes of Section 20 of the Limitation Act can only be the date which the cheque bears and cannot be on the date the cheque is handed over, for the cheque, being post-dated, can never be paid till the date on the cheque arrives." It seems that the minority judgment is sought to be relied upon. The cheque in question stood dishonoured in July 2000, and the Winding-up Petition filed in September, 2000 is clearly within time. When the Respondent's Account Statement is perused, it will be evident that the Petition is not time-barred since, according to the Respondent, some material was rejected on that date.
13. Mr. Rastogi has also contended that if the dealings between the parties are to be governed by Article 1 of the Limitation Act, then each and every entry should be proved, rendering the summary procedure per se to be inappropriate. Assuming this proposition to be the correct exposition of law, I find that the Respondent's liability set out in paragraphs 8 & 12 of the Petition has not been specifically denied. The Respondent was duty bound to plead which entry it denies. A vague, general and omnibus denial is not sufficient. Moreover, the Respondent's case appears to be founded on its debit-notes and not on the correctness of each entry or several entries in the Statement of Accounts filed along with the Petition. Pleadings are not pointless procedural formalities, but are purposeful; by it, parties put each other on caution as to the points of dissension. It is trite to repeat that evidence as well as arguments can be raised only within the factual matrix mentioned in the respective pleadings.
14. I do not find that a bona fide defense has been disclosed by the Respondent Company. The Petition is admitted. The Petitioner has claimed a principal sum of Rs. 27,62,585.03 and another sum of Rs. 31,01,934/- towards interest. The dishonoured cheque is for Rs. 25 lakhs, which sum should be deposited by the Respondent Company within fifteen days with the Registrar General of this Court. Thereafter the Respondent Company shall similarly deposit a further amount of Rs. 2,62,585.03 within fifteen days. The question of payment of interest will be considered on the next date of hearing. In the event that the deposits are not made Citation shall be published in the Times of India, Delhi edition and Veer Arjun, returnable for 28th March, 2003. Appointment of a Provisional Liquidator shall be considered on the next date.
15. Renotify the matter on 28.3.2003.
CP 333 of 2000
16. The facts of this case are similar to those in CP 332 of 2000. For this reason I do not consider it necessary to give a detailed judgment, and the views expressed in CP 332 of 2000 shall apply to the present petition also.
17. I do not find that a bona fide defense has been disclosed by the Respondent Company. The Petition is admitted. The Petitioner has claimed a principal sum of Rs. 39,28,851.55 and another sum of Rs. 51,88,390345 towards interest. In the present case a cheque for Rs. 35,00,000/- bearing NO. 714204 drawn on State Bank of India stated to have been tendered to the Petitioner by the Respondent, which cheque was dishonoured with the remarks "payment stopped by Income-tax authorities". The quantum of debts claimed by the Respondent are different but the reasons for my rejecting those are the same as in the foregoing petition. Accordingly, the Respondent Company is directed to deposit with the Registrar General of this Court a sum of Rs. 35,00,000/- within fifteen days from today. Thereafter the Respondent Company shall similarly deposit a further amount of Rs. 4,28,851.55 within fifteen days. The question of payment interest will be considered on the next date of hearing. However, since Citation has been ordered in CP 332 of 2000 there is no necessity for it to be again ordered in these proceedings. The appointment of a Provisional Liquidator, however, shall be considered on the next date of hearing.
18. Renotify the matter on 28.3.2003.