Full Judgment Text
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 24.04.2014
+ CO. PET. 302/2012 & CA No. 1209/2012
M/S OLAM AGRO INDIA LTD ..... Petitioner
versus
M/S MOTHER V IMPEX PVT LTD ..... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Arun Kathpalia, Mr Rajat Jariwal,
Mr Angad & Ms Anisha Somal.
For the Respondent : Mr Raman Kapur, Sr. Adv. with Mr Rishab Raj
Jain.
CORAM:-
HON’BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
The present petition has been filed by the petitioner company under
1.
Sections 433(e) and 434 of the Companies Act, 1956 (hereinafter referred
to as the ‘Act’) inter alia praying for winding up of the respondent
company on the ground that the respondent company is unable to pay its
debts. It is alleged that the respondent had failed and neglected to pay a
sum of ` 8,45,89,296/- alongwith interest, which was claimed as due and
payable by the respondent company on account of supply of goods by the
petitioner to the respondent. The respondent denies that the amount claimed
by the petitioner is due and payable and states that there is a bona fide
dispute with regard to the amount claimed by the petitioner and therefore,
the present petition is not maintainable.
Co.Pet. 302/2012 Page 1 of 12
2. The controversy that needs to be addressed in the present case is
whether the defense raised by the respondent is bonafide or a sham defence.
And, whether the petition needs to be admitted in view of the defence
raised by the respondent.
3. Briefly stated, the relevant facts are that the petitioner company and
the respondent company entered into Commodity Trade Finance
Agreement dated 27.01.2010 (hereinafter referred to as ‘Agreement’)
whereby the parties agreed to source, supply and make payment for the
import of almonds, pistachios, raisins etc. In pursuance of the said
agreement, the petitioner supplied the agreed goods to the respondent,
during the period between 01.07.2010 to 25.10.2011 and raised invoices for
the same.
4. It is stated by the petitioner that the respondent failed to make the
payment towards the invoices and as on 31.03.2011, a sum of
` 8,45,89,296/- was outstanding and payable by the respondent to the
petitioner. It is submitted that the respondent issued seven cheques of
1,00,00,000/- each drawn on Axis Bank Ltd., bearing Cheque
`
Nos.104668, 104669, 104670, 104671, 104672, 104673 and 104674 dated
31.03.2011 towards part payment of the aforementioned liability of
` 8,45,89,296/-. The learned counsel for the petitioner has drawn my
attention to a letter dated 14.04.2011 sent by the petitioner to the
respondent confirming the receipt of the said cheques towards part of
outstanding amount. It is pointed out that the said letter was countersigned
by the authorized representative of the respondent company. It is submitted
that the said letter mentioned that the petitioner intended to present the
Co.Pet. 302/2012 Page 2 of 12
cheques on 18.04.2011, however, the said date was scored off and replaced
with the date of 24.04.2011, under the signatures of the authorised
representative of the respondent company. It is submitted by the petitioner
that the same clearly indicated that the respondent desired and was
agreeable that the said cheques be presented on 24.04.2011 instead of
18.04.2011.
5. It is pointed out by the petitioner that a Positive Receivable and
Confirmation Request dated 15.04.2011 was also signed on behalf of the
respondent company whereby it was acknowledged by the respondent that
a sum of ` 8,45,89,296/- was due and payable by the respondent company to
the petitioner, as on 31.03.2011. Thereafter, the respondent issued another
cheque for a sum of ` 1,00,00,000/- being Cheque No.104692 dated
31.03.2011 drawn on Axis Bank Ltd. It is stated that the petitioner sent a
letter dated 05.05.2011 to the respondent confirming the receipt of the said
cheque and the said letter was also acknowledged by the respondent.
6. It is submitted by the petitioner that the cheques issued by the
respondent were dishonoured and the petitioner initiated proceedings under
Section 138 of the Negotiable Instrument Act, 1881. It is submitted that the
statutory notices for initiating such proceedings were sent by the petitioner
to the respondent on 21.07.2011 and 05.09.2011 . Subsequently, the
petitioner issued a statutory notice dated 08.12.2011 under Section
434(1)(a) of the Act, however, the same elicited no response from the
respondent.
Co.Pet. 302/2012 Page 3 of 12
7. It is contented by the learned counsel for the petitioner that the
respondent has failed to pay the amount of ` 8,45,89,296/- alongwith
interest, despite service of the statutory notice under Section 434(1)(a) of
the Act. The learned counsel for the petitioner also relied upon the Positive
Receivable and Confirmation Request dated 15.04.2011 in support of his
contention that the amount of ` 8,45,89,296/- was admitted by the
respondent to be due and payable to the petitioner.
8. In response to the winding up petition, the respondent has filed its
reply disputing that the amounts claimed by the petitioner were due and
payable by the respondent. It is stated by the respondent that even after
31.03.2011, the respondent continued accepting goods supplied by the
petitioner and also made payment towards the same. It is submitted that
from period between 01.04.2011 to 25.10.2011, the respondent purchased
and took delivery of goods for consideration aggregating 2,30,95,275.59
`
and also made a payment of ` 4,01,51,900.26 to the petitioner. The
respondent has stated that the balance amount outstanding is
` 6,56,51,469.97. The respondent has also filed a statement of accounts
indicating the above. It is contended that even after receiving further
payment, the petitioner did not return the two cheques (towards the
amounts already paid), issued as a security and to this effect, the respondent
also sent a mail dated 23.11.2011 to the petitioner. The petitioner also
accepts that a principal sum of ` 6,67,75,450/- was outstanding as on date
since the petitioner had received certain amounts after 31.03.2011 .
9. It is contended by the respondent that the petitioner had charged the
currency premium on the goods supplied and hence had been raising bills in
Co.Pet. 302/2012 Page 4 of 12
excess of the amount payable for the goods supplied by the petitioner. It is
stated that the said premium was included in the invoices raised by the
petitioner to cover the possible fluctuation in foreign exchange. It is
contended that in this manner the petitioner had overcharged by adding
certain amounts on account of foreign exchange premium and if charges on
account of the said premium were excluded, the respondent would have no
difficulty in making payment of the amount that may be found due and
payable to the petitioner. The learned counsel for the respondent has also
drawn my attention to clause 8 of the Agreement between parties, which
specifically provides that in case the contract has been agreed in US
Dollars, “the dollar value is freezed and payment would be received with
premium upto the date of payment”. It is admitted by the respondent that
the payment for the goods would be payable at the prevailing foreign
exchange rate prevailing at the time of making payment. It is also stated
that as the amounts were payable after four months.
10. It is also contended that in the year 2010 & 2011 (during the festival
of Diwali), the petitioner released the stocks very late and as the petitioner
was charging the currency premium for lifting the stocks, therefore, the
respondent had to purchase the material from local market. It is contended
that, due to the default and breach on the part of the petitioner, the
respondent has suffered losses, which the respondent was entitled to
adjust/recover from the petitioner. The counsel for the respondent has also
relied upon letters dated 21.11.2011, 08.12.2011 and 12.12.2011 whereby
disputes relating to non-lifting of goods in the Diwali season and charging
of premium have been alluded to. According to the learned counsel for the
Co.Pet. 302/2012 Page 5 of 12
respondent, the said documents indicate that there was a dispute regarding
the payment of the amounts claimed by the petitioner and thus, the present
petition would not be maintainable.
11. It is contended by the learned counsel for the respondent that there is
a bona fide dispute with respect to the amount claimed by the petitioner and
the same cannot be adjudicated in proceedings under Section 433(e) of the
Act. In support of this contention, the learned counsel for the respondent
has relied upon the decisions of this Court in RPG Cables Ltd. v. Logic
Eastern India Pvt. Ltd. : 2011 (176) DLT 641 and Tata Capital Financial
Services Ltd. v. Clutch Auto Ltd. : 2014 (2) AD (Delhi) 163 .
12. It is contended by the respondent that the respondent had been
tricked into providing the balance confirmation on account of a
representation made by one of the employee of the petitioner company.
13. It is further contended by the counsel for the respondent that, on
account of the facts as stated above, a dispute has arisen and as per the
calculation of the respondent (after giving and adjusting the currency
premium charged, the worth of the balance stock sold in open market,
further payments made, interest etc.), the amount left to be paid by the
respondent to the petitioner would not be significant and the present
petition is, thus, not maintainable.
14. I have heard the learned counsel for the parties.
15. The short question that requires to be determined in the present
proceedings is whether the defence raised by the respondent is a bonafide
Co.Pet. 302/2012 Page 6 of 12
defence. It is well settled that in cases where there is a bonafide dispute, the
proceedings under Section 433(e) would not lie. It is settled law that
proceedings under Section 433(e) cannot be used to pressurize a company
to make payment of disputed debts. It is also settled that where a claim is
disputed, there cannot be an admitted debt and the omission to pay the same
cannot be construed as inability on the part of a company to pay its debts.
However, it is equally well settled that a sham and a moonshine defence
will not be permitted to negate the right of the creditor to maintain a
petition under Section 433(e) of the Companies Act, 1956. An illusory and
a speculative defence raised only for the purpose of avoiding payments to a
petitioner cannot be construed as a substantial or a bonafide defence to a
petition under Section 433(e) of the Companies Act, 1956. The Supreme
Court in the case of IBA Health (India) Pvt. Ltd. v. Info Drive Systems
SDN. BHD : (2010) 10 SCC 553 has explained the above principle as
under:-
“20. 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 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
Co.Pet. 302/2012 Page 7 of 12
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.”
16. In the present case, it is not disputed that the goods in question were
supplied to the respondent. It is also not disputed that invoices relied upon
by the petitioner were received by the respondent at the material time. The
letter dated 14.04.2011 clearly indicates that the respondent had agreed that
the cheques aggregating to ` 7 crores be deposited by the petitioner by
24.04.2011 against part discharge of the outstanding amount. It is not
disputed that the said letter has been signed by an authorised representative
of the respondent company. The petitioner states that the said signatory was
a Director of the respondent company at the material time. This is not
accepted by the respondent and it is pointed out that the signatory is the
husband or one of the Directors’. Be that is it may, it is not disputed by the
respondent that he was authorised to sign on behalf of the respondent
company. It is also apparent that authorised signatory was closely
connected with the business and could not have been expected to sign
acknowledgements which were not correct. The contention that the
respondent was induced to sign the balance confirmation is ex facie not
credible.
17. Further, in addition to the letter dated 14.04.2011, the balances as
appearing in the books of accounts had also been confirmed. Admittedly, at
this stage, there were no disputes between the parties and the attention of
this Court has not been drawn to any correspondence which indicates even
Co.Pet. 302/2012 Page 8 of 12
a whisper of dissention between the parties at the material time. The letter
dated 05.05.2011 acknowledges that the petitioner had received a cheque
for a sum of ` 1 crore from the respondent. The said letter also bears the
signatures of the authorised representative of the respondent. Even if, it is
assumed that the balance confirmation as also the cheques had been
obtained by the petitioner, in April 2011, by making certain false oral
representations, it is obvious that by May 2011, the respondent would have
become wiser and would have raised the disputes, in the event the same
existed. However, the correspondence between the parties clearly indicates
that there were no disputes between the parties at that stage.
18. Essentially, the respondent has raised two disputes: (a) the petitioner
has overcharged the respondent on account of currency premium and (b)
that the petitioner is liable to compensate the respondent for the alleged
losses suffered by the respondent on account of delay in supply of goods
for the Diwali season of 2010 and 2011. It is settled law that the stage at
which the disputes are raised is a material factor while determining the
question whether the disputes are bonafide or not. In the present case, the
disputes that are sought to be raised are clearly at a belated stage. The
respondent claims to have conducted business with the petitioner for a
value of about ` 55 crores in the past. The issue of charging premium had
apparently never been raised by the respondent prior to the issuance of
notice under NI Act. The same is also indicative of the fact that the disputes
sought to be raised by the respondent are an afterthought.
19. It is an admitted case that as per Clause 8 of the Agreement, the
petitioner was liable to pay for the goods supplied in the foreign currency at
Co.Pet. 302/2012 Page 9 of 12
the rate prevalent on the date of realization. However, the premium charged
insulated the respondent from any adverse impact on account of fluctuation
in the rate of foreign currency. Apparently, the respondent had accepted the
same without any protest. The books of accounts maintained by the
respondent also do not reflect any unadjusted amount on this count. In my
view, the said dispute is, clearly neither substantial nor bonafide.
20. The claim that the respondent had suffered losses, which are liable to
be compensated by the petitioner is also not a bonafide dispute. The
respondent had made no protest at the material time i.e. the Diwali season
of 2010. This indicates that there was no dispute between the parties on this
account. The disputes sought to raised in November, 2011 were after the
cheques issued by the respondent had been dishonoured and the petitioner
had taken steps for initiation of proceedings under the Negotiable
Instrument Act, 1881. In the event that the respondent was aggrieved by
any delay in supply of goods, the contemporaneous correspondence in 2010
and even in early part of 2011 would indicate the same. In absence of any
dispute at the material time, the contention that the debt claimed by the
petitioner is disputed cannot be accepted.
21. The contention of the respondent that certain cheques had been
issued to the petitioner as security is also not sustainable. The letters dated
14.04.2011 and 05.05.2011 clearly indicate that the cheques issued by the
respondent were in discharge of “part of outstanding amount”. The said
letters are not disputed and the respondent cannot be permitted to canvass a
contention contrary to the plain tenor of the said letters.
Co.Pet. 302/2012 Page 10 of 12
22. The learned counsel for the respondent has contended that net worth
of the company is approximately 50 lacs and thus, winding up of the
respondent company would not assist the petitioner in recovery of its dues.
It is settled law that proceedings under Section 433(e) of the Act are not
proceedings for recovery of debts. The fact that the net worth of the
respondent company is contended to be a fraction of the amount of cheques
issued by the respondent (i.e. which had been dishonoured) itself indicates
that the respondent company is unable to pay its debts and is liable to be
wound up.
23. The judgments referred to by the respondent also do not assist the
respondent in any way. In the case of RPG Cables Ltd. (supra), this court
has observed that there had been default of both the parties i.e. petitioner as
well as respondent (therein) in complying with the time schedule stipulated
in the Agreement and whose default had led to the delay in the execution of
the Agreement was a debatable issue, which could not be decided in a
summary manner without oral evidence and therefore, in these
circumstances, this court refused to admit the said petition. In the case of
Tata Capital Financial Services Ltd. (supra), the winding up petition was
already admitted and this court was only considering the question as to
whether the petition should be advertised and the Official Liquidator should
be appointed as a Provisional Liquidator.
24. In view of the above, the winding up petition is admitted and the
petitioner is directed to publish the citations in the ‘Statesman’ (English)
and ‘Veer Arjun’ (Hindi) for a hearing to be held on 12.08.2014. The
Official Liquidator is also appointed as a Provisional Liquidator to take
Co.Pet. 302/2012 Page 11 of 12
charge of the assets and the books of accounts of the respondent company.
The Directors of the respondent company will file the Statement of Affairs
within 21 days of the appointment of the Provisional Liquidator coming
into effect.
25. The respondent company is restrained from selling, transferring,
encumbering or in any manner alienating any of its assets.
26. However, in order to enable the respondent to make arrangements to
discharge its dues and to arrive at an amicable settlement with the
petitioner, the directions for publication of citations and for appointing the
Official Liquidator as a Provisional Liquidator will not come into effect for
a period of four weeks from today. The order admitting the winding up
petition is also kept in abeyance for a period of four weeks. In the event,
the respondent is able to discharge its debts to the petitioner or arrive at an
amicable settlement for repayment of the same within the period of four
weeks, the directions as stated above will not come into effect. In the event
the parties are unable to arrive at an amicable settlement for discharge of
the dues of the petitioner, the counsel for the petitioner shall inform the
Official Liquidator, who shall on receipt of such communication proceed to
take the necessary steps in accordance with law and in conformity with the
directions as issued herein.
27. List on 12.08.2014.
28. In view of the above, CA No. 1209/2012 stands disposed of.
VIBHU BAKHRU, J
APRIL 24, 2014
RK/MK
Co.Pet. 302/2012 Page 12 of 12