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2014 DIGILAW 478 (GUJ)

Netsweeper Inc. v. Org Informatics Ltd.

2014-04-03

S.R.BRAHMBHATT

body2014
JUDGMENT : S.R. Brahmbhatt, J. Heard learned counsel for the parties. 2. The petitioner by way of this petition filed under Sections 433(e), 434(1)(c) and 439(1)(b) of the Companies Act, 1956, approached this Court with following prayers; a. The Respondent Company viz., M/s. ORG Infomatics Limited, a Company incorporated under the Companies Act, 1956 and having its Registered Office at 3rd Floor, Abhishek Complex, Akshar Chowk, Old Padra Road, Vadodara - 390 021 be would up by and under the directions of this Hon'ble Court under the provisions of the Companies Act, 1956; b. The Official Liquidator attached to this Hon'ble Court be appointed as Liquidator of the Company viz., M/s. ORG Informatics Limited, with all powers under the Companies Act, 1956 including the power to take charge of all the assets, papers, vouchers and bank account of the Company. c. That pending the hearing and final disposal of this Petition, the Official Liquidator attached to this Hon'ble Court be appointed Provisional Liquidator of the Company viz., M/s. ORG Informatics Limited, with all powers under the Companies Act, 1956; d. That pending the hearing and final disposal of the Petition, the Company by itself, its Directors, servants and agents be restrained by an Order and injunction of this Hon'ble Court from dealing with, disposing off, alienating, encumbering or parting with possession, or from creating any third party rights in respect of the whole or any part of the assets of the Company or any part thereof in any manner whatsoever; e. Ad interim reliefs in terms of prayer (c) and (d) above; f. For costs of the Petition. g. For such further and other reliefs as the nature and circumstances of the case may require. 3. The respondent is a Company incorporated under the Companies Act, 1956 having objects as mentioned in the petition. The petitioner has averred in the memo of the petition that petitioner being service provider in the telecom sector is well recognised through the world as such. The petitioner Company contacted by the respondent Company for supply of Internet Policy Server Software for block websites as per DOT regulation for the BSNL Broadband Multi-play Project (hereinafter referred to as 'the BBMP' for the sake of convenience), undertaken in Singapore in the month of April, 2007. The petitioner Company contacted by the respondent Company for supply of Internet Policy Server Software for block websites as per DOT regulation for the BSNL Broadband Multi-play Project (hereinafter referred to as 'the BBMP' for the sake of convenience), undertaken in Singapore in the month of April, 2007. The petitioner received purchase order and raised invoice for the amount of US$ 1,341,893.00 for Application Software License Fee and Service (Installation and Training) cost. Out of total amount of US$ 1,341,893.00, the respondent Company made payment of US$ 889,350.00 as on 23.08.2007. The Annexure-C is the statement of outstanding amount of US$ 452,543.00, which is dated 03.12.2007. Despite repeated requests and reminders, the balance payment did not come forward. The respondent Company on account of its own financial constrains had requested the petitioner Company to accept the amount due from another Company for which the requisite resolutions came to be passed on 30.01.2009 and thereafter the amount was to be collected from another Company called M/s. Spanco Singapore Pte. Limited (for short 'M/s. Pte. Ltd.') The further Board Resolution came to be passed on 11.03.2010, authorising the petitioner to collect an amount of US$ 80,947.65 out of the total outstanding debt of US$ 452,843.00 from M/s. Pte. Ltd. The copy of the said resolution is at Annexure-E. The petitioner in pursuance thereof received an amount of US$ 80,948.00 straight from M/s. Pte. Ltd. on 11.03.2010, which it received on behalf of the respondent Company. The balance payment was covered by one more Board Resolution dated 03.09.2011, authorising M/s. Pte. Ltd, to make payment of US$ 371,019.00 by the respondent Company to the petitioner. That resolution is figuring at Annexure-F. The petitioner perceived that said M/s. Pte. Ltd. through various e-mails namely; 5th July, 2011, 8th July, 2011, 10th July, 2011 and 26th July, 2011, which are placed on record as the said communication did not yield any reason and the petitioner Company did not receive any payment. The petitioner through its advocate addressed a notice to M/s. Pte. Ltd. calling upon them to make payment of US$ 371,019.00 in accordance with the Board Resolution of the respondent Company. The said notice was issued on 29.10.2011 and the same is placed on record. The petitioner through its advocate addressed a notice to M/s. Pte. Ltd. calling upon them to make payment of US$ 371,019.00 in accordance with the Board Resolution of the respondent Company. The said notice was issued on 29.10.2011 and the same is placed on record. The said Company through its advocate replied on 15.11.2011, taken a stand that on account of lack of any privy between the two, the petitioner Company has no right to issue such notice and the earlier payment of US$ 80,947.65 was made at the request of the respondent Company. The said reply is also placed on record. The petitioner, therefore, issued statutory notice through advocate on 11.01.2012 under Sections 433 and 434 of the Companies Act, 1956, which was duly served upon the Company under 'Speed Post with Acknowledgment Due' and under' Registered Speed Post with Acknowledgment due' on 16.01.2012, calling upon respondent Company to make payment of US$ 371,019.00, equivalent to INR 1,91,99,973.53. The petitioner has made the averments in paragraph Nos. 11 and 12, which reads hereunder; 11.The petitioner states that there is now due and payable by the Respondent Company to the petitioner, a sum of US$ 371,019.00 together with interest at the rate of 12% p.a. on the said amount of US$ 371,019.00. The admitted dues of US$ 371,019.00 along with interests calculated at 12% till 31st of December, 2011 comes US$ 583,806.00 which is equivalent to INR 3,08,71,661.28 as per the exchange rate prevailing on 31st of December, 2011. The exchange rate of US$ as on 31st of December, 2011 was 1 US$ is equal to INR 52.88. The Petitioner is entitled to further interests with effect from 1st of January, 2012 till the date of realisation of payment. The particulars of the amount due and the interests are given in a separate statement annexed hereto and marked as "Annexure O". 12. The petitioner states that the respondent Company has unequivocally and unconditionally admitted its debt towards the petitioner by its Board Resolutions as detailed above. The respondent Company has neither complied with the requisitions set out in the said statutory notice dated 11th of January, 2012 served upon it under the provisions of the Companies Act, 1956 nor made any payments demanded therein or replied to the same. The Company has admitted its financial Resolutions and promised to pay the outstanding amount. The respondent Company has neither complied with the requisitions set out in the said statutory notice dated 11th of January, 2012 served upon it under the provisions of the Companies Act, 1956 nor made any payments demanded therein or replied to the same. The Company has admitted its financial Resolutions and promised to pay the outstanding amount. It is apparent that the respondent Company has no financial means to pay its admitted dues and was trying its best to avoid such payments and gain time. The Company, in spite of all promises repeatedly made, failed to repay its admitted debts. In these premises, it is evident that the Company is in involved circumstances and not in a position to make payment of it admitted debts. The Company is therefore liable to be declared as commercially insolvent and liable to be wound up by this Hon'ble Court under the provisions of the Companies Act, 1956. The notice has not been replied which left the petitioner with no other remedy, but to approach the Court as the other documents placed on record indicate that the respondent Company is having financial difficulty in which it can not discharge its obligations, as many cases have been pending for bouncing of cheques etc. under Negotiable Instruments Act. 4. This Court on 01.10.2012 issued notice, making it returnable on 29.10.2012. Today, the matter is heard at length. 5. Learned counsel appearing for the petitioner invited this Court's attention to page Nos. 108, 125 and 127 and indicated that the purchase order is dated 29.01.2007 and the terms and conditions mentioned there below would also clearly indicate that how and in what manner the payment was to be made. Page Nos. 125 and 127 thereafter relied upon to indicate that invoices raised and the amount to be received by the petitioner Company. On the strength of these documents, it was urged that the plea and stand of the respondent Company, as could be seen from their affidavit to suggest that the respondent Company was to pay only on it receiving the amount from the other Company on account of the project is of not much substance as the said documents which are at page nos. 108, 125 and 127 would no way indicate that there was any such condition expressed or acknowledged by either of the parties to the contract and, therefore, when there were resolutions, three in numbers placed on record, the respondent Company did not have any valid reason for resiling out of its obligation for making payment. 6. Learned counsel for the petitioner thereafter invited this Court's attention to all the three resolutions passed by the respondent Company's Board and contended that the resolution and the minutes of the meeting passing the resolution would clearly indicate that there was a clear acknowledgment of the obligation and debt, which could not have been avoided as could be seen from the reply of the respondent Company. The plea of time bar is also not available as the counsel relying upon Section 18 of the Limitation Act read with provisions of Sections 194 and 195 of the Companies Act, submitted that if these provisions are perused closely in juxtaposition with the Board Resolution and the minutes of the meeting, then that will leave no room for raising any doubt qua the non availability of plea of debt being time barred. 7. Learned counsel for the petitioner submitted that this Court in a given situation has passed an order on being convinced that the case for winding up is made out, issued direction for Company to pay up the debt within stipulated time failing which the subsequent procedure was to be undertaken. In the instant case, the defense which is sought to be raised is not to be said to be a bona fide defense nor is the plea available to the Company to justify their stand for debt being time barred, then in that situation, the Court may pass appropriate order by admitting the petition and issuing the advertisement or that may be deemed fit for granting sometime to the respondent company for making the payment of outstanding dues, as prayed for, by the stipulated time, failing which the consequential order may follow. 8. Learned counsel for the respondent Company contended that the memo of the petition itself indicate that the entire transaction was a part of the project called the BBMP. A special emphasis was led upon the averment made in this petition in paragraph Nos. 8. Learned counsel for the respondent Company contended that the memo of the petition itself indicate that the entire transaction was a part of the project called the BBMP. A special emphasis was led upon the averment made in this petition in paragraph Nos. 5, page no.4, and averments were submitted to be clear admission on the part of the petitioner that the transaction was in fact one link of the entire chain leading to the parties to be dependent upon each other as special emphasis was laid on phraseology employed to justify the submission. It would be in fitness of thing that paragraph No.5 be reproduced hereunder. "The petitioner is a leading service provider for the telecom sector and has much acclaim and hegemony all over the world. During its course of business, the Respondent Company approached the Petitioner to supply to it the Internet Policy Server Software for block websites as per DOT regulation compliance for the BSNL Broadband Multi-play Project undertaken in Singapore in the month of April, 2007. In the said Project several Companies were formed into a consortium and worked back to back and performed in parts which were all inter-linked and collectively constituted the Project. The Petitioner has acted in the subject transaction at the instance of and believing the representations made by the said Respondent Company as true and correct. In the Project, the Petitioner had been supplying directly to the Respondent Company the Internet Policy Server Software. The Petitioner had completed the supply services in the month of August, 2008 which were accepted by the Respondent Company unconditionally, which in turn sold off the products and appropriated the payments." On the phraseology of this as well as the exchange of e-mails, which were extensively relied over to the Court, which have produced on record from page Nos. 131 to 141 and also at page Nos. 82 to 88. A submission was made that a close perusal of all these correspondences would clearly lend support to the submission canvassed on behalf of the respondent Company that the defense taken up cannot be said to be a frivolous or subjected to a summary proceeding. 131 to 141 and also at page Nos. 82 to 88. A submission was made that a close perusal of all these correspondences would clearly lend support to the submission canvassed on behalf of the respondent Company that the defense taken up cannot be said to be a frivolous or subjected to a summary proceeding. Those correspondences exchanged would clearly indicate that even the petitioner was aware and was in fact goading the other players (so to say) in realising its dues and therefore, only those e-mails exchanges are to be viewed from that angle which will certainly pursue this Court to hold that there exist a genuine defense which is raised bonafide to resist the claim and therefore, the drastic step of winding up which is a summary way cannot be permitted in light thereof. 9. Learned counsel for the respondent Company invited Court's attention to the provision of Section 18 of the Limitation Act and submitted that the said provision when read in juxtaposition with the resolution of the Company would clearly indicate that there exists no acknowledgment if debt as sought to be made out on behalf of the petitioner Company. The explanation and the requirement of evidences would indicate that the plea of time barred cannot be said to be a plea without any substance. The resolutions and its text and preface would be subject matter of consideration by the competent Civil Court and therefore when such a plea is raised bonafide, the Court may not entertain this petition and dismiss it on this ground. 10. Learned counsel for the respondent Company, in support of her submission, relied upon the following authorities; (i) in case of M/s. Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd., reported in 1971 (3) Supreme Court Cases 632 with special emphasis upon paragraph Nos. 20 and 21. (ii) in case of Ferro Alloys Corporation Ltd. v. Rajhans Steel Ltd., reported in 1999 Company Cases 426. (iii) in case of Bombay House v. New Model Industries (Pvt.) Ltd., reported in 1995 (82) Company Cases 720. (iv) in case of M/s. Poddar Projects Limited v. M/s. Krishan Metal Industries Private Limited, reported in AIR 1996 Andhra Pradesh 305. (v) in case of Vijayalakshmi Art Productions v. Vijaya Productions Pvt. Ltd., reported in 1997 Company Cases 353. (iii) in case of Bombay House v. New Model Industries (Pvt.) Ltd., reported in 1995 (82) Company Cases 720. (iv) in case of M/s. Poddar Projects Limited v. M/s. Krishan Metal Industries Private Limited, reported in AIR 1996 Andhra Pradesh 305. (v) in case of Vijayalakshmi Art Productions v. Vijaya Productions Pvt. Ltd., reported in 1997 Company Cases 353. and submitted that when the Courts have taken unequivocal view that there is a plausibility of plea of debt being time barred, then the same is required to be treated as a valid defense and the same cannot be said to be a defense which is not available. The defense of time barred debt is time and again recognised by Courts, as indicated in the aforesaid authorities. A valid and substantial defense would not entitle the petitioner Company to seek drastic remedy of winding up proceedings. 11. Learned counsel for the respondent Company submitted that in the over all facts and circumstances and the pleadings, Court may appreciate the fact that there exists a bonafide dispute qua the liability of the respondent Company to make payment. Assuming for the sake of argument without conceding that there exists crystallized liabilities, then also in view of the plea of time barred taken up coupled with the language of resolutions, this Court may not permit petition to be carried out further so as to result into initiation of winding up proceedings, at this stage. 12. In view of the aforesaid discussions, the Court is of the considered view that the provision of Section 18 of the Limitation Act read with Sections 194 and 195 of the Companies Act, needs to be set out hereunder; Section 18 of the Limitation Act:- "18. Effect of acknowledgment in writing- (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.- For the purposes of this section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or gift, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) the word "signed" means signed either personally or by an agent duly authorised in this behalf; and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right." Sections 194 and 195 of the Companies Act:- "194:- Minutes to be evidence.- Minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein. 195:- Presumptions to be drawn where minutes duly drawn and signed.- Where minutes of the proceedings of any general meeting of the company or of any meeting of its Board of directors or of a committee of the Board [have been kept in accordance with the provisions of section 193] then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and in particular, all appointments of directors or liquidators made at the meeting shall be deemed to be valid." 13. The plea of debt being time barred appears to be not tenable in law. The language of resolution and the minutes of the meeting and debt mentioned, clearly indicate that the debt cannot be said to be time barred as the resolutions and the time of filing of the petition would clearly indicate that debt in question cannot be said to be time barred. 14. The language of resolution and the minutes of the meeting and debt mentioned, clearly indicate that the debt cannot be said to be time barred as the resolutions and the time of filing of the petition would clearly indicate that debt in question cannot be said to be time barred. 14. The question of invoice and the purchase order being dependent upon the change circumstances or actions as sought to be made out is also in my view not tenable in eye of law, as none of the documents which were perused were indicative of raising any nexus or a point of nexus between the parties who were participating in the project (so to say), but the averments made in paragraph No.5 and the e-mails exchanged indicate that they have knowledge of the final outcome, but that in itself cannot be given a status of a binding condition so as to bring in new obligations or absolving the parties of its existing obligation for paying the outstanding. 15. The Court is, therefore, of the view that the petitioner Company has made out a case of outstanding and respondent Company has liability to make good the outstanding i.e. US$ 371,019.00. Let there be some more time available to the respondent Company for discharging its liabilities to the petitioner Company and therefore while admitting the matter the Court is inclined to grant time to the respondent Company to make good its liability to the petitioner Company on or before 16.06.2014, failing which the further order of advertisement will be passed. The matter may come up on 18.06.2014.