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2019 DIGILAW 110 (GAU)

Abc India Ltd. v. Calcom Cement India Ltd.

2019-01-25

SUMAN SHYAM

body2019
JUDGMENT AND ORDER 1. Heard Mr. R. Hussain, learned counsel for the petitioner. Also heard Mr. S. R. Gogoi, learned counsel representing the respondent. 2. This company petition has been filed under sections 433 and 434 read with section 439 of the Companies Act, 1956 praying for issuance of an order for winding up the respondent-company on account of its inability to pay the admitted debt. 3. The factual matrix of the case, as projected through the pleadings, is that the petitioner-company is engaged in various business activities including transportation of cement manufactured in India or elsewhere. On 6.3.2010, the respondent-company, which is a company engaged in manufacturing of cement, had entered into an agreement with the petitioner-company appointing it as a Clearing and Forwarding (C&F) Agent exclusively for handling cement at the warehouses at Guwahati, Dibrugarh, Silchar, Agartala, Aizawl, Dimapur, Banderdewa, Bhalukpung, Shillong or at any other place as and when required. The said agreement was valid for a period of three years with effect from 1.1.2010 and had contained a provision for extension of the period of agreement on mutually agreed terms. The agreement dated 6.3.2010 contains various terms and conditions governing the rights and obligation of the parties including those pertaining to payment of monthly expenses for the warehouses, payment of bills on account of handling charges and the interest component payable thereon in case of delay in payment beyond the stipulated period. 4. Besides the aforesaid agreement dated 6.3.2010, the respondent had signed three other agreements on 1.4.2010 with the petitioner-company for transportation of cement packed in bags by road from its manufacturing plant at Lanka to various destinations by Trucks, by TATA 407 and by Bolero vehicles, respectively, as a carrier, in terms of the Carriage by Road Act, 2007. As per the terms and conditions contained in the agreements dated 1.4.2010, the petitioner was required to raise the bills along with Proof of Delivery (PoDs) on the first working day of every week and the respondent was required to pay the entire amount within 7 days of receiving the bills along with the PoDs, provided all the queries made by the respondent's regarding the bills are answered promptly and to the satisfaction of the respondent. 5. In terms of the aforesaid agreements, the parties had been engaged in regular business activities involving various bilateral transactions. 5. In terms of the aforesaid agreements, the parties had been engaged in regular business activities involving various bilateral transactions. According to the statements made in the petition, the petitioner-company had raised bills from time-to-time and the payments were also clear by the respondent-company as per the terms of the respective contract agreements. 6. On 21.12.2012 the representative of the respondent-company had forwarded a copy of the reconciliation statement to the petitioner-company indicating the amount reflected in the books of account of the respondent-company as well as the petitioner-company, as on 18.12.2012. By forwarding the aforesaid reconciliation statement the respondent had apparently asked for some more time to clear the amount as there was shortage of fund faced by it. But despite time having been granted by the petitioner, instead of making payment of the outstanding dues, the respondent had completely stopped clearing the outstanding bills of the petitioner. According to the petitioner, the projection made in the reconciliation statement showing the amount that was due and payable to the petitioner-company was a clear admission of the debt of the respondent towards the petitioner. As per the reconciliation statement the respondent had failed to make payment of a sum of Rs. 1,88,77,663 being the principal amount due and payable to the petitioner as on 18.12.2012.- Hence, a demand notice was issued by the petitioner to the respondent on 15.3.2014 demanding payment of an amount of Rs. 3,66,05,586 which amount had included the sum of Rs. 1,77,27,923 as interest payable on the principal sum of Rs. 1,88,77663. However, later on it was found that the aforesaid notice was not in accordance with the correct provision of law. As such, the notice dated 15.3.2014 was withdrawn by the petitioner and a fresh notice under section 433/434/439 of the Companies Act, 1956 read with sections 270, 271 and 272 of the Companies Act, 2013 was issued on 25.6.2014, which was duly received by the respondent. But despite receipt of the notice dated 25.6.2014 neither any reply has been sent nor has the payment been made till date. Hence, the petition. 7. Referring to the materials brought on record, more particularly the re-conciliation statement, Mr. Hussain has argued that the aforesaid statement has been generated by the respondent which shows the payments due and payable by the respondent to the petitioner-company. Hence, the petition. 7. Referring to the materials brought on record, more particularly the re-conciliation statement, Mr. Hussain has argued that the aforesaid statement has been generated by the respondent which shows the payments due and payable by the respondent to the petitioner-company. From the aforesaid statement, it is possible to precisely work out the outstanding dues of the petitioner. Such being the position, submits Mr. Hussain, there can be no escape from the conclusion that the respondent has neglected to discharge its admitted debt by making due payment of the outstanding bills of the petitioner-company. It is also the submission of Mr. Hussain that the initial notice dated 15.3.2014 having been issued under the provisions of a statute which was yet to come into force, the said notice cannot be said to be valid in the eye of law and as such, it is only the subsequent notice dated 25.6.2014 issued by the petitioner-company which was valid in the eye of law. Therefore, it is the notice dated 25.6.2014 which would alone form the basis of this proceeding. Since the respondent has failed to respond to the notice dated 25.6.2014 or deny the claim raised therein, viewed from that angle also, submits Mr. Hussain, it is a clear case of admission of debt by the respondent. As such, Mr. Hussain submits that the present is a fit case where this court may pass an order for winding up of the respondent-company. 8. Referring to the stand taken by the respondent in its counter-affidavit claiming a right to recover certain amount from the petitioner and further stating that there was no liability on its part to make any payment to the petitioner-company, Mr. Hussain submits that no such claim or outstanding dues have been reflected in the audited balance sheet of the company and, therefore, the said contention of the respondent is completely frivolous, lacks bona fide and, hence, deserves to be rejected by this court. In support of his aforesaid arguments, Mr. Hussain has relied upon the following decisions 1. Vaishali Aromatic (India) (P.) Ltd. v. Deogiri Nagri Sahakar Bank Ltd., (2005) 2 Bom CR 155 2. Geeta Prints Ltd. v. Falcon Industries, (2009) 148 Comp Cas 146 (Guj.) 3. Shyam Dri Power Ltd. v. Bhav Shakti Steel Mines (P.) Ltd., (2013) 177 Comp Cas 248 (Del.) 4. Hussain has relied upon the following decisions 1. Vaishali Aromatic (India) (P.) Ltd. v. Deogiri Nagri Sahakar Bank Ltd., (2005) 2 Bom CR 155 2. Geeta Prints Ltd. v. Falcon Industries, (2009) 148 Comp Cas 146 (Guj.) 3. Shyam Dri Power Ltd. v. Bhav Shakti Steel Mines (P.) Ltd., (2013) 177 Comp Cas 248 (Del.) 4. Niti International Ltd. v. Shree Sagarmatha Distributors (P.) Ltd., (2013) 179 Comp Cas 594 (Del.) 9. Mr. S.R. Gogoi, learned counsel appearing for the respondent, on the other hand, has invited the attention of this court to the pleadings contained in the counter-affidavit as well as the stand taken in the reply dated 17.6.2014 submitted by the respondent in response to the notice dated 15.3.2014 sent by the petitioner-company to contend that not only has the respondent denied the liability to pay the sum of Rs. 3,66,05,586 to the petitioner but the respondent has also claimed to be entitled to recover an amount of Rs. 95,89,947 from the petitioner-company on account of the losses and injuries suffered by it at the instance of the petitioner. Mr. Gogoi submits that facts stated in the company petition are heavily disputed by his client and there are sufficient materials on record in support of the averments made in the counter-affidavit filed by the respondent in support of its claim of Rs. 95,89,947 which forms the basis of a bona fide dispute between the parties that calls for adjudication by a competent forum. Under the circumstances, the learned counsel for the respondent has prayed for dismissal of the company petition as not maintainable in the facts and circumstances of the case. 10. I have considered the submissions advanced by the learned counsel for both parties and have also meticulously gone through the materials available on record. 11. As noted above, the petitioner-company had entered into as many as four different contract agreements with the respondent-company for carrying out various business activities and in terms of the respective agreements, bills were also raised from time-to-time. Materials available on record go to show that the some of the bills raised by the petitioner company had been cleared by the respondent and the said mechanism continued to operate smoothly until such time, a dispute had arisen between the parties compelling the petitioner to issue a notice demanding payment of a sum of Rs. 3,66,05,586. Mr. Materials available on record go to show that the some of the bills raised by the petitioner company had been cleared by the respondent and the said mechanism continued to operate smoothly until such time, a dispute had arisen between the parties compelling the petitioner to issue a notice demanding payment of a sum of Rs. 3,66,05,586. Mr. Hussain has candidly submitted that the sole basis of this petition is the reconciliation statement issued by the respondent, which, according to the learned counsel, clearly bears out an admission of the debt. The learned counsel, therefore, submits that the dispute raised by the respondent claiming a sum of Rs. 95,89,947 from the petitioner is an afterthought made with the sole intention of defeating the claim of the petitioner. 12. In view of the above stand taken by the petitioner's counsel, it would be necessary for this court to minutely examine the reconciliation statement and the projections made therein by the respondent-company in the light of the materials available on record so as to ascertain as to whether there is any admission of debt by the respondent in this case. 13. It appears from the record that on 21.12.2012, a representative of the respondent-company, viz., Pradip Bansal, had sent an e-mail forwarding a reconciliation statement to the petitioner reflecting the figures in its books of account in respect of the respondent, i.e., CCIL and the petitioner, i.e., ABC. According to the aforesaid reconciliation statement as on 18.12.2012, a sum of Rs. 18,128,876.98 has been shown on the account of CCIL in comparison to Rs. 2,33,62,281.31 on the account of ABC. The aforesaid statement was sent with a forwarding e-mail which reads as follows “Dear Mr. Makharia, Please find attached latest reconciliation received from the factory. From this it looks like there are lot of entries remain to be passed by ABC in their books, i.e., on account of tds, opening difference, debit notes, deductions already agreed by ABC, etc. Please take the help of our Lanka accounts and carry out necessary entries in your books as well as reconcile the balance items on war footing.” 14. According to Mr. Hussain, the differential amount as projected in the reconciliation statement is the amount due and payable to the petitioner-company and, hence, would constitute the admitted debt. I am afraid, such a contention of Mr. Hussain cannot be accepted for the following reasons. According to Mr. Hussain, the differential amount as projected in the reconciliation statement is the amount due and payable to the petitioner-company and, hence, would constitute the admitted debt. I am afraid, such a contention of Mr. Hussain cannot be accepted for the following reasons. Firstly, the difference in the figures recorded on the account of CCIL as compared to ABC does not represent the amount of Rs. 1,88,77,663 claimed as the principal amount due and payable by the respondent in the notice dated 25.6.2014 sent by the petitioner-company to the respondent. Secondly, a plain reading of the forwarding letter leaves no room for doubt that the process of reconciliation of the account was still under progress and the figures reflected therein were not the final figures. There is nothing in the reconciliation statement or in any other correspondences exchanged by and between the parties wherein the respondent has unequivocally admitted any particular amount which was due and payable to the petitioner against the bills submitted by it. 15. In the above context it would be relevant to mention herein that the learned counsel for the petitioner has himself admitted that the materials brought on record do not indicate with any degree of clarity or precision as to which bill raised by the petitioner relates to which of the four agreements entered into by and between the parties nor do the same clearly indicate as to whether a common bill pertaining to two or more agreements had been raised by the petitioner-company. That apart, the materials available on record also do not clearly indicate as to which of the pending bills had been cleared by the respondent and on which date. The materials available on record also do not indicate with any degree of clarity as to which are the bills in respect of which the respondent has not raised any dispute. Under the circumstances, it is not possible for this court to reach a definite conclusion only on the basis of the reconciliation statement that the respondent-company has admitted any liability towards the petitioner-company. Rather what transpires from the reconciliation statement and the forwarding letter is that the reconciliation statement was a “work in progress”. 16. Under the circumstances, it is not possible for this court to reach a definite conclusion only on the basis of the reconciliation statement that the respondent-company has admitted any liability towards the petitioner-company. Rather what transpires from the reconciliation statement and the forwarding letter is that the reconciliation statement was a “work in progress”. 16. The principles that would come into play while considering an application for winding up of a company under section 433 of the Companies Act, 1956 have been discussed by the hon'ble Supreme Court in IBA Health (India) (P.) Ltd. v. Info-Drive Systems SDN. BHD., (2010) 10 SCC 553. The observations made in paragraph 23 of the aforesaid judgment would be relevant for the purpose of this case and are, therefore, extracted herein below 23. The principles laid down in the abovementioned cases indicate that if the debt is bona fide disputed, there cannot be “neglect to pay” within the meaning of section 433(1)(a) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up on the ground that the company is unable to pay its debts is not substantiated and non-payment of the amount of such a bona fide disputed debt cannot be termed as “neglect to pay” so as to incur the liability under section 433(e) read with section 434(1)(a) of the Companies Act, 1956.” 17. Coming to the facts and circumstances of this case, I am of the opinion that the respondent has not only denied its liability but has raised a counter-claim against the petitioner. From the pleadings contained in paragraph 5 of the counter-affidavit and its various sub-paragraphs, I find that the respondent has laid down the foundation of such claim which are generally supported by materials brought on record. The claim and counter-claim of the parties are based on several disputed questions of facts which cannot be decided by this court in the present proceeding. Therefore, having regard to the materials available on record, I am of the considered opinion that the respondent has succeeded in raising a bona fide dispute opposing the claim of the petitioner. That apart, I also find that there is no admitted debt in this case. As such, in the facts of this case it would be wholly impermissible to say that the respondent has neglected to pay the admitted dues of the petitioner-company. That apart, I also find that there is no admitted debt in this case. As such, in the facts of this case it would be wholly impermissible to say that the respondent has neglected to pay the admitted dues of the petitioner-company. 18. For the reasons indicated herein above, this court is of the considered opinion that there is no good ground to admit this petition seeking winding up of the respondent-company. Consequently, the company petition stands dismissed. However, having regard to the facts and circumstances of the case, it is hereby provided that notwithstanding the dismissal of this company petition, the petitioner-company shall be at liberty to initiate appropriate legal action against the respondent for recovery of debt, if any, by following the due process of law. There would be no order as to cost.