Dee Dee Electricals vs Road Master Foods Limited

Swatanter Kumar, J.—This petition has been filed by M/s. Dee Dee Electricals u/s 433 read with Section 439 of the Companies Act with a prayer that M/s. Road Master Foods Ltd. (hereinafter referred to as the respondent-company) be ordered to be wound up.

The petitioner, which is a sole proprietorship concern, entered into an agreement for electrical works at the factory premises of the respondent-company at Ghaziabad on May 6, 1993. A copy of the said agreement has been placed on record. According to the petitioner, it completed the entire work in terms of the agreement and even rendered electrical consultancy services to the respondent-company, as desired. A certificate dated February 1, 1995, was issued in favour of the petitioner by the respondent-company appreciating their work. For the entire work done, the petitioner raised 18 bills for a total value of Rs. 5,22,122.68, out of which it is stated that a sum of Rs. 3,84,834 was actually paid and the Income Tax at source was deducted for the years 1993-94 and 1994-95 leaving a net balance of Rs. 1,28,194.68. In addition thereto, a sum of Rs. 75,800 was also claimed on account of electrical consultancy service rendered by the petitioner. However, in spite of reminders and personal visits, the respondent-company failed to make the payment of the dues. Under these compelling circumstances, the petitioner served a notice dated July 15, 1996, by registered acknowledgement due. Copy of the notice along with acknowledgment card has been placed on record.

Because of some error vide order dated September 11, 1997, Justice N.K. Sodhi was pleased to grant leave to the petitioner to amend the petition, which was filed. Notice to show cause why petition be not admitted was issued vide order dated January 9, 1998, returnable on February 12, 1998. Affidavit of service was filed on record. On March 20, 1998, learned counsel appearing for the respondent-company took four weeks time to file reply. Ultimately reply was filed. On April 24, 1998, Shri S.P. Goyal, Deputy General Manager of the respondent-company appeared in person and the following order was passed :

"Mr. S.P. Goyal, Deputy General Manager of the respondent-company is present in court. He assures the court that if any amounts are found to be due to the petitioner, the same would be paid within 15 days from today. Adjourned to May 8, 1998."

Thereafter none appeared on behalf of the respondent-company on July 17, 1998 and the matter was adjourned. Replication was filed on August 26, 1998 and the matter was listed for hearing on September 18, 1998. As counsel for the respondent was not present on September 18, 1998, the petitioner was directed to file the original copy of annexure P-2, i.e., the certificate issued by the respondent-company. The same was filed and the matter was finally heard on November 27, 1998, in the absence of counsel for the respondent-company, as nobody had been appearing on its behalf on various dates.

In the reply filed, there is a vague denial to the averments made in the petition. It is admitted that there was contract between the parties and the petitioner had carried out the work. The basic plea taken is that the claim of the petitioner was barred by time and secondly the entire payment had been made to the petitioner. In fact, according to the respondent-company, the petitioner had received a sum of Rs. 26,078 in excess for the work done.

As is clear from the above noted facts, the controversy between the parties is a very limited one. The court has to only consider whether there has been complete discharge of liability of the respondent-company and whether the petitioner has received the overpayment as alleged by the respondent-company. It is an admitted case that work was done by the petitioner and the payments were made to him. The payments were made on different dates against 18 bills submitted by the petitioner. The payments were admittedly made in the year 1994-1995 and even TDS was deducted for that period after the financial year was over, as such the petition was filed in the year 1997 and thus the claim cannot be stated to be barred by time as it is apparently within the period of limitation. A statement of account has been filed by the respondent-company, where the last payment is stated to have been made to the petitioner on October 22, 1994. The TDS was deducted subsequent thereto. In the face of the document of the respondent-company, the claim in this petition cannot be stated to be barred by time.

Coming to the merits of this case, 18 bills were submitted, though according to the respondent, they were 17. The petitioner has given the details of all the 18 bills. In the statement of account put forward by the respondent-company, it is stated that liquidated damages of Rs. 1,01,350 had been debited to the account of the petitioner. There appears to be no justification for this entry. Neither the correspondence or terms of the contract has been referred to in the pleadings ; nor any document has been placed on record to substantiate this claim before this court. There is no material on record on the basis of which the court can come to the conclusion that the deduction of the said amount is justified or even raise a bona fide claim. No detail has been given in the statement of account as to when the alleged entry of debit in relation to the liquidated damages was made in the account. In fact, even copy of the original accounts has not been placed on record by the respondent-company. The company is obliged to maintain books of account in discharge of its statutory obligation. Non-production of such books of account would obviously draw inference adverse to the interest of the respondent-company.

At this stage, it will be appropriate to refer to the certificate issued as on February 1, 1995, by the respondent-company. This certificate was issued after all the 18 bills had been submitted to the respondent-company by the peti-tioner. The certificate reads as under :

"TO WHOM IT MAY CONCERN 01-02-95 It is certified that M/s. Dee Dee Electricals, P-18, Sector 23, Sanjay Nagar, Ghazibad has done electrical work of H. T. Switch yard, power and control cable laying, PCC/MCC, Earthing, Steel Fabrication, Cable Trey Laying, Light-wiring and other misc. work of worth Rs. 5 lakhs approx.

Their quality of work is very good and they are well equipped, organised and technically sound. We are satisfied with their performance during this period.

We wish them all success in future.

For Road Master Foods Ltd. (Sd.) S. Menon, Executive Director."

The language of the above certificate clearly indicates that work of the petitioner was found to be satisfactory. The respondent-company was fully satisfied with the performance of the work and a definite reference was made to the period of execution of the work. The letter seen in the light of the statement of account filed by the respondent themselves, apparently amounts to admission, if not of the entire liability at least a major part of the liability. I have already recorded above that there could be no justification for the entry of liquidated damages in the statement of accounts filed by the respondent-company.

It is a settled principle of law that the defence raised in a winding up petition by the respondent-company must be bona fide and should be plausible. The defence raised by the respondent in the present case is neither bona fide nor is justifiable on any score. The petitioner-company has been able to show that the respondent-company owes the amount claimed by the petitioner and the respondent-company has failed to pay the said liability in spite of the due notice. Resultantly, it has to be construed that the respondent is unable to pay its debts, which are lawfully due to the petitioner.

At this stage, it may also be appropriate to make a mention that two other winding up petitions ; being Company Petition No. 69 of 1997 titled Vikas Laminators Ltd. v. Road Master Food Ltd. and Company Petition No. 90 of 1998 titled Vee Key Enterprises v. RMI Foods Ltd. have also been filed and were being heard along with this petition. In C. P. No. 90 of 1998 a sum of Rs. 5,74,476.50, while in C P. No. 69 of 1997 a sum of Rs. 1,92,435 with interest has been claimed.

During the course of hearing of the present winding up petition/ opportunity was granted to the respondent-company to settle the matter and its representative Mr. S.P. Goyal, Deputy General Manager had also assured the court that the amount would be paid and settled but thereafter nobody appeared on behalf of the respondent-company, leaving this court with no option but to admit this petition.

In view of the circumstances stated above, this company petition is ordered to be admitted. Notice of admission be published in "Indian Express" "Jansatta" and the official gazette of the State of Punjab, in accordance with rules. The notice shall be published giving 14 days clear notice prior to the next date of hearing.

List this matter for hearing on March 19, 1999.