Eva Exotica Private Ltd. vs M/s. Bengani Food Products Private Ltd.

Arindam Mukherjee, J.

The instant winding up application has been filed by the petitioner,Bengani Food Products Private Limited seeking winding up of the company,

namely, Eva Exotica Pvt. Ltd. (hereinafter referred to as the said company) alleging that a principal sum of Rs.14,32,754.00 has remained unpaid on

account of goods (maize) sold and delivered by it to the said company.

It is the case of the petitioner that between 5th April, 2013 and 12th April, 2014 it had supplied maize of diverse quantities on the basis of verbal

orders placed by the company. The petitioner had raised six several bills for the entire supply, against which the said company has made payments

from time to time. After giving credit to all such payments a principal sum of Rs. 14,32,754.00 remained due and owing from the said company to the

petitioner. On further scrutiny the records reveal that the last two bills are respectively dated 11th April, 2014 and 12th April, 2014 for a sum of

Rs.12,45,114.00 and Rs.2,87,640.00 respectively aggregating to Rs.15,32,754.00. The last payment received by the petitioner from the said company is

of Rs.1,00,000.00 made on 16th December, 2014. It also appears that the aggregate bill amount of the first four bill have been paid but in a phase wise

manner and not exactly bill by bill.

The petitioner says that credit period of 60 days was agreed upon by the parties and after expiry thereof, when no further amounts were paid the

petitioner has issued several reminders and claimed the unpaid sum with interest @ 24% being the rate as mentioned in its invoices. Despite receipt of

the reminders no further payments were made by the said company except the sum as aforesaid. It is also the case of the petitioner that on

persuading the said company for payment, the said company through one Ramankar Singh said to be an authorized officer of the said company agreed

to clear all payments of the petitioner within 18th June, 2015. The so-called admission relied upon by the petitioner is in a hindi document and an

unofficial english translation thereof said to have been made by Atanu Ghosh (deponent) on behalf of the petitioner are annexed to be winding up

petition.

Even thereafter as no payments were made by the said company, thepetitioner through its advocate issued a statutory notice on 8th March, 2016

which is also annexed to the said petition. There is, however, no mention of the so-called admission alleged to have been made by the said company to

clear all payments within 18th June, 2015 in the said statutory notice. The statement of account enclosed along with the winding up notice shows that

the immediate preceding payment made by the said company to the last payment of Rs.1,00,000.00 made on 16th December, 2014 was on 26th May,

2014 for a sum of Rs. 20, 37, 823/-.

The company has replied to the statutory notice through its advocate’sletter dated 6th April, 2016, which is also annexed to the said petition. In

the said reply the company has alleged the following:-

(a) The maize supplied under invoice no.056/2014-15 was foundsubstandard, mutilated and rotten. The transporter was therefore asked not to unload

the material and take back the same when it reached the factory premises at Ambala, Haryana. However, at the request of the petitioner’s

representatives that there will be double transportation charges if the goods are to be taken back and on the assurance that the invoice amount will be

reduced to settle the disputes amicably, the duty officer of the said company allowed the materials to be unloaded.

(b) After discussing the matter with the officials of the saidcompany and representatives of the petitioner having decision making authority, an

understating was arrived at, wherein the petitioner agreed to revise the invoice amount by 25 per cent of the total invoice amount and revert back to

the said company.

(c) The company was not ready to pay more than Rs.1,00,000.00 for the last two supplies which they did immediately and even prior to the negotiation

to the effect that the invoice amount for invoice nos. 056/2014-15 and 057/2014-15 will be reduced to 25%.

(d) The petitioner’s representative visited the Lucknow office of thecompany and again agreed to the earlier terms. The petitioner’s

representative requested an officer of the company to write few words to establish his visit at Lucknow and acceding to such request in June, 2015.

Some writing was issued by the said company.

(e) At the end of the reply to the statutory notice the companyrequested the petitioner to raise revised bill as agreed to enable the said company to

make payment of the revised the bills.

The allegations made in reply to the statutory notice as to thesubstandard quality of material is not borne out of any contemporaneous document

relied upon by the company in its affidavit- in-opposition. In the affidavit the company has also not craved leave to refer to any further document. The

company at the beginning of the hearing sought leave to file a supplementary affidavit/ sur rejoinder to bring on record certain facts including an e-mail

which according to the said company was a contemporaneous complaint as to the quality of the goods supplied. In the absence of any pleading in the

affidavit-in-opposition regarding any contemporaneous complaint such prayer was declined to avoid a new twist to the case after completion of

affidavits.

After considering the pleadings, the materials on record and thesubmissions advanced on behalf of the parties the case of the said company as to

substandard quality of the material supplied as a consequence whereof it did not pay or of an agreement to reduce the bills which was not done by the

petitioner cannot be accepted for the following reasons:-

(i) The company has relied upon a written purchase orderissued by it and annexed to its affidavit-in-opposition wherefrom it appears that the said

company in such purchase order, has provided for certain specifications as to the maize ordered for by it and to be supplied by the petitioner. The said

purchase order, however, do not either provide for any inspection report to accompany the goods or of any inspection to be conducted prior to the

supply or subsequent to supply as a condition precedent for acceptance. There is no pre-fixed mechanism to ascertain whether the maize to be

supplied or supplied by the petitioner adhered to the specification provided in the purchase order. In the absence of such stipulation the question of any

inspection report accompanying the goods from the petitioner’s side certifying the goods to be in conformity with the specifications or of any

inspection to be held prior or subsequent to the supply in the presence of the parties or by any inspecting agency cannot and does not arise.

 The company, however, to ascertain the quality of the goods in view of the provisions of Section 41 of the Sale of Goods Act, 1930 could have itself

conducted any inspection either in the presence of the petitioner or even unilaterally and if, it was not satisfied with the quality of the goods supplied to

it, could have rejected the goods or asked for replacement within a reasonable period of time from the delivery of the same. The company has not

adopted either of such procedure. There is not even a single letter written contemporaneously complaining of the quality. There is also no letter

rejecting the goods. There is also no letter intimating the petitioner as to the substandard quality of the goods supplied by it prior to the reply to the

statutory notice. On the contrary the said company has consumed and/or appropriated the goods.

(ii) The company has relied upon few documents beingannexure-B to its affidavit-in-opposition claiming them to be “godown receipt notesâ€. By

citing those documents, the company has tried to impress upon the fact that the goods were found damaged when the trucks/lorries arrived at Ambala

to deliver the goods. It appears from the “godown receipt notes†that the deliveries were made in bags. Unless the bags were opened and

physical checked the quality of materials could not have been ascertained. It is also not the case of the said company that at the time of effecting

delivery, the jute bags containing the maize were opened and checked or were unloaded. Unless this course was adopted, it cannot be accepted that

the goods were found to be damaged when the same were brought to the factory at Ambala. The “Lab Report-Quality†appearing in the

purported “godown receipt notes†could not have been instantaneously prepared and inserted in the said “godown receipt notes†to be made

over to the lorry/truck driver who carried the goods as it requires at least a day or two, to prepare such report after ascertaining the deficiencies in

specification of maize so supplied.

It is also not the case of the said company that the truck/lorry drivers were detained and only after the lab reports were prepared, the same was

inserted in the “godown receipt note†and made over to the said lorry/truck driver. The insertion of the “Lab Report-Quality†in the

“godown receipt notes†are therefore insertions subsequent to handing over the same if at all they were handed over. Moreover the signature of

the godown in-charge in two places of the “godowns receipt note†dated 12th April, 2014 appearing at page 19 is seen to be different with plain

eyes. These creates a reasonable doubt in the mind of the Court as to the authenticity and genuineness of those documents. This court is therefore not

inclined to accept the said “godwon receipt notesâ€​ and defence sought to be put forth on the basis thereof by the said company .

(iii) There is also no document to show that any “Lab ReportQuality†mentioned in the purported “godown receipt notes†were prepared

either in the presence of the petitioner or after inviting the petitioner to be present at the inspection for preparing such “Lab Report-Qualityâ€.

There is also no evidence to show that the said reports were made over to the petitioner at any point of time prior to the endorsement of the figures

inserted in the “godown receipt notes†disclosed along with the affidavit-in-opposition. The author of the said “Lab Report-Quality†remains

undisclosed as the reports has been disclosed on the facts and figures thereof has been mentioned in the “godown receipt notesâ€​.

(iv) So far as the purported agreement to reduce the bill amount ofthe last two bills to 25 per cent of their respective aggregate value and raising of

revised bills is concerned the same is unacceptable inasmuch as there is no document corroborating such agreement which otherwise would have

existed from the side of the said company particularly when the company alleges breach of such agreement by the petitioner. The least that was

expected of the company to write a letter to notify the petitioner about the agreement and its failure to raise the revised bills when the petitioner did

not raise any revised bill even after expiry of a considerable period of time. The said company has admitted to have issued some writing at the request

of the petitioner in June 2015 but has not disclosed such writing. The time “June 2015â€, however, may be co-related with the so called admission

relied upon by the petitioner being a hindi document.

(v) That apart the said company before receiving the goodssupplied under the last two invoices bearing no.056/2014-15 and 057/2014-15 respectively

dated 11th April, 2014 and 12th April, 2014 received the previous supply on 16th April, 2013 under invoice no.066/2014-15 for an aggregate value of

Rs.28,81,480.00. The company made payment of a sum of Rs.20,37,823.00 on 26th May, 2014 i.e. much after receipt of the alleged disputed supplies.

The company would not have made such payment had there been an agreement to reduce the bill for the two subsequent supplies and the petitioner

had defaulted in doing so as a natural consequence.

The company has also raised the point maintainability of the petition onthe plea that leave under Rule 21 of the Companies (Court) Rules 1959 has

not been obtained prior to filing of the said winding up petition. It appears that a previous winding up petition on the self-same cause was dismissed for

the want of leave under Rule 21 of the said Rules by an order dated 9th June, 2016 which is annexed to said petition. It further appears from the

record that the Law Officer who has verified the petition on behalf of the petitioner company has been duly authorized by the Board of the petitioner

company. There is also a Power of Attorney executed by Bimal Kumar Bengani one of the Directors of the petitioner company in favour of the

deponent. These two documents are annexed to the winding up petition. It further appears from the said petition that the petitioner has specifically

prayed for leave in terms of Rule 21 of the Companies (Court) Rules 1959 and have also made a prayer to that effect. In such circumstances the plea

that prior leave was not obtained and the petition to liable to be dismissed on such ground is untenable. It can at best be an irregularly and not an

illegality which cannot be cured by granting leave at a subsequent stage particularly when there is a specific prayer to that effect. Leave, if not

granted earlier granted to the petitioner company under Rule 21 of the Companies (Court) Rules, 1959 is granted in term of prayer (a) of the winding

up petition.

In the circumstances as discussed hereinabove the only conclusion thatcan be arrived at is that the said company accepted the goods in view of the

provisions of Sections 41 and 42 of the Sale of Goods Act, 1930 and have failed to pay the price thereof. The defence put forth by the company to

defend the claim against it is therefore not bona fide. The defence is illusory, sham and moonshine. The company, as such, is not entitled to any leave

to defend by relegating the issues to a regular suit upon being asked to furnish security.

The company petition no.563 of 2016 is admitted for a principal sum ofRs.14,32,754 along with simple interest on such sum from the date of the

winding up notice i.e, 8th March, 2016 till the date of the order @ 10% per annum. The interest rate of 24% though is mentioned in the invoices which

has been duly received by the said company but the said interest rate, if allowed will be harsh and unconscionable. Considering the transaction to be

commercial in nature and provisions of the Code of Civil Procedure, 1908 the rate of interest is increased from 6% but reduced to 10% being a

reasonable and fair rate. The company will, however, be at liberty to pay the admitted sum in six instalments, the first five of which will be equal

monthly instalment and the sixth one to be for the balance sum. The first instalments is to be paid on or before 12th August, 2018 and all subsequent

instalments to be paid by 10th of each succeeding month till the entire sum is fully paid. In the event the company makes payment of the money for

which the winding up petition is admitted in six instalments, the winding up petition being C.P. no. 563 of 2016 shall remain permanently stayed. In the

event of default by the company in making payment of any one of the instalments, the petitioner shall be at liberty to advertise the petition once in

“Telegraph†and once in “Bartaman†indicating therein, that the matter will appear on a working Friday immediately on the expiry of three

weeks from the date of the advertisement. The publication in the official gazette is dispensed with.

(Arindam Mukherjee, J.) Later:-

The Advocate appearing on behalf of the company prays for stay of the order. Considered the prayer for stay and the same is refused.