GANAGE PRESSINGS PRIVATE LIMITED vs POSCO-INDIA PUNE PROCESSING CENTER PRIVATE LIMITED AND ANR

Sr.

Nos.",Date,Amount

1,"30th July, 2014","10,00,000

2,"10th August, 2014","33,72,222

3,"10th September, 2014","33,72,222

4,"10th October, 2014","33,72,222

5,"10th November, 2014","33,72,222

6,"10th December, 2014","33,72,222

7,"10th January, 2015","33,72,222

8,"10th February, 2015","33,72,222

9,"10th March, 2015","33,72,222

10,"10th April, 2015","33,72,222

11,"10th May, 2015","33,72,222

12,"10th June, 2015","33,72,222

13,"10th July, 2015","33,72,222

14,"10th August, 2015","33,72,222

15,"10th September, 2015","33,72,222

16,"10th October, 2015","33,72,222

17,"10th November, 2015","33,72,222

18,"10th December, 2015","57,44,444

,Total,"6,07,00,000

suppressed by the respondent who was attempting to unjustly enrich itself by making claims against the company. It was contended that in view of,,

the payment received from the insurance company, there was no longer a debt outstanding from the company and the respondent was not a creditor",,

of the company. It was thus contended that the winding up petitions at the instance of the respondent would not be maintainable, as the respondent",,

ceased to be a creditor within the meaning of Section 433 and 434 of the Companies Act. It was stated that this fact had went unnoticed when the,,

consent order dated 25 June 2014 was passed by the Court. It was thus the case of the company that it be released from the statements and,,

undertaking as made to the Court and recorded in the consent order dated 25 June 2014.,,

The learned Company Judge having considered the rival pleas held that the said defence of the company was not acceptable as the company was a,,

third party and could not have taken a defence that the amounts subject matter of the debt of the company has already been paid by the respondents',,

insurer and consequently avoid making payment on that ground. Considering the legal position on this issue, the learned Company Judge observed that",,

even if the respondent has received payment from the insurance company, the respondent was still entitled to proceed against the company. The",,

learned Single Judge disbelieved the subsequent affidavit dated 15 September 2015 filed by one of the Directors of the company Mr.Rohit R.Ganage,",,

to contend that the company was not aware of the respondent's insurer making payment to the respondent. Moreover, taking into consideration the",,

material on record the learned Company Judge has observed that the company has in fact made a false statement in the said affidavit that the,,

company came to know only in July/August 2015 of the respondent having received the payment from the insurance company. This for the reason,,

that this was being urged on the basis of an EÂmail dated 14 June 2012 (page 96 of the paper book) from Ksure to the company which was very,,

much in existence and available with the company when the company Court passed an order dated 25 June 2014. The learned Single Judge,,

accordingly ordered that the company be wound up. The company being aggrieved by the impugned order is before the Court in the present appeals.,,

Learned Counsel for the appellant/company in assailing the impugned order has made the following submissions:Â​,,

(i) There should have been a disclosure by the respondent of the receipt of the amounts from the insurerÂKsure. This to ascertain whether the insurer,,

was assigned the rights in respect of the debt of the company towards the respondent and/or to ascertain whether the insurer subrogates the rights of,,

the respondent to the debt in question. (ii) As the respondents had received the entire amount from the insurance company, there was no longer a debt",,

outstanding from the company as also the respondent ceased to be creditors of the company within the meaning of Section 433 and 434 of the,,

Companies Act.,,

(iii) The observations of the learned Company Judge that the Company has filed a false affidavit when it contended that it had recently received the,,

knowledge of the payment made by the insurer to the respondentsÂcompanies, is an error inasmuch as the affidavit was filed by the Mr.Rohit R.",,

Ganage who was a new Director.,,

In supporting the submission that the respondent having received the amounts as outstanding from the company, from its insurer and thus there was",,

no debt due and payable by the company to the respondents, the learned Counsel for the respondents has placed reliance on the decisions in the case",,

“Union of India Vs. Sri Sarada Mills Ltd AIR 1973 SC 281.†; Economic Transport Organization, Delhi Vs. Charan Spinning Mills Pvt.Ltd. &",,

Anr (2010)4 SCC 114.â€​ .,,

On the other hand, the learned Counsel for the respondents in supporting the impugned order would submit that despite the payment being made by",,

the insurer, the respondent's cause of action against the company would very well survive considering the settled position in law, that such a contention",,

as urged on behalf of the company cannot be a defence as it would be the subject matter of separate proceedings between the insurer and the,,

respondent. It is submitted that the company being a third party cannot take such a defence so as to disown its liability. It is next submitted that the,,

learned Single Judge has correctly observed that the affidavit of Mr.Rohit R. Ganage dated 15 September 2015 interalia stating that it had recently,,

come to the notice of the Directors of the Company that the amount having received from the insurer, there was no debt due and payable by the",,

company to the respondent, was exÂfacie a false statement. It is submitted that this plea was completely falsified by Email dated 14 June 2012",,

addressed by Ksure to the Companies. It is submitted that the defence of the appellant company was not bonafide and honest. In any case, the",,

receipt of the amount from the company would not vitiate the cause of action which had accrued to the respondent.,,

We have heard the learned Counsel for the parties. We have also perused the impugned order and the record.,,

It is not in dispute that under the purchase transaction between the company and the respondent, the company was liable to pay an amount of",,

Rs.6,07,00,000/Â to the respondent. What is significant is that in the consent order dated 25 June 2014 passed by the learned Company Judge the",,

appellantÂcompany(s) had admitted this liability, whereby the company had agreed to a detailed schedule of payments to be made to the respondents",,

from 30 July 2014 to 10 December 2015. Admittedly, the said order of the Company Court was a self operative order inasmuch as the company",,

failing to pay any of the installment, it was directed that the company petitions shall stand revived and without reference to the Court would stand",,

admitted to be made returnable after six weeks, from the date of default and advertised in local newspapers. The Company petitions were accordingly",,

advertised and thereafter were taken up for final hearing and decided by the impugned order. It is thus clear that there is no dispute that there was a,,

debt due and payable by the company towards the respondents. The only defence of the company as introduced in the affidavit of Mr.Rohit R.,,

Ganage dated 15 September 2015 is that the company had recently become aware that the respondents had duly received the outstanding payments,,

qua the transaction between the company and the respondent from its insurerKsure and having received the amounts which were due and payable by,,

the company, there was no longer a debt outstanding from the company to the respondent. It is the contention of the Company that the insurance",,

company thus was a necessary party. It is also the Company's case that the respondent has suppressed the agreement between the respondent and,,

its insurerÂKsure, which was not placed on record. It is submitted that the contract between the respondents and the insurer was required to be",,

considered by the Company Court, so as to ascertain whether the debt outstanding from the company was assigned by the respondent in favour of the",,

insurer and/or the insurer subrogates the company qua the said debt. The submission is also that at the most the insurer of the respondent would be,,

entitled to make a claim against the company and not the respondent.,,

We are surely not persuaded to accept the above pleas of the company. This for the more than one reason. We cannot lose sight of the fact that,,

the company in the company petition's in question had agreed to a consensual order dated 25 June 2014 passed by the Company Judge agreeing to,,

discharge his liability and make full and final payment of Rs.6,07,00,000/Â​ in eighteen installments starting from 30 July 2013 till 10 July 2016 as set out",,

in the chart at page 2 of the said order passed by the Company Court. Further in the event of default and failure to pay any installment, it was agreed",,

and the Court had directed that the company petitions shall stand revived and the petitions would stand admitted. The company defaulted in payment,,

of the installments. The company also did not move any formal application by making any substantive prayer for recall of the said orders dated 24,,

June 2014 except incorporating a statement in paragraph 9 of the affidavit of Rohit R. Ganage dated 15 September 2015 stating that as the,,

respondent had received an amount of Rs.6,07,00,000/Â​ from its insurers, the order dated 25 June 2014 passed by the company Court be recalled.",,

Be that as it may, it would be imperative to consider whether such a plea that the debt of the company payable to the respondent ceased to exist",,

on the respondent's insurer making payment to the respondent, can at all be accepted. Admittedly, the company is a unknown entity to the contract of",,

insurance between the respondent and its insurer Ksure. Being a third party the company cannot take shelter and disown its liability of a debt payable,,

to the respondent on the basis of an insurance transaction which has taken place between the respondent and its insurer. In our opinion, such a plea",,

introduced in the affidavit of Mr.Rohit R. Ganage is an argument of desperation. Being a third party, the company is not entitled to take a defence",,

that the respondent being paid by the insurer, the liability of the company would ceased to exist, as the insurance contract between the respondent and",,

its insurer is a matter interÂse between the said two parties. It is for the insurer depending upon the terms and conditions of the contract between the,,

respondent and the insurer, to consider its position and recover any amount, if so is received by the respondent under the transaction in question. The",,

company stands completely outside the insurance contract between the respondent and its insurer. In our opinion, the Company cannot espouse the",,

cause of the insurer in making an argument that the respondent is unjustly enriched. In our opinion, the principle of law in this regard can very well be",,

seen from the decisions in “Morley Vs. Moore (1962)2 Q.B. 1936(2) KB 359†and “Yorkshire Insurance Vs. Nisbet Shipping Co.Ltd.,,

(1962)2 Q.B.330†as referred in the impugned order. We are also in agreement with the view taken by the Divison Bench of the Gujarat High,,

Court in the case PVD Plast Mould Industries Ltd. Vs. ING BHF Bank Aktiengesellschaft 2008(144) Company Cases 484 Gujarat wherein the Court,,

observed that “The petitioner cannot say that once the insurance company has paid the money to the principal creditor, then the appellant company",,

is not answerable to anybody. The appellant company is still liable and applying the principle of subrogation, the insurance company can always",,

recover the money from the appellant and in any case, if the money is received by the creditor company then, to the extent of the receipts, the creditor",,

company would refund the money to the insurance company. That would be a matter between the insurance company and the creditor company.,,

The debtor is not entitled to take any benefits out of the said transaction.â€​,,

We are also in agreement with the view taken by the learned Single Judge of this Court in Jiangsu Skyrun Waxi Co.Ltd. VS. Syrma Technology,,

Pvt.Ltd. wherein the learned Single Judge referring to the decision as we have noted above, observed thus:Â​",,

“18. … … … ….,,

In light of the judgments referred to above, the submission of the Company In light of the judgments referred to above, the submission of the Company",,

that, in view of the phraseology of the payment receiptÂcumÂsubrogation letter which includes the words “assign†and “transferâ€, only the",,

insurer can initiate and maintain any action against the Company cannot be accepted. The Petitioner is indeed entitled to file the above Company,,

Petition against the Company and the Petition as filed is maintainable in law. The only obligation that falls upon the Petitioner is in respect of receipt of,,

sums from the Respondent which may be in excess of the Petitioner’s claim, to which extent the insurance company would be entitled to seek",,

recovery of such sums from the Petitioner. This, however, would be the subject matter of separate proceedings between the insurance company and",,

Petitioner and does not merit any further consideration at the stage of admission of this present Company Petition.,,

The Company’s following submission was that the claim under the Petition was not a 'debt' but 'damages' and there was no ascertained,,

liability. Therefore, it was submitted, the claim of the Petitioner can only be proved in a Civil Court. In my view, there is no question of the claim being",,

in respect of damages or being unascertained in any manner whatsoever. On the contrary, there is no dispute in respect of the admitted outstanding of",,

US$ 226,283.40 payable by the Respondent. Therefore, the present Company Petition, which is in respect of an admitted debt and an ascertained",,

liability is unaffected by the judgments relied upon by the Company which relate to the nonmaintainability of a winding up petition in cases where there,,

is an unascertained sum payable to the Petitioner.â€​,,

The reliance of the Company, on the decision of the Supreme Court in Union of India Vs. Sri Sarada Mills Ltd. (supra) is not well founded. The",,

dispute in the said case arose from a suit instituted by the plaintiff â€" Sri Sarada Mills Ltd., against the Union of India/Railways for damages to 100",,

bales of F. P. cotton consigned through their agents from Nagpur to Podhanur under a railway receipt issued by the Central Railway. When the goods,,

had arrived at Podhanur, it was found that 87 bales out of the 100 were burnt and charred and 13 bales were loose and short in weight. When the",,

plaintiff applied for open delivery, the railway authorities at Podhanur got the damage surveyed, and issued a certificate of damage and shortage. The",,

plaintiff claimed damages. The railways however denied the claim as the cause of the fire was stated to be unknown and thus no negligence or,,

misconduct could be claimed against the railways. The plaintiff had accordingly instituted a suit for damages. It is in the said suit the defendantsÂ‐,,

railways contended that the plaintiff was not entitled to institute the suit as it had insured the goods with the Indian Globe Insurance Co. and had,,

received the total loss from the said Company, and therefore, the railways was not liable for damages. In the majority judgment, the Court refused to",,

accept the said contention and made the following observation:Â​,,

“21. The defence of the Railway Administration was that the mill realised from the insurance company the damages and ""as such the plaintiff",,

(meaning thereby the respondent mill) has no right to claim any sum in this action"". If the specific plea of assignment had been taken in the written",,

statement the respondent mill would have impleaded the insurance company. The Court could 'have in those circumstances been in a position to afford,,

full and complete relief to the parties.,,

In the present case the insurance company and the mill proceeded on the basis that the, insurance company was only subrogated to the rights of",,

the assured. The letter of subrogation contains intrinsic evidence that the respondent would give the insurance company facilities for enforcing rights.,,

The insurance company has chosen to allow the mill to sue. The cause of action of the mill against the Railway Administration did not perish on giving,,

the letter of subrogation.,,

In Economic Transport Organization, Delhi Vs. Charan Spinning Mills Pvt. Ltd. & Anr.(supra) as relied on behalf of the appellant, the issue which",,

fell for consideration of the Constitution Bench was on a reference as made by a three Judges' Bench on the issue that the decision of the Supreme,,

Court in Oberai Forwarding Agency V. New India Assurance Co.Ltd (2000)2 SCC 407 whether required reconsideration. The question which fell for,,

consideration of the Supreme Court in the said decision are paraphrased in paragraph 11 of the decision which pertained to the issue of a letter of,,

subrogation executed by an assured in favour of the insurer. One of the questions namely question (b) was where the insurer pays the amount of loss,,

to the assured, whether the insurer as subrogee, can lodge a complaint under the Act, either in the name of the assured, or in the joint names of the",,

insurer and the assured as coÂcomplainants?. In answering the said issue, the Court laid down the principles of subrogation in paragraph 35 of the",,

decision and answered the questions so framed in paragraph 51 of the decision. It was held that if there is subrogation in favour of the insurer, the",,

insurer as subrogee can file a complaint under the Consumer Protection Act either in the name of the assured as his attorneyÂholder or in the joint,,

names of the assured and the insurer, for recovery of the amount due from the service provider. It was held that the insurer cannot in its own name",,

maintain a complaint before a Consumer Forum under the Act, even if its right is traced to the terms of a letter of subrogationÂcumÂassignment",,

executed by the assured. The observations of the Court in paragraph 51 needs to be noted which read thus:Â​,,

“51. We therefore answer the questions raised as follows:,,

(a) The insurer, as subrogee, can file a complaint under the Act either in the name of the assured (as his attorney holder) or in the joint names of the",,

assured and the insurer for recovery of the amount due from the service provider. The insurer may also request the assured to sue the wrong doer,,

(service provider).,,

(b) Even if the letter of subrogation executed by the assured in favour of the insurer contains in addition to the words of subrogation, any words of",,

assignment, the complaint would be maintainable so long as the complaint is in the name of the assured and insurer figures in the complaint only as an",,

attorney holder or subrogee of the assured.,,

(c) The insurer cannot in its own name maintain a complaint before a consumer forum under the Act, even if its right is traced to the terms of a Letter",,

of subrogationcumÂ​assignment executed by the assured.,,

(d) Oberai is not good law insofar as it construes a Letter of subrogationÂcumÂassignment, as a pure and simple assignment. But to the extent it",,

holds that an insurer alone cannot file a complaint under the Act, the decision is correct.â€​ (emphasis supplied)",,

Considering the above position in law on subrogation, in our opinion, the above decision is of no avail to the appellants as the issue in the present",,

case does not arise from any adjudication on subrogation or assignment by the learned Single Judge. In any event, even assuming that there was a",,

subrogation applying the principles of law as laid down by the Constitution Bench in Economic Transport Organization, Delhi Vs. Charan Spinning",,

Mills Pvt. Ltd. & Anr. (supra), it needs to be held that the company petitions at the behest of the respondent were nevertheless maintainable.",,

In the light of the above discussion, we find no merit in the appeals. They are accordingly rejected. No costs.",,