G.S. Fertilizers P. Ltd. vs Durgapur Steels Ltd.

Sahidullah Munshi, J.—The present appeal arises out of an order dated July 26, 2013, passed by the hon''ble single judge in C.P. No. 660 of 2011--since reported in (Durgapur Steels Ltd. (in liquidation). In re [2014] 185 Comp Cas 71 (Cal)). In the said C.P. No. 660 of 2011 filed by Durgapur Steels Ltd., being the company in liquidation, one Gopal Kumar Sanei affirmed an affidavit on March 12, 2013, in his capacity as one of the directors of G.S. Fertilizers P. Ltd., a supporting creditor. In the said affidavit it was contended by the supporting creditor that at the request of the company in liquidation G.S. Fertilizers P. Ltd., the supporting creditor, agreed to make an inter-corporate deposit for a sum of Rs. 60,00,000 (sixty lakhs) only, with the company in liquidation for a period of 247 days reckoned from April 28, 2010 to December 31, 2010, at an agreed rate of interest for 19 per cent, per annum. It is claimed by the supporting creditor that the aforesaid term of inter-corporate deposit would be evident from their letter dated April 28, 2010, written by G.S. Fertilizers P. Ltd., to the company in liquidation and that the said intercorporate deposit of Rs. 60,00,000 (sixty lakhs) only, was made by way of RTGS from the account of G.S. Fertilizers P. Ltd. A copy of the said letter dated April 28, 2010, has been annexed by the supporting creditor to his application. It has been claimed by the supporting creditor that the company in liquidation duly acknowledged the said inter-corporate deposit of Rs. 60,00,000 (sixty lakhs) only, and handed over a post-dated cheque for the said amount drawn on the Royal Bank of Scotland N.V. Braborne Road, Kolkata, being cheque No. 310891, dated December 30, 2010. It has been, further, claimed that the company in liquidation also promised to pay interest after encashment of the said cheques. Copy of the said cheque has, also, been annexed by the supporting creditor to his affidavit.

It has been submitted by G.S. Fertilizers P. Ltd., that at the request of the company in liquidation G.S. Fertilizers P. Ltd., deposited the said cheque with its bankers, the State Bank of Hyderabad, Park Street branch, on March 30, 2011, but the bankers of the company in liquidation, the Royal Scotland Bank, N.V., returned the said cheque unpaid with the remark "refer to drawer".

Copy of the said cheque memo issued by the Royal Scotland Bank N.V. has, also, been annexed to the said affidavit of the supporting creditor. The company in liquidation, however, made part-payment of Rs. 40,00,000 (forty lakhs) only, by RTGS on May 4, 2011, to G.S. Fertilizers P. Ltd. Apprehending that the company in liquidation would not make payment of the interest on the amount paid by the supporting creditor, a letter was addressed to Durgapur Steels Ltd., under registered cover by the learned advocate for the said G.S. Fertilizers P. Ltd. The said letter dated October 31, 2010, has been annexed as annexure D to their affidavit. By the said letter, the learned advocate, Mr. Murali Mohan Ray, demanded a sum of Rs. 17,20,932 (seventeen lakhs twenty thousand nine hundred thirty two only), by way of interest on principal amount being Rs. 60,00,000 (sixty lakhs). Forty lakhs have already been paid, a demand was made for payment of the balance sum of Rs. 37,20,932 (thirty seven lakhs twenty thousand nine hundred thirty two).

As against the said affidavit affirmed by Gopal Kumar Sanei on behalf of G.S. Fertilizers on March 12, 2013, one Sandeep Kumar Kedia affirmed an affidavit on April 26, 2013, on behalf of the company in liquidation. In the said affidavit, the company in liquidation denied and disputed the stand taken by the supporting creditor as also their claim for interest at 19 per cent, per annum. However, in paragraph 6 of the said affidavit, the company in liquidation has prayed for waiver of the interest charged at 19 per cent, per annum.

(emphasis1 supplied)

The hon''ble single judge disposed of Company Petition No. 660 of 2011 and the applications filed therein. The hon''ble single judge observed that unless there has been an express agreement to pay the interest, there is no justification on the part of the company to plead waiver of interest in the proceeding. The hon''ble single judge has expressed his views that if there is some bona fide disputes raised by the parties, the proper course which the company court should adopt is to relegate the parties to a regular civil proceeding. The hon''ble single judge recorded that all the creditors, who appeared at the post-advertisement stage including the present creditors, have been paid in entirety. According to the hon''ble single judge, the only dispute relates to the payment of interest on the principal amount. The hon''ble single judge has held that the pleading on the part of the company in liquidation that it has prayed for waiver of interest in paragraph 6 of the affidavit does not make the supporting creditor entitle to claim interest over the principal amount.

We have gone through the order passed by the hon''ble single judge and we share the views expressed by the hon''ble single judge only with an exception that the hon''ble single judge has not considered the statement made in paragraph 6 of the affidavit of the company in liquidation affirmed on April 26, 2013 and those made in paragraph 9 thereof. In paragraph 6, the company has stated "I further say that the applicant has prayed for waiver of interest charged at the rate of 19 per cent, per annum". In paragraph 9 of the said affidavit the company in liquidation has stated"... and further prayed for waiver of interest charged at the rate of 19 per cent, per annum".

From the aforesaid averment and the prayer made, it is evidently clear that the supporting creditor, while advanced the said sum of Rs. 60,00,000 (sixty lakhs) for a specified period, there was some kind of understanding between the company in liquidation and the supporting creditor regarding payment of interest although there is no document to show that the rate was fixed at 19 per cent, per annum. Be that as it may, it is undisputed that the amount was given to the company in liquidation and the company in liquidation has utilised the said money for its benefit. We, therefore, hold that the supporting creditor, who had advanced a sum of Rs. 60,00,000 (sixty lakhs), is entitled to claim interest over the principal amount of Rs. 60,00,000 (sixty lakhs). In the demand notice dated October 31, 2011, the supporting creditor demanded a sum of Rs. 17,20,932 (seventeen lakhs twenty thousand nine hundred thirty two) for a period of 551 days with effect from April 28, 2010 to October 30, 2011, at the rate of 19 per cent, per annum. We hold that since there is no agreement and/or no document to show that the rate of interest was fixed at 19 per cent, the supporting creditor, however, cannot be denied of at least the simple interest on the said amount. The said rate of interest, we think, should be not less than 10 per cent, per annum and accordingly, we direct the company in liquidation to calculate the total interest payable at the rate of 10 per cent, per annum to the supporting creditor and such payment should be made within a period of 3 (three) months from communication of this order to the company in liquidation.

In view of our finding as mentioned hereinabove, we partially modify the order passed by the hon''ble single judge only with regard to the payment of interest and the appeal is accordingly disposed of, however, without any cost.

Liberty is granted to the company to pay the amount as indicated in our order by 3 (three) months. In default liberty is granted to the appellant to advertise once in The Anandabazar Patrika and once in The Statesman. The advertisement in the Official Gazette is dispensed with and returnable six weeks after publication of this advertisement.

Urgent photostat certified copy of this judgment and order, if applied for, may be furnished to the applicant at an early date.

Subhro Kamal Mukherjee J.--I agree.

1Here printed in italics.