Khalsa Pulp and Paper Industries (P.) Ltd. vs Cellulosix Ltd.

V.K. Jhanji, J.—This petition under Sections 433, 434 and 439 of the Companies Act, 1956, is by Khalsa Pulp and Paper Industries (P.) Limited, P. O. Village Naura, district Jalandhar. The company is having its registered office at district Jalandhar and it carries on the business of supplying the machinery from the complete plant of paper, pulp and board mills which includes machinery and other items used for installation of paper and board plant.

It has been stated that the respondent-company, namely, Cellulosix Limited, is a private limited company under the Companies Act, 1956. The main objects for which the respondent-company was established are to manufacture, buy, sell gray board and other paper boards set forth in the memorandum and articles of association. It has been stated that the company entered into an agreement with the petitioner on September 14, 1981, for erection of an automatic plant for 15 TPD for a total cost of Rs. 37,65,500. Subsequently, the company executed another agreement with the petitioner on June 9, 1993. In the schedule of agreement, the details of equipment, machinery and other materials to be supplied by the petitioner and the mode of payment were mentioned. It has been averred that as a consequence of the agreement, the petitioner opened a mutual and current account in its account books in respect of dealings made with the respondent-company. The petitioner-company has alleged that under various confirmed orders, the petitioner supplied material to the respondent-company, vide various bills as attached to the petition as annexures P-2 to P-12. The said material includes machinery and other items. It has been stated that the respondent-company admitted liability of Rs. 1,77,107.75 as it was due on July 28, 1989. The petitioner-company has further stated that it made several written requests to the respondent-company for payment of the debt, but in spite of that, the respondent-company failed to clear its debts. On June 26, 1993, the petitioner served a legal notice to the respondent-company asking them for payment of Rs. 2,70,769.70 along with interest at the rate of 18 per cent. per annum which was due from them. The said notice was returned by the respondent-company with the remarks "returned". The petitioner-company, thus, has submitted that the respondent-company be ordered to be wound up under the provisions of the Companies Act since it has failed to meet its liabilities.

On notice of the petition, the respondent-company has filed a detailed written statement in which it has been stated that a bona fide dispute exists between the petitioner and the respondent and as such, the petition for winding up is not maintainable. It has been stated that the basis of the alleged claim is the agreement dated June 9, 1983, executed between the petitioner-company and the respondent-company. Under the agreement, the petitioner was to supply and erect an automatic plant of a capacity of 15 tonnes per day. In the agreement, it was specifically pointed out that the delivery period along with installation, erection and commissioning of plant at the earmarked site was 15 to 18 months. It has been averred that the petitioner-company failed to supply the equipment as per the said agreement. In this connection, the letter dated May 11, 1990, written by the Punjab State Industrial Development Corporation Limited has been placed on record. In this letter, the corporation has stated that the responsibility for delay would rest with the petitioner. The respondent- company has further stated that as all the machinery and equipment were not supplied by the petitioner, an attempt was made by the respondent to sort out the matter regarding supply of equipment amicably. In this connection, letters dated April 13, 1991, April 19, 1991, and June 23, 1991, have been referred to and the same have been annexed as annexures R-4 to R-6. In regard to admission of liability regarding payment of Rs. 1,77,107.75 as on July 28, 1989, it has been stated by the respondent-company that the said amount is with reference to retention money which was to be released after completion of erection and successful commercial production running of three months, i.e., after establishment of consumption parameters as stated in Clause 3C of the agreement. As the supply of machinery was not completed by the petitioner-company, the retention money was not paid. The respondent-company wrote to the managing director, Punjab State Industrial Development Corporation, on May 8, 1990, in connection with release of the retention money. However, as the petitioner owed sums of money as advance received from the respondent-company, the sum of Rs. 1,77,107.75 was calculated by adjusting the advance paid to the petitioner against the retention money. It has thus been stated that the alleged claim of Rs. 1,77,107.75 is without any basis.

From a reading of the pleadings and the documents placed on record, I am of the considered view that the prayer made in the petition for winding up of the respondent-company cannot be allowed as a bona fide dispute exists between the petitioner-company and the respondent-company with regard to performance of the agreement which had been executed between the parties. As regards the plea taken in the petition that the respondent-company has admitted the liability of Rs. 1,77,107.75, I find from a reading of annexure P-13 that the so-called admission was contained in special notice to creditor/debenture holder/State Government in pursuance of Rule 36(2) of the Company Law Board (Bench) Rules, 1975, regarding condonation of delay in filing the particulars of modification of charge in favour of the Punjab State Industrial Development Corporation, Chandigarh, for Rs. 17.50 lakhs. This amount was stated because in the books of account of the respondent-company, the said amount stood credited to the account of the petitioner-company. In regard to this payment, as already noticed, the respondent-company in its written statement has stated that the said amount was in fact a retention money and has already been adjusted in regard to advances not supplied. This assertion of the respondent-company has not been denied by the petitioner-company. No replication has been filed denying this assertion. More so, even if it is taken that respondent-company admitted a liability for a sum of Rs. 1,77,107.75, then also the petitioner-company cannot take advantage of this admission inasmuch as this admission was made in regard to liability as on July 28, 1989. The present petition has been filed on March 7, 1996, i.e., much after the expiry of period of limitation. The claim which has become barred by time is no claim in the eyes of law and, therefore, this petition deserves to be dismissed. It is so ordered.