Parmetex Inc. vs Punjab Con-Cast Steels Limited

N.K. Sodhi, J.—This petition has been filed under sections 433: 434 and 439 of the Companies Act, 1956 (for short, "the Act"), for the winding up of Punjab Con-Cast Steels Limited, a public limited company incorporated under the Act with its registered office at 1, Focal Point, Ludhiana, in the State of Punjab (hereinafter called "the company") on the ground that it is unable to pay its debts.

The petitioner is also a company incorporated under the laws of the United States of America with its registered office at 93, Nottingham Square, Hackettstown, New Jersey (U.S.A.). It is engaged in the export of shredded scrap to various steel plants in India. It is not in controversy that the parties have been entering into contracts from time to time for the supply and purchase of waste and scrap for remelting (melting scrap) of all grades of non-alloy steel carbon steel shredded scrap. The case as set up in the petition is that the company placed five purchase orders on the petitioner for the supply of shredded scrap as aforesaid the particulars of which have been mentioned in para 7 of the petition. It is further stated that the petitioner shipped the material from the United States of America by chartered ships to Kandla Seaport in the State of Gujarat. The material is said to have been cleared by the clearing agents of the company after its arrival at Kandla. It is also alleged that there was sufficient delay on the part of the company in clearing the goods after their arrival at Kandla and as per the terms of the contract between the parties the demurrage amount was liable to be paid by it which amounted to 345,851.64 US dollars. According to the terms of the contract, all payments were to be made to the petitioner in US dollars which had to be released on the directions of the Reserve Bank of India. In support of its case the petitioner has placed reliance on the alleged contracts entered into between the parties and also on the debit notes prepared by the petitioner debiting the aforesaid amount to the account of the company which documents are said to have been confirmed by the company. Copies of these documents have been produced with the petition as annexures.

In the reply filed by the company the execution of the contracts/ purchase orders referred to in para 7 of the petition (annexures P1-A to P1-E with the petition) has been denied. It was stated that even though the company had been doing business with the petitioner it never placed the alleged five purchase orders nor executed any contracts in this regard and, therefore, it denied its liability to pay any demurrage whatsoever. Thereafter, the petitioner filed Company Application No. 97 of 1992 seeking permission of this court to place on record four letters allegedly written by the company to the Reserve Bank of India for the release of foreign exchange to be paid to the petitioner by way of demurrage. Notice of this application was given to the company which filed a detailed reply denying having written these letters. The application was allowed and the documents were permitted to be placed on record and the reply of the company to the application was ordered to be read as part of its written statement. Since the company was challenging the authority of S. D. Ajgaon-kar to file the petition on behalf of the petitioner-company it was directed to file an amended written statement. Accordingly an amended written statement has been filed.

Again, by filing Company Application No. 138 of 1993 the petitioner sought the permission of the court to place on record a copy of the reply sent by the company to the statutory notice received by it from the petitioner u/s 434 of the Act. This application too was allowed subject to just exceptions.

Having heard counsel for the parties at length, I am of the opinion that disputed questions of fact are involved in this petition which cannot be adjudicated upon without recording evidence. Not only has the execution of the contracts/purchase orders in question been denied, the company contends that the letters alleged to have been written by it to the Reserve Bank of India for the release of foreign exchange are forged and fabricated documents and the reasons mentioned by it in its reply even if taken as prima facie correct still need to be properly looked into by a civil court. It is true that the company in its reply to the statutory notice received by it u/s 434 of the Act has admitted the execution of the documents though its liability to pay any amount by way of demurrage to the petitioner has been denied. The parties have had dealings in the past and the possibility of counsel who sent the reply on behalf of the company not having been properly briefed cannot be ruled out and it being an admission can be explained away but in appropriate proceedings. It is also doubtful whether S. D. Ajgaonkar was properly authorised to file the present petition on behalf of the petitioner and the copy of the power of attorney produced on record was seriously challenged by the company.

When the case came up for hearing on September 24, 1993, learned counsel for the petitioner undertook to produce the originals of the alleged purchase orders placed on them by the respondent company and also the debit notes prepared by the petitioner which were allegedly confirmed by the company. He has not been able to produce these documents and stated that the same are not available. Photocopies of the debit notes have been produced which do not indicate that the company had ever confirmed the said debit notes. This again is a circumstance which raises another controversy which cannot be resolved without recording evidence.

It would be pertinent to mention that the company is a going concern having a turnover of more than one billion rupees per year. It has more than 900 persons in its direct employment and about 1,200 persons in indirect employment. The company pays about 7 to 8 crores of rupees by way of excise duty each year. It is not an insolvent company and, therefore, the court has to be slow in ordering its advertisement/citation.

In view of the aforesaid disputed facts, I decline to interfere in the present proceedings and relegate the petitioner to the remedy of a civil suit where all such questions can be gone into after recording evidence. In case the petitioner files a suit against the company, the latter, on being served in the said suit, shall within one month from the date of service furnish security (other than cash and bank guarantee) for the amount which the petitioner would claim in the suit to the satisfaction of the trial court which will accept the same after notice to the parties. It is, however, made clear that whatever has been stated hereinabove is only for the purposes of. disposing of the present petition and nothing stated herein shall be taken as an expression of my opinion on any of the issues that may arise between the parties in the civil suit and the trial court would be free to decide those issues in the light of the evidence that may be led before it by the parties. With these observations, the petition is dismissed with no order as to costs.