Sree Balaji Coal Traders Ltd. vs Grewal Associates P. Ltd.

These two appeals would relate to an order of refusal to admit two winding up petitions arising out of balance price of goods sold and delivered by the appellants to the respondent. The facts would depict, the respondent-company permitted M/s. Expo Minerals P. Ltd., to run their factory for a limited period. The said Expo Minerals handed over the factory back to the respondent on May 13, 2010. The subject supply would relate to coal supplied between the period April 4, 2010 and April 14, 2010. The appellant would allege, they supplied coal to the respondent whereas the respondents would deny the same. The respondent would claim, they had a linkage with South India Coalfields Ltd. They never had any occasion to purchase coal from any private party, far to speak of the appellants. Both these petitions would raise a claim of about Rs. 1.5 crore. However, the petitioners in these matters are different although they belong to the same group. Hence, both the winding up petitions were heard together and disposed of by a common judgment and order. The learned single judge by judgment and order dated September 16, 2013--since reported in (Grezual Associates P. Ltd. v. SMJ Eximp Ltd. [2014] 187 Comp Cas 121 (Cal.)), declined to admit the winding up petitions. The judgment would appear from pages 285-292 of the paper book. Hence these appeals at the instance of the petitioning-creditors.

Mr. Jayanta Mitra, learned senior counsel appearing in support of the appeals being assisted by Mr. M.C. Ghosh, learned counsel, would take us to the pleadings being winding up petitions and the affidavits-in-opposition. Mr. Mitra would contend, when a statutory notice of demand was served upon the company, it was their obligation to react to the said notice. The company deliberately did not reply to the said notice of demand that would raise a presumption of insolvency in accordance with the provisions of section 434 of the Companies Act, 1956, making the winding up petition maintainable. Mr. Mitra would further contend, the so-called defence that the company raised in their affidavit-in-opposition was nothing but an afterthought and in any event, there are discrepancies that would be apparent from the affidavit-in-opposition. Mr. Mitra would draw our attention to the statements made on behalf of the company where the company denied having signed the confirmation of accounts and in the same breath admitted to have been initialed by one Abhimunna Shaw. We find from the affidavit, the company denied the existence of the confirmation of accounts. They would contend, the seal appearing on the said document was not the seal of the company. The initial appearing therein would appear to be of Abhimunnu Shaw who denied having signed the same by filing an affidavit appearing at page 121 of the paper book. Mr. Mitra would make comment on such pleadings. He would refer to the earlier paragraphs where the company claimed to have 380 employees. According to him, out of 380 employees if the company could identify the initial of Abhimunnu mere denial on the part of Abhimunnu would not absolve their responsibility.

On the invoice Mr. Mitra would contend, both the invoices were accompanied by various road challans giving details of the truck that carried the coal that would prove the supply. He would also draw attention to a notice of demand that the company raised on Expo Mineral during pendency of the winding up proceeding wherein the company once again cautioned the Expo Mineral, in case they would not settle the issue, the company would admit the claim and would realise such claim amount ultimately from Expo Minerals. Mr. Mitra would contend, had it not been a genuine claim, the company would not have written such letter. He would lastly submit, in case the learned judge was not impressed with the facts and circumstances, he should have directed security to be furnished as the facts would deserve such order. He would rely upon the following cases in support of his contention:

N. Desai Papers P. Ltd. Vs. Computer Skill Ltd., .

K.T.S. (Singapore) Plc. Ltd. Vs. Associated Forest Products (Pvt.) Ltd., .

SICAL-CWT Distriparks Limited Vs. Besser Concrete Systems Limited, .

Per contra, Mr. Surajit Nath Mitra, learned senior counsel appearing for the company would submit, the company never had any transaction at all with the respondent. The supply of coal for a brief period between April 4 to 14, 2010, that too, amounting to Rs. 1.5 crore, would itself raise suspicion particularly when the company categorically denied the supply.

Mr. Mitra would further contend, once the company denied existence of such document said to be confirmation of accounts, it was the duty of the petitioner to produce evidence in support thereof, they failed to do so.

Commenting on the confusion that is being raised in respect of Abhimunnu, Mr. Mitra would contend, the initial appearing on the document would appear to be of Abhimunnu. Hence, the company enquired of him whether he had signed the document or not that he denied by filing an affidavit appearing at page 121 of the paper book. He would again raise suspicion on the existence of the document appearing at page 28 that was hand delivered. According to him, the distance would not permit so prompt delivery even by hand. Reacting to the appellant''s contention on the letter of notice of demand made to Expo Minerals, Mr. Mitra would contend, it would show the bona fide conduct of the company. He would lastly contend, the company is a cash rich company having earning profit. He would rely upon the balance-sheet appearing at page 122 of the appeal being A.P.O. No. 14 of 2014. The company never faced any winding up proceeding in the past or soon after filing of the present two petitions. He has prayed for dismissal of the appeal. To support his contention, Mr. Mitra would rely on the decisions in the cases of East India Wires Limited Vs. Mohan Lal Ghosh, : East India Wires Limited Vs. Mohan Lal Ghosh, and SICAL-CWT Distriparks Limited Vs. Besser Concrete Systems Limited, .

While giving reply, Mr. Ghosh contended, the decision in the case of East India Wires Limited Vs. Mohan Lal Ghosh, , would have no application as it was rendered at the final stage of winding up. With regard to the notice of demand raised on Expo Minerals, Mr. Ghosh would contend, it was nothing but an afterthought and was raised just to resist the winding up proceeding.

We have considered the rival contentions. The facts appearing from the records as discussed above, do not convincingly show, the appellant had a claim against the company that would have no plausible defence from the company. In a winding up proceeding the principal test is to find out, whether the petitioning-creditor has a claim duly raised through a statutory notice of demand and the company failed or neglected to pay or compound the same meaning thereby, once the claim is raised, it is the duty of the company to rebut by way of justification as to non-payment. If they are successful on that score, the winding up petition cannot be admitted. In the present case, the company did not give any reply that would definitely raise a presumption against them. However, once the winding up petition came up for admission after affidavits, the court is to examine the records that would appear from the pleadings including affidavits filed by the company. The facts so discussed above, would not suggest, the petitioning-creditor was successful in raising the admitted claim. In our view, the disputes so raised by the company could not be said to be a sham that would deserve an order of rejection. We do not know, whether the petitioning creditor would be able to justify their claim or the company would be able to resist the same, at the final trial. It would be too early to comment on merits. We would only observe, the facts so discussed above, would not create a situation to support an order of admission.

Mr. Mitra has relied upon a decision in the case of K.T.S. (Singapore) Plc. Ltd. Vs. Associated Forest Products (Pvt.) Ltd., . He has relied upon a passage appearing at page 203 where the learned single judge of this court observed: "If the company has failed to apply for the necessary permission and obtain the same in due course, that does not mean that the debt is not presently payable. It is due to the default of the company that such a situation has arisen and it is an elementary principle that nobody can take advantage of his own default. Therefore, it cannot be contended now by the company that the debt is not presently payable having not produced any document before this court to show that it made an application before the Reserve Bank of India under the Foreign Exchange Regulation Act for the remittance of the commission payable to the petitioning-creditor, under the said contract between the parties, which is admitted".

Above observation was made by the learned judge in a given situation where the company took a defence, money was not presently payable in absence of permission from the Reserve Bank of India under the Foreign Exchange Regulation Act then prevalent. The learned judge ultimately held, it was nothing but a ploy to avoid the just claim of the petitioner. In this case, we could not come to a definite conclusion as to the veracity of the claim. Hence, this may not have any relevance.

Mr. Mitra has next cited the decision in the case of In Re: Deepika Housing Projects Pvt. Ltd. and etc., . He has relied upon paragraph 17 where the learned single judge of this court observed (page 33 of 146 Comp Cas): "The company''s ground that the petitioner lacks of bona fides is without basis. It is the petitioner which gave the money to the company. Such fact remains undisputed. Who is in control of the petitioner or who is in control of the company is irrelevant once the petitioner is established as the creditor and the company the debtor". This paragraph has been relied upon by Mr. Mitra in support of his contention, the company cannot take the plea of Expo Minerals being in the helm of the affairs of the relevant period. From the records we find, the bill was raised in September, 2010. The demand notice would also speak of supply in September whereas the invoice disclosed in the winding up petition would relate to April, 2010. The passage is thus not applicable.

In the case of East India Wires Limited Vs. Mohan Lal Ghosh, a winding up petition was filed on the just and equitable ground. In that context, the court observed, "it was a last resort and the court should sparingly use it as a discretionary relief".

The Division Bench of the Madras High Court in the case of SICAL-CWT Distriparks Limited Vs. Besser Concrete Systems Limited, once again reiterated (page 249):". . . when the respondent who was sought to be wound up was able to show that there was a bona fide dispute with regard to the liability in question, the winding up proceeding is not the proper remedy to resolve the dispute". This is a well-settled proposition of law that has been rendered in the general context.

The learned judge, in our view, rightly declined to admit the winding up petition that would deserve no interference.

Mr. Jayanta Mitra, learned senior counsel, as and by way of alternative submission, has contended, the learned judge should have directed security to be furnished.

We have examined the balance-sheet of the company. It is a cash rich company. The fact that the company never faced any winding up petition, is not disputed by the petitioner. The bulk coal is generally supplied by the Government coal companies. The company asserted, they had a linkage with South Indian Coalfields Co., a Government undertaking. These facts would prevent us from directing any security to be furnished. We, however, observe, since the appellant was pursuing its claim bona fide before this court, they should get the benefit of section 14 of the Limitation Act, 1963. We would permit the appellant to file a suit in relation to the selfsame claim before the appropriate forum within a period of six weeks from date meaning thereby, they would get the benefit of the period from the date of initiation of the winding up proceeding till the suit is filed within the stipulated period. The appeals are disposed of without any order as to costs.