@JUDGMENTTAG-ORDER
S.C. Dharmadhikari, J.@mdashThis Company Petition invokes the powers of this Court u/s 434(e) and (f) of the Companies Act, 1956 and seeks winding up of the respondent Company. The petitioner Company is a German based Company and incorporated on 23.1.1998 under the Companies Act, 1956, as a private limited company by shares. After pointing out as to how the name of the Company has undergone a change, it is stated in para 4 of the petition that the registered office of the respondent Company is situated at 115, Kamat Towers, Patto Plaza, Panaji, Goa (India) 403001. In paragraphs 5 and 6 of this petition what has been pointed out is the authorised share capital, capital paid up or the credited paid up, as also the main objects and thereafter in para 7 it is stated that the respondent Company is indebted in the sum of Rs. 2,03,04,604/- which corresponds to Euro 351174.41. It is stated that the petitioner is a leading manufacturer of specialised application heavy duty concrete pumps and components thereof. Thus, the respondent Company has been, during course of its business in India, placing orders for the supply of various components required for the production of the aforesaid pumps and such orders are placed on the petitioner from time to time. Pursuant to the placement of such orders, the petitioner has supplied to the respondent Company various components and thereafter raised invoices for payment towards the same.
2. A summary of invoices and the credit notes are annexed as Annexure E to the petition and, thereafter, it is stated that the respondent Company failed to make payment for such goods. There were various letters/reminders, details of which are mentioned in paragraph 10 of this petition.
3. In paragraph 11 of the petition, it is stated that the supplies were effected in the year 2004 and 2005, but the Company has not raised any issue either with regard to the supply or with regard to any shortages or deficiencies in the goods. Since the amounts were not paid, what the petitioner stated in paragraph 12 is that they served a Notice of Demand dated 16th March, 2006 on the respondent at its Registered Office, stating therein that in case the amount due is not paid within the period stipulated in the notice, the petitioner would be constrained to initiate winding up proceedings.
4. It would be material to refer to the statements in the petition, thereafter and instead of making reference to the specific statements, it would be proper to reproduce paras 13 to 15 of the petition, which read thus :
(13) The Petitioner states that the said Company vide its Response dated 23 /3 /2006 purported to link the issue of Joint Venture Agreement dated 4/11/2004 and Licence Production Agreement dated 19/12/1997 with the issue relating to the payment of the amount of Rs. 20,304,604.00 (Euro 351171.41) towards supplies received by the Said Company. The Petitioner states that the Joint Venture Agreement and the Licence Production Agreement have since been terminated by the Petitioner and at any rate, the issues arising therefrom has no nexus, relevance or bearing whatsoever with the issue of payment of an amount of Rs. 2,03,04,604.00 by the Said Company to the Petitioner. The outstanding amounts owed by the said Company to the Petitioner arise out of the separate and distinct transactions involving supply of parts and components by the Petitioner, which transactions are independent of any of the terms and provisions of the Joint Venture Agreement or the Licence Production Agreement. These dues of the Said Company are payable against specific and certain goods supplied by the Petitioner to the said Company and therefore the contentions of the said Company alleging any correlation between the two matters are not at all tenable.
(14) The Petitioner states that further in the response dated 23/3/2006 addressed to Mr. N.V. Raman, the Said Company made reference to two letters dated 17/3/2006. In the said letters, the Said Company has attempted to raise the issue of alleged nonperformance of four High Pressure Core Pumps supplied by the Petitioner to the Said Company and certain alleged short supplies of components of SKD sets of BSF 20.07. In view of the above the claim of the amount of Euro 565700 has been vaguely claimed by the Said Company in the Response dated 23/3/2006.
A copy of the Response dated 23/3/2006 is hereto annexed and marked as "ANNEXURE H" to this Petition.
Copies of the two letters dated 17/3/2006 are hereto annexed and marked as "ANNEXURE I" collectively to this Petition.
(15) It is relevant to point out that the said two letters dated 17/3/2006 were duly replied by the Petitioners vide their letters dated 19/4/2006 categorically refuting all the allegations made by the said Company.
Copies of the said letters dated 19/4/2006 issued by the petitioner to the said Company are hereto annexed and marked as "ANNEXURE J
5. It is, thus, stated that the four High Pressure Core Pumps and the components of SKD sets of BSF 20.07 were supplied by the petitioner to the said Company way back in the years 2004 and 2005, and for a period of two years, therefore, no grievance was made with regard to the alleged non-performance of the said pumps or the alleged short supply of the components. There is not a single correspondence emanating from the said Company, wherein such allegations were earlier notified to the Petitioner. Therefore, once the pumps have been beneficially used and without any complaint from the customers, the letters dated 17th March, 2006 have been issued with the sole purpose of disputing the debts which are, otherwise, legitimately due and payable. The allegations purporting to dispute the legitimate dues of the petitioner are belated and they are neither bona fide nor substantiated and it is clear an afterthought. Alleging thus, and making further statement in the petition that the respondent has admitted and acknowledged the debts and such admission is to be found in the Balance Sheets of the respondent Company in the subsequent years, it is stated that the presumption that it is unable to pay its debts be raised and the requirement of sub-section (1) of Section 434 having been complied with, an order of winding up the respondent Company be passed.
6. The petition is opposed by the respondent Company and in their affidavit-in-reply they have stated that the petition is not maintainable. There is noncompliance with the requirement of Section 434(1) of the Companies Act, 1956 inasmuch as the notice demanding the payment has not been addressed to the respondent at its registered Office. It was addressed at their office at 190, 191, Kundaim Estate, Ponda, India 403 115. That is not the Registered Office of the Company and that was to the knowledge of the petitioner. The Registered Office is, 115, Kamat Towers, Patto Plaza, Panaji, Goa, India 403 001. In these circumstances, and when there is non-compliance with the mandatory requirement, then, the company petition is not maintainable and deserves to be dismissed on this ground alone.
7. In addition to this what is stated is that the petition contains several false statements, including with regard to service of the notice of demand. The petitioner has not approached this Court with clean hands. From para 3 of the affidavit, and its sub-paras, it can be inferred that what the respondent Company is projecting is an arrangement styled as "Joint Venture Agreement" (for short "JVA") and "Licensed Production Agreement" (for short "LPA"), between the two entities. The stipulations in the JVA and LPA are then referred to and what has been stated is that the product of the petitioner Company found market only because of the sincere efforts of the respondent. It is the petitioner which has breached the terms and conditions of these agreements. Under these agreements the assurances so also the commitments made were to be abided by the parties. However, alleging breaches of these agreements, what is pointed out is that there are disputes and differences between the parties as referred to in the petition and the claim of the petitioner allegedly on account of some supplies made, is being projected in isolation. There is a clear link between the obligations and the commitments under these agreements and once the respondent has alleged that the petitioner has committed default, then, it is not possible to delink the issues raised in the petition from the breaches on the part of the petitioner. It is submitted that the petitioner was aware of the said allegations with regard to the breaches and the correspondence is extensively referred to. It is then stated that the petitioner is aware of the same, as would be clear from the perusal of paragraphs 13 to 15 which have been reproduced above. After stating thus, it is then contended with regard to the specific supplies which are subject-matter of this petition as well, what has been overlooked is that the production, manufacture, sale and supply of respondent company''s products was as per JVA-1 till 4th November, 2004 and thereafter, as per JVA-2 and as per LPA. In view thereof, certain components, spares, accessories, tools in respect of the respondent Company''s products were to be supplied by the petitioner to respondent Company in accordance with the JVA and LPA and its obligations thereunder. The respondent was placing orders for supply of components, spares, accessories, tools, but the petitioner, with mala fide intention and with ulterior motive, delayed the supplies despite confirmation of the orders and delivery schedule.
8. In relation to Order number IMP 66 dated 21st June, 2004, it is alleged that it was confirmed by the petitioner on 23rd June, 2004 and the due date of dispatch was 11th February, 2005. Despite the same, and without any reasons, the components under this order were not dispatched and it was delayed by one and half months. Similarly, with regard to order Nos. IMP 73, IMP 74, IMP 75, IMP 76 and IMP 77 all dated 5th October, 2004, the dates of dispatch have not been adhered to and the delay ranges from 6 to 8 months. What has been then stated is that each of these facts have been brought to the notice of the petitioner Company by Fax messages and even by correspondence. It is the respondent''s case that these letters have been suppressed from this Court.
9. The reply then proceeds on the basis that the petition for winding up cannot be entertained in view of the bona fide and substantial dispute raised by the respondent. In subsequent paragraphs, with regard to each of the orders and the invoices, version of the respondent Company is set out. Reference is also made to the breaches of the JVA and LPA, in relation to which the proceedings are pending between the parties. My attention is also invited to the fact that the petition for winding up is filed, but the position of the company has substantially improved and it cannot be said to be commercially unviable or unable to meet its debts. There is nothing like a belated plea or dispute or something which is in the nature of an afterthought raised by the respondent.
10. My attention is then invited to the rejoinder-affidavit and further affidavits that have been placed on record of this winding up petition.
11. It is on the basis of above material that I have heard the learned Senior Counsel appearing for the parties.
12. Mr. Dessai, learned Senior Counsel appearing on behalf of the petitioner, after inviting my attention to the averments in the petition, and the annexures thereto, has submitted that the petition for winding up has been filed on due compliance being made with the statutory prerequisites. He submits that the Company has accepted the goods without any demur or protest. It is his submission that the receipt of the invoices has also not been disputed. Once the correctness of the invoices has not been disputed, but the demand has not been complied with, then, the requisite presumption must be raised, more so, when the defences raised are not bona fide, but in the nature of an afterthought. Shri Dessai submits that the respondents, while receiving the supplies of the goods/ components, never raised any issue or objection and never intimated the petitioner as regards any shortages or deficiencies. The respondent never objected the twelve communications/reminders for payment which have been duly received. In fact, the liability is admitted. This is a case where the liability is admitted, in writing, inasmuch as the balance sheets of the respondent Company for the relevant year have under the heading "sundry creditors" notified the liability, the sums due and payable to the petitioner. This is not a case where any other issue and particularly with regard to the compliance of JVA and LPA can be raised by the respondent. The respondent is neither a party to the pending arbitral proceedings, nor any other dispute in relation to the liability of the Company towards the petitioner. The respondent has, therefore, chosen to raise technical defences about service of Statutory Notice and particularly when the notice of demand has been duly replied. It is now not open to the respondent to argue that the statutory notice was not addressed to or received at the Registered Office. All such pleas would show an attempt to delay and defeat the claim. In fact, if there was any substance in the allegations made, there was no occasion for the respondent to place the orders and the petitioner to comply with the same. Mr. Dessai has also contended that the statement of the invoices and the sums due thereunder was duly forwarded. Once there is nothing received contradicting any of the figures or sums mentioned therein, then, the statement is accepted and the Court must proceed on that basis. It is in these circumstances, when there is an admitted liability that this Court should proceed to admit the petition, and particularly when the dispute raised is not substantial or bona fide.
Shri Dessai has relied upon the following decisions in support of his contentions:
(1) Texcon Energies v. Euro Cotspin Ltd. [1999] 96 CC 752 (Punj. & Har.).
(2) Chhabra Steels Strips (P.) Ltd. v. Haspa Wheels (P.) Ltd [1996] 86 CC 703 (P&H).
(3) Joti Prasad Bala Prasad v. A.C. T. Developers (P.) Ltd [1990] 68 CC 601 (Delhi).
(4) G.K.W. Ltd v. Shriram Bearings Ltd [1998] 18 SCL 461 (Delhi).
(5) Max India Ltd v. Unicoat Tapes (P.) Ltd [1998] 94 CC 405 (Punj. & Har.).
(6) Chem-Crown India Ltd v. Sports Equipment (P.) Ltd [2001] 103 CC 1002/[2002] 35 SCL 462 (Delhi).
(7) Marsons Ltd v. Mundhra Bright Steel [2002] 39 SCL 919 (Cal.).
(8) Prem Seth v. National Industrial Corpn. Ltd [2001] 103 CC 1011/ [2002] 35 SCL 636 (Delhi).
(9) ITW Signode India Ltd. v. Bhushan Steel & Strips Ltd [2003] 2 CLJ 269/[2002] 39 SCL 929 (Delhi).
(10) Har Narayan Tandon v. Jaipur Smelting (P.) Ltd.[2003] 115 CC 231 / [2004] 50 SCL 192 (Raj.).
(11)
(12) Pandam Tea Co. Ltd. v. Darjeeling Commercial Co. Ltd. [1977]47 CC 15(Cal.).
(13) Garodia Hardware Store v. Nimodia Plantations & Industries (P.) Ltd. [1999] 98 CC 636 (Gauhati).
13. On the other hand, Mr. Nadkarni, learned Senior Counsel appearing on behalf of the respondent, firstly, submitted that the petition for winding up cannot be entertained unless there is complete compliance with Section 434(1) of the Companies Act, 1956. That provision mandates that the demand, in writing, has been raised and served or delivered at the registered office of the respondent Company. It is only upon receipt of such a notice and if there is no compliance therewith in the form of demand being honoured or the amount paid or debt due is compounded it to the reasonable satisfaction of the creditor. In the instant case, the notice of demand is addressed to the factory and not to the registered office of the respondent. If such is the notice of demand and it does not comply with the basic and fundamental requirement for institution of the winding up petition, then, this company petition cannot be entertained. This is not just a technical plea, but a substantial one, according to Mr. Nadkarni. He has relied upon decisions of this Court and that of other High Courts, in support of this submission.
14. As far as financial position of the respondent Company is concerned, it is submitted by him that the turnover of the respondent Company has been increasing. The performance in the market is such that the respondent is a growing concern, carrying on its manufacturing business activities by employing substantial number of people. It is not as if it is a defunct or commercially unviable unit. My attention is invited to an application made to the Foreign Investment Promotion Board, seeking post facto approval for the foreign investment made which application is made by the petitioner itself. In that it has averred that the profit of the respondent Company has been increasing on year to year basis. This very Company now cannot turnaround and allege that the company petition for winding up should be entertained. Shri Nadkarni has laid great emphasis on the fact that the presumption in law is that the company is unable to pay its debts. Being unable to pay its debts means its current demands being not met and its existing assets being totally insufficient to meet the liabilities can be said to be unable to pay its dues. In order to meet the argument of Shri Dessai that the financial position being sound and the unit being viable, is no answer, if the dispute is not bona fide or defence is not substantial, Mr Nadkarni endeavours to point out that this is a case were the JVA and the LPA, both have to be seen to appreciate the claim of the petitioner. He submits that the JVA has been breached by the petitioner. It failed and neglected to make necessary finances available to the respondent and also delayed the supplies of the components. There were short supplies which detrimentally and prejudicially affected the business. My attention is invited to some letters and e-mails in this behalf, copies of which are annexed to the affidavit-in-reply. Mr. Nadkarni argued that the correspondence has been suppressed and what is being presented and projected is that the petition for winding up is filed after the respondent failed to comply with the notice of demand. The notice of demand and reply thereto is not an isolated event. Prior thereto, there are several letters and messages which would show that in relation to each of the orders, the supplies were not timely. There were shortages and the respondent has challenged the version of the petitioner. In answer to the argument of Shri Dessai that if this was the case, the respondent should have raised an issue against the petitioner by approaching a Court of law, what is argued by Mr. Nadkarni is that the matter cannot be seen from this angle inasmuch as it is the petitioner who has filed the petition, seeking winding up and it must be able to demonstrate that the dispute or the defence is not substantial or bona fide. The respondent''s inaction cannot be only governing and relevant factor. If independent of all this and in answer to the claim the defence is raised, and it is pointed out that the dispute is substantial and cannot be said to be one raised purely as an afterthought, or moonshine, then, the petition for winding up cannot be entertained as it is well settled law that it is not a proceeding for recovery of money, but seeking winding up of the company. For all these reasons, it is submitted by him that this petition should be dismissed.
15. Mr. Nadkarni has relied upon the following decisions in support of his contention:
1. Madhusudan Gordhandas & Co.v. Madhu Wollen Industries (P.) Ltd [1972] 42 CC 125 (SC).
2. Pandam Tea Co. Ltd. In re [1975] 45 CC 67 (Cat).
3. N.L. Mehta Cinema Enterprises (P.) Ltd v. Pravinchandra P. Mehta [1991] 70 CC 31 (Bom.).
4. Pradeshiya Industrial & Investment Corporation of Uttar Pradesh v. North India Petro Chemical Ltd [1994] 79 CC 835 (SC).
5. Excel Embroideries v. Trend Designs Ltd. [1998] 91 CC 373 (Ker.).
6. Smt. Vijayalakshmi v. Hart Mara Ginning & Pressing [1999] 96 CC 723/[2000] 24 SCL 414 (AP).
7. Tata Iron & Steel Co. v. Micro Forge (India) Ltd [2001] 104 CC 533/ [2000] 27 SCL 419 (Guj.).
8. Sandur Manganese & Iron Ores Ltd v. Manganese Ore (India) Ltd [2002] 37 SCL 159 (Ker.).
9. Gujarat State Financial Services Ltd. v. Maegabyte Consultancy Services (P.) Ltd [2003] 115 CC 165 (Bom.).
10. Mediquip Systems (P.) Ltd v. Proximo Medical System Gmbh [2005] 59 SCL 255 (SC).
11. N.N. Valechha v. I.G. Petrochemicals Ltd [2008] 143 CC 122(Bom.).
16. For properly appreciating the rival contentions, with the assistance of the learned Senior Counsel appearing for the parties, I have perused the petition and the annexures thereto, so also all the affidavits placed on record. I have also perused, with their assistance, all relevant statutory provisions and the decisions brought to my notice.
17. The petition for winding up has been instituted essentially on the footing that a notice of demand has been sent on 16th March, 2006, a copy of this notice of demand has been annexed to this petition. That notice of demand shows that the respondent has placed certain orders on the petitioner from time to time, for purchase of goods and the goods were supplied in accordance therewith. For such supplies, invoices were raised which invoices have been duly received without any demur or protest. The amount which is due and payable is quantified at Euro 351174.41, as payable on 23rd February, 2006. The reference is made in this notice of demand to periodical reminde Rs. The notice of demand states that a petition for winding up will be filed if there is no compliance with the said demand, within three weeks from the date of receipt of the notice.
18. This notice of demand has not been addressed to the registered office of the company. On the own showing of the petitioner, this notice is sent at the factory address. True it is that it has been duly replied by the respondent by pointing out that there is a subsisting JVA dated 4th November, 2011 and the LPA dated 19th December, 1997 under which the obligations are reciprocal. However, the petitioner has backed out from the same. The JVA is purported to be terminated, so also the LPA. This termination is termed as wrongful and bad in law, so also invalid. Reference is made to the letter dated 20th March, 2006, a copy of which is annexed to the petition and besides this, in relation to the termination what has been stated is that on 17th March, 2006, the respondent complained about non-performance of high pressure core pumps and pointed out that the supply of certain components was short and amounts were claimed for that loss with interest. It is stated that the respondent has a counter claim of Euro 5,65,700. The allegation and the statement in the notice that the goods have been supplied in terms of the orders placed, has been denied and it stated that they are not so supplied, and, therefore, the amount claimed is not due and payable.
19. The letter dated 20th March, 2006, a copy of which is at page 229 of the paper book has been referred to in the petition itself. Besides that, in the petition itself, an attempt is made by the petitioner to state that the letters dated 17th March, 2006 have been duly replied on 19th April, 2006. I do not see how if the debt arises under certain purchase orders and supplies, so also the invoices raised therefore that it was for the petitioner to plead that there is no question of linking or connecting the obligations to pay the amount under the invoices with that under the JVA and the LPA. It is with that intent that I have reproduced paragraphs 13 to 15 of the petition. A reading of the same would show that the petitioner was aware that the Company is trying to link the issue of performance of these agreements with that of the demand in relation to the supply of goods. Therefore, it is the petitioner which has come with the pleading that the issues are not interlinked or inter-connected. It is in answer to such a pleading that the respondent Company has forwarded its response. To my mind, if the details of invoices and statements are forwarded by the petitioner to the respondent Company, and the statements have been received, that by itself does not mean that there is any admission of the liability. Ultimately, if the respondent Company has merely received the statements, it does not mean that the correctness thereof is admitted. Equally, in the given facts and circumstances when the pleading is of the aforesaid nature, the petitioner will not be in a position to rely only on the entries in the balance sheet. That entry, Schedule 9 is entitled "Current Liabilities & Provisional Current Liabilities" and that under the Current Liabilities, Sundry Creditors are mentioned. It is not necessary to go into the larger question as to whether the claim can be said to be founded only on the entries in the balance sheet or if the balance sheet must be read together with the explanatory statements inasmuch as if the bona fides of the defence or the substantial nature of the dispute is to be tested on other materials and if those materials are projecting such disputes and differences, then any larger controversy or wider question need not be decided. The petition can be decided on the basis of the pleas raised by parties and the documents produced. Ultimately, the matter has to be decided on the touchstone of bona fides of the defence of the Company.
20. It is with that intent that I have proceeded to peruse the affidavits filed.
21. The affidavits that are placed before this Court by respondent No. 1, after referring to the obligations under the JVA and the LPA, have referred to the correspondence. If one peruses the defence, what emerges is that these JAV and LPA are to give effect to the partnership of both entities. What the petitioner has done is to supply pumps under the invoices on the company forwarding prior purchase orders. However, the respondent has stated that the pumps supplied were not suitable for the Indian market. They were improved upon with the assistance and the technical know-how provided by the respondent. As to how this was achieved, is set out and it is stated that the substantial growth has benefited both the entities. It is not as if the relation was seen as that of debtor and creditor in the ordinary sense. If the assurances and commitments in the JVA-1 and JVA-2 relate to the provision of funding and supplying of components, then, one fails to understand as to how the petitioner''s argument that these matters must de-linked or have no bearing with each other, can be accepted. It is clear that the invoices which have been raised and the purchase orders are seen as an isolated business transaction by the petitioners, however, when they filed a reply and raised several issues and with reference to the contents of certain specific letters, the petitioner has chosen not to deal with them. In so far as the said purchase orders and the supplies are concerned, assuming that they could be looked at independent of the above documents of agreement, what the respondent Company states is that in terms of order No. IMP 66 dated 21st June, 2004, the supply was to be made within the stipulated period, namely by 11th February, 2005. However, the components were not dispatched. Thereafter, repeated requests and reminders were issued and in response to that a partial supply was made on 16th February, 2005 and last such shipment was made on 27th March, 2005. Thus, there was a delay of one and half months. In relation to orders No. IMP 73 to IMP 77, it is stated that they were confirmed for supply on 3rd November, 2004 and the dates of dispatch were 2nd April, 2nd June, 2nd August, 2nd September, and 2nd November, all of the year 2005. However, under the first two orders, there was a short supply of items and Exhibit 15 collectively are copies of the documents in relation to the said short supplies. As far as order NO. IMP 73 was concerned, the shipment was delayed by 8 months. In relation to order No. IMP 74, it was delayed by 6 months and as far as balance orders are concerned, there was no supply. Therefore, a fax message dated 21st October, 2005 was sent, under which the respondent informed the petitioner about the delivery situation. This fax message sent by the petitioner company to the respondent company stated that the parts could not be delivered and it stated that it was not bound to deliver any more items under the LPA. Now, if Exhibit 16 to the affidavit-in-reply is perused, it would be apparent that the same is a response to the communication in relation to the compliance of the JVA and the LPA. When short supply of parts was an issue which is a subject of this Exhibit 16, what has been stated therein is that the delivery situation would be informed later. However, there is a statement that a part of the orders has not been delivered. Rest of the orders have been delivered. Yet, the assertion is that according to the notice of termination, served by the petitioner, the period under the same was over by 30th September, 2005 and, accordingly, the petitioner is not bound to deliver any more items under the LPA. Now, it is very clear that this is the petitioner''s communication and which does not find any reference in the correspondence referred to in the petition nor in the notice of demand. If there was substance in the contention of Shri Dessai that the transactions must be looked at independent of the obligations of the parties under the JVA and the LPA, then, it was for him to explain as to how this tele-fax makes a reference to the LPA. However, not only there is no satisfactory answer, but has no relation to the letter dated 29th October, 2005, which is addressed by the respondent to the petitioner in which reference is substantially made to the Orders No. IMP 73 to IMP 77 and short supplied items with quantity and the defence that is raised is that the payment terms were sought to be changed unilaterally. The correct payment terms were 60 days after Bill of Lading and if the change is unilateral, yet, the respondent seeks confirmation of the dispatch of short supplies under the aforementioned orde Rs. These are specific statements made in the affidavit-in-reply and supported by the correspondence. It is in such circumstances that when the respondent accuses the petitioner of failing or neglecting or refusing to supply parts/components under the confirmed orders, then, it is difficult to accept the submission of Shri Dessai.
22. Equally, the respondent''s reply is not just based on denials, but it also mentions certain proceedings in which the petitioner refers to the financial position of the respondent. It is in these circumstances that what the respondent has alleged in the affidavit-in-reply assumes significance.
23. In the affidavit-in-rejoinder that is filed by the petitioner to the affidavit-in-reply and the supplementary affidavit of one Ashok Vidyanand Dikshit, seeking to correct some errors and mistakes, what the petitioner states is that the JVA and the LPA are admitted documents. However, any violations or alleged violations or breaches thereof have no relevance or bearing in the present case which arises out of certain independent commercial transactions, involving supply of goods by the petitioner to the respondent, for which the respondent is liable to pay outstanding sums. This has nothing to do with nor it is remotely connected with the terminated JVA. The contents of the documents which are annexed to the affidavit-in-reply and particularly the letters and messages are neither relevant, nor germane. After general assertions, in the affidavit-in-rejoinder what it proceeds to allege is that the petitioner is a leading manufacturer of specialised application heavy duty concrete pumps and components thereof. During the course of its business in India, the respondent had been placing orders for supply of various components required for production of aforesaid pumps on the petitioner. Pursuant to the placement of such orders, supplies were made and despite having received and appropriated the goods and eventually utilising the same, that the payments are not forthcoming. The respondent is aware that the supplies were effected in the year 2004 and 2005. It is alleged, therefore, that by a letter dated 23rd March, 2006, linking of these issues with the JVA and LPA takes place.
24. However, this is nothing but a reproduction of the statements made in the petition and denials of the specific statements that are made in the affidavit-in-reply. What is interesting to note is that the petitioner in para 5, stated to be its parawise reply to the affidavit of the respondents, states that it encountered unforeseen hardship and difficulty in performance of JVA-2 and in accordance with the relevant terms of JVA-2, the petitioner, therefore, addressed such hardships and difficulties to other parties of the JVA-2 and also suggested certain measures to remove them. Accordingly, the petitioner addressed communication dated 25th May, 2005 to Mr. Bhadbade, a copy where of has been annexed with the reply. In any event, said JVA-2 did not take effect in its entirety as number of steps which were required to be taken by both the parties in terms thereof, were not complied with by said Mr. Bhadbade and Mr. Ashok Dikshit. It is stated that these facts are duly confirmed by these persons by communication dated 26th July, 2006. Moreover, certain disputes and differences resulted in withdrawal of the petitioner from JVA-2 and the termination of LPA and in fact such disputes and differences have since been referred to arbitration and the matters are presently subjudice. Even these allegations have no significance in the present proceedings. It is stated that the allegation that the supplies were delayed or there were any short supply, is wrong and generic. It is alleged that there is no loss or damage to the respondent. It is stated that even violation of certain laws, are matters which are pending before the Delhi High Court. There was no violation as alleged. In relation to the correspondence which is annexed, what is stated is that they require no comments and those are matters of record. Thus, none of the allegations in the reply with regard to the linking of the obligations or their inter se connection has been satisfactorily dealt with. All that it states is that it is incorrect to suggest that production, manufacture, sale and supply of respondent Company''s products was to be as per JVA-1 till 4th November, 2004 and thereafter, as per JVA-2 and the LPA or that certain components, spares, accessories, tools in respect of the respondent Company''s products were to be supplied by the petitioner to the respondent Company. I do not see how when issues are irrelevant and not germane that it was necessary for the petitioner to offer its comments and state on these lines. If the instant proceedings arise out of non-payment of debts in respect of the supply of heavy duty concrete pumps and components, and it is during the course of respondent''s business that it had placed orders and if these transactions were indeed distinct and independent, I do not see how repeatedly, the petitioner makes reference to the JVA and the LPA and when such guarded allegations and statements are made, what is stated is that the allegations of the respondents are baseless and afterthought and in any event, without prejudice, the respondent is liable to pay to the petitioner for the goods that has been ultimately supplied by the petitioner and which were received and appropriated. Now, these are matters which must be seen in the light of the accounts maintained by the parties in their respective books. If all supplies effected were complete and for which payment is not forthcoming and that is the demand then, in these circumstances, I do not see how on the basis of a statement of account or on the basis of the entries in the books of account of the petitioner Company, any liability can be fastened on the respondent. Equally, if the entry in the balance sheet is what is relied upon as admission of the liability, then when in affidavit in reply short supply of goods or non-supply thereof is an issue raised, in rejoinder the petitioner was not required to plead that in so far as Order No. IMP 66 is concerned, the reason that the delay, if any in shipment of this consignment was due to sourcing difficulties mainly on account of hardened concrete cylinders, which at that time had very long delivery time. Then to say that admittedly the products were received and appropriated without any objection or reservation and, therefore, the company cannot have any legitimate grievance is, by itself, something which would require the petitioner to demonstrate as to when the supplies were required to be made, when they were indeed made and how and for what period the amount came to be not remitted or that the delay is waived by the respondent. Therefore, it must make payment without any reservation.
25. This may be a case in relation to Order No. IMP 66, but with regard to orders No. IMP 73 to IMP 75, equally the very same problem of sourcing of certain parts, is pointed out in para 4(xxi). The fax message dated 21st October, 2005 is explained by the petitioner by pointing out that the possible dispatch details of the items were indicated therein. Further, the respondent Company was informed that the payment terms would be changed in real cash against documents conditions, which means that the documents would be handed over by the bank only after the money had been paid. With these documents, the respondent Company could clear the goods from customs. Earlier terms were cash against documents with 60 days payment terms, which meant that the goods could be cleared with documents from the bank against payment guarantee from the respondent Company to effect the payment after 60 days. But since the respondent Company was repeatedly defaulting in making the payments of the products already supplied by the petitioner, it was necessary to protect the interest of the petitioner by requesting for contemporaneous payments from the respondent company.
26. In respect of order No. IMP 73 and IMP 74, therefore, what is asserted is that the products were duly supplied. They were received and appropriated. It is, therefore, clearly the liability of the respondent and it must make payment of such products. In any event, the respondent Company has not indicated any loss, harm or prejudice caused due to the alleged delay in shipment of the products. To my mind, even for the sake of illustration that these pleadings are taken into consideration, then, prima facie, the petitioner Company has been rightly accused of suppressing the material and relevant factors in the petition. It is only when the affidavit-in-reply comes before the Court with annexures thereto that the petitioner seeks to explain how its demand arises out of these invoices and prior purchase orde Rs. However, the terms thereof, supply made and the delinking of disputes which are raised by the parties are matters which, on the own showing of the petitioner, should have been fairly stated by it. The petitioner ought to have disclosed all this in the petition itself and fairly stated that its demand is based on certain supplies under certain invoices for which there could not be any withholding of payment because of delayed supplies or short supplies. That segregation having not been done and admittedly, there is a substantial defence raised with regard to alteration of the terms of payment, I am of the opinion that the defence of the respondent cannot be ignored and brushed aside, as lacking in bona fides or being not substantial in nature.
27. Once, such is the conclusion reached, then, it is well settled that a winding up petition cannot be entertained and requires no reference to all the judgments or decisions cited, because it is not a mode of recovery, Once it is not a mode of recovery and the petitioner will have to resort to other remedies available in law, then, a further conclusion is inevitable that the petition cannot be entertained.
28. The decisions that have been brought to my notice by the parties and specially by the petitioner, must be noticed only in the context of the facts that emerge on the record of those cases.
29. While a strong reliance is placed on the decision of the Supreme Court in the case of IBA Health (India) (P.)Ltd v. Info-drive System SDN. BHD [2010] 104 SCL 367/8 taxmann.com 1, which is stated to be the final word, even by the test laid down in that decision what emerges is that it is a reiteration of the principles laid down in the case of Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 CC 456 (SC) and in the case of Madhusudan Gordhandas & Co. (supra). It is not that I have reached the above conclusion on the basis that the company is financially sound and therefore, no winding up petition can be entertained against it. I have proceeded on the basis that the petition for winding up cannot be resisted by financially and economically viable, so also commercially flourishing units or companies, if the defence lacks bona fides or is not substantial in nature. I have proceeded on the basis that the defence raised is substantial and can be said to be bona fide. Equally, I have proceeded on the basis that the petitioner has suppressed material and relevant facts from this Court in relation to its demand. If such is my conclusion, then, no assistance can be derived from this decision and the principles highlighted by Shri Dessai.
30. Equally, the other decisions that have been handed in, together with the written notes by the petitioner''s Advocate need to be noticed for their applicability. In the first decision which is cited, viz. that of Calcutta High Court in Marsons Ltd (supra), what the Calcutta High Court has relied upon is the unqualified admission and promise to pay and, therefore, it termed the defence as malafide and afterthought and, there was no justifiable cause shown. Therefore, this decision is distinguishable on facts. Equally, the decision of the Division Bench of Delhi High Court, in the case of Chem-Crown India Ltd (supra), is distinguishable on facts, because there was no bona fide dispute. In these circumstances, what I have noticed is that whether the defence can be said to be bona fide or substantial, is a matter of individual facts and circumstances, emerging from the record of each case. General principles will have their applicability provided in individual cases it can be concluded that the company is not making payment of debts due although there is no substantial defence to it or that the defence raised lacks bona fides or is pure afterthought. In such circumstances, I am of the opinion that the reliance on this decision will not assist the petitioner. For the aforesaid reasons, the petition stands dismissed. Noorder as to costs.
