TMI Blog1984 (4) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... , the respondent-company did not pay the amount but instead issued a reply dated August 10, 1982, obviously far beyond the time specified in the statutory notice stating that the respondent-company has counter-claims against the petitioner-company and, therefore, the question of payment does not arise to the respondent-company. But nevertheless they have stated in the same reply that a full and adequate reply will be given within three weeks' time. Both the notice and the reply thereto are issued through their respective solicitors. The amount demanded in the statutory notice has not been paid and, therefore, on November 12, 1982, the petition was presented in this court. After a notice to respondents on December 17, 1982, the respondent-company entered appearance and filed its objections. Before stating the salient points raised in the objections, it is useful to briefly mention the manner in which the amount has become due to the petitioner-company in regard to which there is no dispute. By a letter dated February 12, 1975, the respondent-company placed an order with the petitioner-company for supply of roll mills required by them of certain specifications and of agreed sizes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent-company contends that it is not liable to pay interest as there is no agreement in that behalf to do so. The petitioner-company, on the other hand, contends that it is entitled to interest under the provisions of the Interest Act read with the Sale of Goods Act. When this matter had been heard for some time, in the light of the objections raised, the court was apprised by the petitioner-company that the respondent-company was in a bad state financially and had showed liabilities in excess of rupees eight crores in its balance-sheet as on March 31, 1981, and, therefore, this court should reasonably infer that the company was unable to pay its debts and, therefore, was liable to be wound up as prayed for in the petition. As against that submission, learned counsel for the respondent-company submitted that the respondent-company is a viable unit; that the liability as shown in the balance-sheet was a normal liability shown in the normal course of business and the company could not be said to be unable to pay its debts merely because the balance-sheet shows a large sum as its liability. The liability should be seen alongside the assets and the ability of the company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase considerably and I propose to deal with it first before I decide the merits of the claim and counter-claim of the petitioner and respondent companies. A certified copy of the ad interim order passed by the First Additional ' Civil Judge, Mysore, in O.S. No. 349 of 1983 has been made available to me by the counsel for the respondent. From that I see that an order is made under O. 39, rule 2 of the CPC restraining the petitioner-company from withdrawing the money deposited in this court as per the direction of this court. The operative portion of the order reads as follows : "Heard Sri M.A.S. Since Sri M.A.S. submits that if the defendants withdrew the amounts deposited in the High Court, the plaintiff would be put to hardship as the matter is still to be referred to arbitration. This is a fit case when ex parte orders are to be passed: Hence, issue ad interim injunction as prayed pending disposal of this LA. Issue summons and notice on this I.A.I. to defendant by December 5, 1983". The above order, in my opinion, has definitely obstructed the course of justice in this court. An identical prayer made by the respondent-company was pending adjudication as on October 24, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and that remedy is available only under O. 38, rules 1, 2 and 5 of the CPC. Item IV provides for interim injunction or appointment of a receiver and 0. 39, rules 1 and 2 and O. 40, rule 1 of the CPC are also made applicable. From the above, it is clear that a civil court entertaining proceedings under the Arbitration Act can press into service the provisions of O. 39 or O. 38, as the case may be, or even O. 40 provided the occasion arises to do so. In the instant case, the prayer before the civil court was for an injunction which has been granted which necessarily means that the order was passed under O. 39 of the CPC. But, according to Mr. Iyengar, learned counsel for the respondent-company, the pleadings in the proceedings were in the nature of securing the payment of such damages the respondent-company may establish before the arbitrator, on reference. Therefore, it was a question of securing the amount in dispute in the reference, if any. This court has not the advantage of the pleadings before the learned Civil Judge. What can be secured is only the difference between the claim and counter-claim. If the claim ultimately adjudicated by the arbitrator in favour of the plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... call for his explanation forthwith. Now, coming back to the problem of the petitioner-company and the respondent-company, strenuous efforts have been made by both sides to sustain their respective stands to which I have briefly adverted to earlier. Undoubtedly, Mr. lyengar does not dispute that a sum of Rs. 3,37,395.16 has been admittedly due as on March 31, 1981. It is also not in dispute that there has been lengthy correspondence and more than one meeting of the representatives of the two companies held in order to reach a settlement. I need only refer to one document produced by the respondent-company itself, that is, annexure 5 to the statement of objections. It purports to be the proceedings of discussion held between the petitioner and the respondent-company's representatives. The last three paragraphs of those proceedings are as follows : "Under these circumstances, there is sufficient ground in the opinion of VTL that VTL should claim damages from OMCC which are much more than the dues claimed by OMCC. Mr. Chandra maintained that the warranty period is over long back. However, it was pointed out to him by VTL that for heavy capital equipment, a reputable-company norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or further dictation. Today the matter being posted for completing the order, a memo has been filed by the counsel for the respondent-company stating that in view of the decision of the Supreme Court in Cotton Corporation of India Ltd. v. United Industrial Bank Ltd. [1984] 55 Comp. Cas. 423, the respondent-company has no objection for this court to pass appropriate orders in regard to the amount deposited by the respondent in these proceedings without taking into consideration the order of injunction passed by the learned Additional Civil Judge, Mysore, in O. S. No. 349 of 1983. The respondent-company has further undertaken to take steps to move the Civil Judge at Mysore to recall his order in question. In the light of the memo filed, I do not think I need proceed further to examine the case put forward by the respondent-company. There is already C.A. No. 240 of 1983 pending in which the petitioner has sought permission to withdraw the amount in deposit in court. If I allow that application, then there will be no cause of action subsisting in favour of the petitioner. The other application made by the respondent-company is for directing the petitioner-company to furnish secur ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
