TMI Blog1980 (4) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... ime, the matter was adjourned as it could not be taken up on the grounds that the counsel were not available at the time of hearing. Finally, the matter was taken up. The claim of the petitioning creditor arises out of an export contract for supply of various qualities and quantities of A.C.S.R. conductors by the company to the foreign buyer in Pakistan being the Pakistan Water Power Development Authority, hereinafter referred to as W.A.P.D.A. The said transaction for the supply to the foreign buyer by the company was routed through the petitioning creditor as the agent and also through the Industrial Import Private Limited, 34, Stephen House, 4, B.B.D. Bag (East), Calcutta 1, and Associated Commercial Agencies, Associate Chambers, 24/25, Patiala Ground Link, Mcleod Road, Lahore, who were acting as the Indian and Pakistani agent of the petitioning creditor. The said W.A.P.D.A. of Pakistan invited a global tender due on December 20, 1976, for the purchase of the said goods. Thereafter, the petitioning creditors' said agent in India invited offers from Indian Manufacturers of the said articles accordingly and the company submitted its offer together with quotation by its letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnical Particulars enclosed). 3500 Miles US $ 604.00 per mile US $ 2,114,000 3. ACSR, BARE, STRAN- DED, SIZE: 1/.132" Code Word : ' RABBIT ' Based on : 215 (Part-II)/ 1956. (Technical particulars enclosed) 3,000 Miles US $ 308.00 per mile US $ 924,000.00 (US Dollar Thirty-seven Lakhs Thirty-two Thousand Eight Hundred only) US$ 37,32,800.00 Price : Prices quoted above are on FOB Calcutta basis. Rates quoted are based on the current rate of exchange, i.e. , U.S. $ 11.40 Indian Rs. 100. If there be any adverse fluctuation of dollar rate from the above that is to be borne by the purchasers. Validity : Our offer will remain valid for acceptance for a period of 45 (forty-five) days from the date of closing of the Tender ( i.e. 20-12-1975); Delivery: Delivery of the conductors quoted will commence within 60 (sixty) days from the date of receipt of full, final and complete in all respects order together with the letter of credit at our end will be completed at the rate of 1,000 miles per month on an average of all the items taken together subject to availability of ship and Force Maje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur tender No. 2014/DPE/ ADP-IV. We are pleased to place an order on you for the supply of material cited above as subject to the rates mentioned hereunder and subject to the general conditions of the contract for purchases and special conditions laid down in this contract. Sl. No Description of Stores Qty. 'Miles' Tare prt. (Mile CAF) Total CAF Wagha value (US $) (US $) 1. A.C.S.R. "LYNX" 600 1216.718 7,30,030.80 2. A.C.S.R. "RABBIT" 3,000 326.020 9,78,060.00 Total 17,08,090.80 (US Dollar Seventeen lakhs Eight thousand Ninety decimal eight only) (U.S. $ Seventeen Lakhs, Eight Thousand Ninety Decimal Eighty only) Special Conditions: ( i )....................... ( ii )...................... ( iii )..................... ( iv )...................... 9.Name of Principals : M/s. EURO METAL LTD. 1, Lambath Hill, London, EC 4V-4AS UK 9A.Name of Manufacturer : M/s. Aluminium Cable and Conductor (UP) Ltd., 2-A, Shakespeare Sarani, Calcut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we confirm having agreed to provide you with commission of 2.75% of the F.O.B. value of the quantity that would be supplied. The amount will be remitted to you subject to Reserve Bank of India's approval and realisation by us in India of the export proceeds in full on the successful completion of the contract. Please return two copies of this letter duly stamped and signed as a token of your acceptance. Thanking you, Yours faithfully, For Aluminium Cables Conductors (U.P.) Private Limited. (Sd.) Director. It also appears that by a letter dated the 29th of April, 1978, the company intimated the petitioning creditors' said Indian agent as to the particulars of the invoices and the commission amount payable with a tentative date of remission of the same. The said letter is set out hereunder: Annexure 'E' Shakespeare Sarani,CABLES STALCOND' Calcutta-700 016.April 29, 1978. Alcond/WAPDA/P/NDG/78 M/s. Industrial Importers Pvt. Ltd., "Stephen House", 34, Dalhousie Square East, Calcutta. Dear Sirs, With reference to our invoice-wise credit notes dated 18-4-1978, issued in favour of M/s. Eurometal Limited, 1, Lambath Hill, London, EC 4V 4 AS/ U.K. coveri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant correspondence which clearly show the admission on the part of the company to pay the commission to the petitioning creditor in terms of the contract between them, through its said Indian and Pakistani agents. THE CHARTERED BANK I.I. Chaundrigar Road, Karachi. Dated 17th December, 1976. Director of Procurement (Elecy.), Pakistan Water Power Development Authority, WAPDA House, LAHORE. Dear Sir, Our letter of guarantee No. 691/276-76 Dated 17-12-1976 Tender No. 2014/CES/ DPE/GM (Tanding)/International. (D)/GM At the request of Messrs. Eurometal Limited, London, we hereby establish in your favour a bond for the amount of US Dollar 186,640.00 (United States Dollars One hundred eighty six thousand six hundred forty only) covering their offer for the supply of ACSR Cables, submitted to you against your above tender enquiry through their agents Messrs. Associated Commercial Agencies, Lahore. In consideration of the above, we hereby confirm that on demand from you in writing, we will release to you the amount of this bond, namely, US Dollar 186,640, should Messrs. Eurometal Limited, London, not fulfil their obligations to you under the terms and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total amount appears to be 40,793.35 U.S. dollars for which the said credit notes were issued. In the present winding-up petition, the petitioning creditor in the statutory notice served on the company dated 3rd/4th January, 1979, demanded the said amount after specifying the circumstances under which the amount became payable as commission to the petitioning creditor as agent for negotiating and finalising the contract with WAPDA for the supply of the said goods. Mr. R.C. Nag, appearing with Mr. Sudipta Sarkar for the petitioning creditor, placed the said correspondence chronologically and submitted that the petitioning creditor as the foreign agent of the company in respect of the said contract was entitled to the payment of the said amount subject to the Reserve Bank of India's permission which was to be obtained by the company as admitted in the letter dated the 29th of April, 1978. The company's contention that the said agreement for commission was without consideration has no substance and Mr. Nag referred to paras. 6,9 and 10 of the winding-up p3tition and para. 10 of the affidavit-in-reply and submitted that consideration is clearly pleaded and also supported by the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arayanamurthy v. Arjanadu, AIR 1939 Mad 145, where it has been held by the Division Bench of the Madras High Court that the right, which the creditor, who files the insolvency petition against his debtor, is really seeking to exercise, is the right of a creditor who finds his debtor in insolvent circumstances, to have the assets of the debtor administered in insolvency and distributed for the benefit of the creditors as a body. This is a right which is conferred upon the creditors by statute and is not a right arising out of a particular contract of loan between the petitioning creditor and the debtor. The said decision is also noted in the Supreme Court decision in Jagdish Chandra Gupta v. Kajaria Traders ( India ) Ltd., AIR 1964 SC 1882, in para. 8, at page 1886, where the Supreme Court approved the proposition that an insolvency petition is a right arising not out of a contract but from the statute and the same principle applies to the present case as admittedly the company has failed to pay the commission due to the petitioning creditor in respect of the said contract and the claim is admitted by the company in the correspondence and, in fact, the company issued the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrency. It was held that where a foreign currency was the currency of the contract but the proper law of the contract was English Law, the court had power to give judgment in foreign currency and should do so and, therefore, it was held that the shipowners was entitled to judgment for the demurrage in dollars. Relying on the said decision, Mr. Nag submitted that there is no bar on a court, under the contract between the company and the petitioning creditor as a foreign agent, for judgment in U.S. dollars which was stated in the contract itself and the company also issued debit notes in dollars as would appear from the said letter, dated the 29th of April, 1978, of the company referred to above. Mr. Nag also referred to section 47 of the F.E.R. Act, and submitted that the company has not produced any document to show that it made any application to the Reserve Bank of India for remittance of the said amount to the petitioning creditor as per their letter dated the 22nd of January, 1977, and 29th of April, 1979. It was the petitioning creditor's duty to produce a document to show that such a permission has been refused and it can be safely presumed that the company has not done anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank of India. It was the duty and it was also incumbent under the law, that is the F.E.R. Act and the Rules made thereunder, for the company to make the necessary application for permission for remitting the said amount to the petitioning creditor. The company cannot take advantage of its own default and set up the said plea of absence of permission of the Reserve Bank of India. Secondly, it is admitted that the company has realised the price of the goods supplied in full so far as the portion of the contract was executed and it also appears from the correspondence disclosed in this proceeding, that by mutual consent the balance quantity of the contract between the company and the WAPDA was not delivered and the contract was treated as concluded by performance in part and, therefore, prima facie all the three conditions are fulfilled in this case. Thereafter, Mr. Mukherjee submitted that the statutory notice under section 434 of the Companies Act, 1956, is defective as the claim is made in dollars and no specific amount in rupee has been stated. In my view, there is no substance in the said contention as the said equivalent amount can easily be determined by calculating the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission which has been refused. It also appears that the company has not given any reply to the statutory notice served on the company by the petitioning creditor's advocate-on-record being the letter dated 3rd/4th January, 1979, being annex. F to the winding-up petition. In these circumstances, I am of the view that the company has not raised any bona fide dispute to the claim of the petitioning creditor and, there is no bar in presenting this winding-up petition by the petitioning creditor as the debt due to the petitioning creditor is admitted by the company and the company itself has created the difficulty by its own default in not obtaining the necessary permission of the Reserve Bank of India as it had specifically undertaken, in the correspondence mentioned hereinbefore, being the letters dated the 22nd of January, 1977, and 29th of April, 1978, addressed to the petitioning creditor and its Indian agent respectively. The amount of the debt due is admitted and because the same is expressed in dollars, that does not convert an undisputed debt to a disputed debt on bona fide ground and, lastly, it appears that the company has performed the contract and abandoned a portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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