TMI Blog2004 (10) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... improve from May, 1999 onwards and outstanding position will improve. (4)Mr. Saraf further indicated that he will make all efforts to clear all outstandings before we resume business. (5)The Credit Notes on account of (1) Rate Difference, (2) Quality and Grade Difference, (3) Material returns and any other pending issues are to be settled in three weeks. (6)Ispat informed that the relationship between the two Companies should move ahead after release of substantial amount of payment." 3. Thereafter by a letter dated 23rd May, 1999, the Company informed the petitioner that it was unable to clear the outstandings due to their auditors objection on account of the petitioner not having issued the credit notes. By a letter dated 24th May, 1999, the petitioner stated that the credit notes would be issued only after the outstandings were cleared. This stand may or may not be justified. It is however pertinent to note that in this letter, the petitioner stated that the company could withhold an amount of Rs. 15,00,000 in respect of the credit notes and clear the balance outstandings of Rs. 1,36,00,000. It is then important to note that the company did not respond stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that even at this stage the company did not contend that the amount of Rs. 15,00,000 suggested by the petitioner in its letter dated 24th August, 1999 to be adjusted on an ad hoc basis was too low. ( e ) The petitioner thereafter served a further statutory notice dated 21st July, 2000 at the Pune office of the company calling upon it to pay the balance amount of Rs. 1,00,81,349.60 ps. with interest. 6. Mr. Shah, on behalf of the Company raised the following four defences to the petition: (I)The statutory notices were not served at the registered office of the Company. (II)Even assuming that the notice dated 14th October, 1999 was served at the registered office of the Company, the petition if based on this notice is not maintainable as it merged in the subsequent statutory notices dated 8th March, 2000 21st July, 2000 and thereby lost its efficacy as a statutory notice. (III)The petition is not maintainable as there is a discrepancy between the amounts claimed in the statutory notices and the amount actually due. (IV)An amount of only Rs. 15,00,000 is due and payable by the company. RE : Submission I 7. As stated above, the petitioner addressed thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (2) of section 146 of the Companies Act. As pointed out earlier mere sending of the notice is not sufficient. The Registrar must be satisfied that the change is duly authorized pursuant to a resolution of the board of directors. It is therefore not a mere mechanical act on the part of the Registrar to effect the change in the register but he must be satisfied that the legal requirements have been complied with. The very fact that the change was not effected raises a presumption that the Registrar having not been satisfied has not effected the change. At any rate whatever be the reason the change has not been effected and consequently the registered address of the company remains as disclosed in the register maintained...." (p. 415) Apart from being bound by the judgment I am in respectful agreement with the same. 10. In any event the first statutory notice dated 14th October, 1999 was in fact served at the Mahalaxmi office of the company which, it is contended by the Company, is its registered office. The same was returned unclaimed. Mr. Madon submitted that the notice was thus validly served. In support of this submission he relied upon a judgment of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 434(1)( a ) of the Companies Act. 12. Clauses ( b ) and ( c ) to the proviso to section 138(1) of the Negotiable Instruments Act are relevant in this regard and read as under: "( b ) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and ( c ) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice." Section 434(1)( a ) of the Companies Act reads as under: "434. Company when deemed unable to pay its debts. (1) A company shall be deemed to be unable to pay its debts ( a )if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding (one lakh rupees) then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is despatched his part is over and the next depends on what the sendee does". (p. 3767) 14. The Supreme Court thereafter went on to hold that a notice which is returned as unclaimed but which was despatched in the manner prescribed with the correct address on it is deemed to have been served. 15. The judgment would apply to a notice under section 434(1)( a ) of the Companies Act with greater force. Section 138 of the Negotiable Instruments Act entails criminal consequences, whereas section 434(1)( a ) involves only civil consequences. Moreover the requirements of a notice under section 138 of the Negotiable Instruments Act are stricter and wider. Despite the same, the Supreme Court held that a person who properly addresses a notice and mails it would be deemed to have fulfilled his obligation of sending the notice even if the same is returned unclaimed. On a parity of reasoning, it must be held that a notice though returned unclaimed, if duly mailed by registered post addressed to the registered office of the Company, must be deemed to have been "delivered" within the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e office. He further submitted that in fact there was a representation by the Company to the petitioner that the office at Pune was the registered office of the Company. In support of this submission he relied upon the judgment of a learned Single Judge of the Karnataka High Court in the case of Manganese Ore (India) Ltd. v. India Sandur Manganese Iron Ores Ltd. [1999] 98 Comp. Cas. 755 1 . However considering the view that I have taken I do not find it necessary to decide this point. 19. The first contention that no statutory notice was delivered at the registered office of the company is rejected. RE : Submission II 20. Mr. Shah then submitted that even assuming that the statutory notice dated 14th October, 1999 was served at the registered office of the company, the petition is not maintainable as thereafter the petitioner addressed two further notices and the Company had made a part payment of Rs. 46,83,757. According to Mr. Shah, in view of these facts, the Petition is not maintainable as the notice dated 14th October, 1999 had merged in the subsequent notices. Secondly by virtue of the part payment there was a difference between the amounts stated in the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie would appear to be in order exceeds the limit of Rs. 500 indicated in section 434. Shri Tulzapurkar submitted that the position is not res integra being concluded by the decisions both of the English Court and of the Calcutta High Court, which decisions have taken a view contrary to the view which found favour with the learned company judge. Our attention was invited to these decisions and it becomes necessary, therefore, to refer to them. In point of time, the first of the decisions is the decision given by Plowman J. in In re Tweeds Garages Ltd. [1962] 1 Ch. 406 : [1962] 32 Comp. Cas. 795 . The relevant observations are to be found at pp. 413 and 414 of the report. An opinion has been expressed in the said judgment that it would be quite unjust to refuse a winding-up order to a petitioner who is admittedly owned moneys which have not been paid merely because there is a dispute as to the precise amount owing. Almost to the same effect are the observations in Cardiff Preserved Coal and Coke Co. v. Norton (1867) 2 Ch. App. 405. A contention had been advanced before the appellate court that the winding-up order which was being considered was bad because the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are in the range of nearly Rupees Thirty Lakhs. The terms of agreement are also very clear and in case of default, the company is liable to pay the service charges. When a part of claim made by the creditor is seriously disputed but the remaining portion is prima facie appear to exceed the limit of Rs. 500 indicated in section 434 of the Act, it would be unjust to refuse wind up order on the ground that there is dispute as to precise amount owned. In re Tweeds Garages Ltd. [1962] 1 Ch. 406; it was clearly held that it would be unjust to refuse a winding up order to the petitioner who has admittedly owned moneys which have not been paid merely because there is a dispute as to the precise amount owning. Almost to the same effect are the observations in Cardiff Preserved Coal and Coke Co. v. Norton [1867] 2 Ch. App. 405. 12. The learned single judge of Calcutta High Court in Ofu Lynx Ltd. v. Simon Carves India Ltd. [1971] 41 Comp. Cas. 174 has observed : I, therefore, hold that a notice under section 434 of the Companies Act, 1956, will not be rendered invalid only because of the fact that the amount of debt mentioned in the notice may not be exactly correct amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er incuriam in view of the judgment of the Division Bench of this Court in Pfizer Ltd. s case ( supra ). It is also impliedly overruled by the Division Bench of this Court in Tata Finance Ltd. s case ( supra ). This judgment therefore is of no assistance to Mr. Shah. 27. In support of this submission, Mr. Shah had to go and in fact went to the extent of submitting that if upon receipt of a statutory notice, the company makes part payment of the amount claimed, a petition for winding up based on the said statutory notice would not be maintainable as there would be a discrepancy between the amount stated in the statutory notice and in the petition. The difference in the amount mentioned in the notice dated 14th October, 1999 and the amount stated in the Petition is on account of the petitioner having given credit for the part payment of Rs. 46,83,757. In other words, according to him, if on receipt of a statutory notice for a certain amount, a company makes part payment of a mere pittance, another statutory notice would be required before filing a petition stating therein only the balance amount due. To accept this submission would lead to an absurdity and frustrate any peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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