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TMI Blog2005 (10) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... petition has been filed by M/s. Melvin Powell Vanaspati and Engineering Industries Ltd., with its registered office at 8/1/B, Diamond Harbour Road, Calcutta and M/s. Paharpur Cooling Towers Ltd., registered office at 8/1/B, Diamond Harbour Road, Calcutta under section 439 read with sections 433 and 434 of the Companies Act, 1956 read with rule 9 of the Companies (Court) Rules, 1956, to wind up Oswal Chemicals and Fertilizers Ltd. with its registered office at Village and Post Office, Piprola, Shahjahanpur. 4. Brief facts leading to the filing of Company Petition No. 5 of 2004 in the matter of Paharpur Cooling Towers Ltd., stated in paragraph 7(a) to (h) are stated as below:- "(a)Humphreys and Glasgow Consultants Ltd. having its office at Oberoi Complex, Saki Vihar Road, Sakinaka, Mumbai, floated an enquiry on behalf of company being Inquiry No. OEFL:BC2517:3HC: R401 dated 18-8-1997, for Paradeep Phosphatic Fertilizers Complex. (b)Pursuant to the floating of the enquiry, the petitioner made offers bearing No. S217 dated 16-9-1997; S217A dated 22-12-1997 and DT-97222 dated 26-12-1997 and thereafter had technical and commercial discussions with the company with regard to the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner amounting to Rs. 21,02,998 (rupees twenty-one lakhs, two thousand nine hundred and ninety-eight only) which amount is admittedly due and payable as per the terms of the contract and the same has been reconciled, confirmed and admitted by the company. (h)The petitioner sent numerous reminders and even made personal visits to the company's office but to no avail. It is pertinent to mention here that every time the representatives of the petitioner made visits to the office of the company, the representatives were made to wait for long hours and even after long hours of wait, the representatives used to come back either without meeting any of the respondent-company's representatives as they would refuse to meet or come up with some lame excuse and refuse to pay the admitted amount on baseless, flimsy and whimsical grounds, thereby harassing the petitioner and denying to pay the aforesaid amount to the petitioner." 5. Brief facts leading to the filing of the Company Petition No. 4 of 2004 in the matter of Melvin Powell Vanasapti & Engineering Industries Ltd.'s case (supra) stated in paragraph 7(a) to (h ) are stated as below:- "(a)Humphreys and Glasgow Consultants Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. (g )Despite proper execution of the contract/order handing over of the cooling tower to the company to its complete satisfaction, the company failed to settle the outstanding dues payable to the petitioner amounting to Rs. 14,85,950 (Rupees fourteen lakhs eighty-five thousand nine hundred and fifty only) which amount is admittedly due and payable as per the terms of the contract and the same has been reconciled, confirmed and admitted by the company. (h)The petitioner sent numerous reminders and even made personal visits to the company's office but to no avail. It is pertinent to mention here that every time the representatives of the petitioner made visits to the office of the company, the representatives were made to wait for long hours and even after long hours of wait, the representatives used to come back either without meeting any of the respondent-company's representative as they would refuse to meet or come up with some lame excuse and refuse to pay the admitted amount on baseless, flimsy and whimsical grounds, thereby harassing the petitioner and denying to pay the aforesaid amount to the petitioner." 6. The petitioners in both these company petitions served a legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... became due from the petitioners to the deponent-company for late execution of the contract and after deducting the amount due and the amount payable the net amount which is due to the petitioner-company by the deponent company comes to Rs. 9,76,382. However, since the petitioner in the case and M/s. Paharpur Cooling Towers Ltd. (petitioner in Company Petition No. 5 of 2004) are group company which is also evident from the below mentioned annexures attached with this petition. '1. Annexure P2 : Question No. Ref. 5217, dated 16-9-1997, of Paharpur Coolling Towers Ltd., in response to which this notification of award was awarded to M/s. Melwin Powell Vanaspati Engg. Industries Ltd.' " 11. In Company Petition No. 5 of 2004, it is stated in paragraph 4 that award was notified on 6-1-1998, for a sum of Rs. 541 lakhs. The time was essence of the contract. 12. Relevant clause of the contract in para 5 is quoted as below: "Liquidated damages. - In case you fail to deliver as per agreed delivery schedule you shall be penalized at the rate of 1/2 per cent of the price of undelivered goods per week of delay or part thereof, subject to a maximum of 5 per cent of order value (also see claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Prasad learned counsel for the petitioner-company that even if the time was the essence of contract, when the erection and completion of the cooling towers were to be made on civil construction works and the same was not handed over within scheduled period of time, the time will only begin to run from the date when the civil construction was completed and the site was handed over to the petitioner-company. He submits that the defense taken by the respondent-company for making deduction is not bona fide. 20. Shri Bharat Ji Agarwal on the other hand submits that the civil construction works were to be carried out by the petitioner-company. Time was the essence of the contract and that the project was delayed unreasonably and that on account of delay caused by the petitioner-company the respondent-company suffered loss to the extent of Rs. 6 crores. He submits that method, manner and deduction for late completion of work were laid down in the contract itself and that the respondent-company was authorized to make such deductions. No objection was raised for deductions made in the running bills at the appropriate time. 21. Lastly, he submits that there is an arbitration clause in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, given an opportunity explain the circumstances in which the demand was not met. 26. The purpose of demand, and its non-compliance gives a right to the creditor to institute proceeding for winding up of the company. The consequences can be avoided by showing reasonable cause. There may be various circumstances, namely, that there is a bona fide dispute, the debt is time-barred or was deferred with the consent of the creditor, or that there was some arrangement for payment in due course. It is not appropriate to lay down the circumstances in any detail, which may constitute reasonable excuse for not paying the debt. Where, however, the court finds that the defence taking is moon shine, in that there is nothing to establish a bona fide dispute or reason or substantial ground not to pay the debt, the court may investigate into the commercial insolvency and proceeded to take steps to wind up the company. 27. In the matters of delay, or failure to pay for the materials supplied or work carried out for the respondent-company, the court would be slow to interfere, as there may be several reasons for non-payment. Though the court may not enter into a process of adjudication, the defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear deviation from the admissions made by the officers and engineers of the respondent-company. Whereas it is stated in paragraphs 4 and 5 that the petitioner-company failed to supply the material sulphuric acid plant and phosphoric acid plant and that approximately 60 per cent of their material was delivered after the stipulated delivery schedule and that ammonia storage tank and the entire material for cooling towers was delivered, erected and commissioned after 7 to 8 months, and production losses were suffered due to delay in installing cooling towers, are reasons, which are totally invariance with the admissions made during the period the execution of contract, was in progress. 33. The note of discussion between the officials of the company dated 5-4-1990, at pages 38 and 39, letter dated 19-5-1999, at pages 42 and 43, letter dated 11-8-1999, at pages 50 and 51, are clear admissions to the delay attributable to the respondent-company. 34. Further, I do not find much substance in the defence taken by Shri Bharat Ji Agrawal that the petitioner-company should have invoked arbitration clause. There was no unresolved dispute in terms of clause 40 of the agreement, to be submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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