TMI Blog2012 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... DER 1. This Company Petition invokes the powers of this Court under Section 434(e) and (f) of the Companies Act, 1956 and seeks winding up of the respondent Company. 2. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t specific and certain goods supplied by the Petitioner to the said Company and therefore the 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 23/3/3006 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 non-performance 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 Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 after-thought raised by the respondent. 11. My attention is then invited to the rejoinder-affidavit and further affidavits that have been placed on record of this winding up petition. 12. It is on the basis of above material that I have heard the learned Senior Counsel appearing for the parties. 13. 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1990] 68 Comp. Cas. 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 Comp. Cas. 405 (Punj. Har.). (6) Chem-Crown India Ltd. v. Sports Equipment (P.) Ltd. [2001] 103 Comp. Cas. 1002/[2002] 35 SCL 462 (Delhi). (7) Marsons Ltd. v. Mundhra Bright Steel [2002] 39 SCL 919 (Cal.) of the High Court of Calcutta. (8) Prem Seth v. National Industrial Corpn. Ltd. [2001] 103 Comp. Cas. 1011/[2002] 35 SCL 636 (Delhi). (9) ITW Signode India Ltd. v. Bhushan Steel Strips Ltd. [2003] 2 Comp. LJ 269/[2002] 39 SCL 929 (Delhi). (10) Har Narayan Tandon v. Jaipur Smelting (P.) Ltd. [2003] 115 Comp. Cas. 231/[2004] 50 SCL 192 (Raj.). (11) C. Hariprasad v. Amalgamated Commercial Traders (P.) Ltd. AIR 1964 Mad. 519. (12) Pandam Tea Co. Ltd. v. Darjeeling Commercial Co. Ltd. [1977] 47 Comp. Cas. 15 (Cal.). (13) Garodia Hardware Store v. Nimodia Plantations Industries (P.) Ltd. [1999] 98 Comp. Cas. 636 (Gauhati). 14. On the other hand, Mr. Nadkarni, learned Senior Counsel appearing on behalf of the respondent, firstly, submitted that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooting 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 reminders. 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. 19. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 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 bonafides 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 bonafides of the defence of the Company. 21. It is with that intent that I have proceeded to peruse the affidavits filed. 22. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it-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. 25. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 diffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 orders. 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 bonafides or being not substantial in nature. 28. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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