TMI Blog2013 (8) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... d not get any reply. The respondent company was directed to secure the claim of the appellant by offering cash security or any other co-lateral security to the satisfaction of the Registrar, Original Side -Such security must be furnished within a period of four weeks from date - In default, the winding up petition would stand admitted for the sum together with interest at the rate of 9% per annum on and from the date of receipt of statutory notice of demand until payment and the petition for winding up would stand revived and appellant would be entitled to approach the learned Company Judge for appropriate direction for advertisement as well as fixation of returnable date - Otherwise, the petition for winding up would remand permanently stayed. Claim being Time Barred - Merely because the debtor was a corporate entity the creditor cannot enforce hid debt as a matter of a right in a winding up proceeding - It can only ask for winding up of the debtor and he becomes successful if the defence taken by the company, according to the Court, prima facie not sustainable – the plea of time barred claim could not be accepted – The law of limitation is enacted to prevent any stale claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws are still prevalent that had been born before the Constitution was. The Courts of law time to time extended the scope to cope up with the prevalent situation. The commercial laws are no exception. Post-millennium period changed the economic scenario of our country drastically. By the advent of globalization our Courts would have to take a liberal approach while deciding a commercial litigation so that the foreign investors do not get any wrong signal. The Courts are quite aware of the limitations while expanding the scope of the stature. At the same time the plea of hyper technicalities must not create hindrance to have a controversy particularly a commercial one, being decided on merit. In our humble view and with all humility may we say, if we cannot reach up to the expectation of the commercial world, our country would not be in a position to cope up with the advent of globalization and would lag behind. Keeping the above in the back of our mind, let us discuss the law on the subject for which we are invited to decide the present controversy. The law of winding up in India is celebrating its century in a sense, the Indian Companies Act, 1913, was the mother of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter. FACTS : The appellant appointed the respondent as its dealer to deal with computer and other related products belonging to the appellant. There was outstanding as claimed by the appellant to the extent of Rs.4,10,03,260.98 for the period September 22, 2008 to April 22, 2009. However, the purchase orders were mostly of 2008 as we find from the record. 2009 document was a credit invoice being dated April 22, 2009. Although the paper book is voluminous containing several documents and pleadings we feel, few e-mails would decide the fate of the case. The contents are quoted below: (i) From Subramaniam to Pravin February 27, 2009 Dear Pravin, Despite our numerous demands to settle your outstanding obligations with us, your account continues to be in service arrears. Please note that the entire amount due and payable to us as of today is in the total sum of 42,138,240.18 INR. Unless we receive your settlement sum of 42,138,240.18 INR on or before 09-Mar-09, we will, without further reference to you, take appropriate action which may include but not limited to instructing our solicitors to commence legal proceedings or placing the account with a third party collecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years has not been approved on technical ground and spo team has not bothered to take an extra effort to clear it. f) In June last year, overnight you had stopped a 10 year old relationship without any notice and at a dinner table we were told that thanks for the great job done in post but we have changed our distribution model for desktops and from tomorrow the billing for the same will not be done through JIPL. Naturally as an MNC you did not think even once as to the efforts put by us to develop the market and unilaterally changed the rules of the game to our sheer disadvantage and loss. In short with the change in your business model we also had to relook at our business as 35% of our business was with you. The business came to stand still overnight and we had to relook at the business as it was no longer viable. Slowly with the passage of a few months and the global recession things became worse and now we have for the time being stopped your distribution business and have only focused on selling our inventory and collecting debtors. Even this has become more and more difficult because the customer also knows that his credit lines will not be renewed and he will not get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffered loss to the extent of Rs.795.74 lacs. They denied, having withheld the sum of Rs.4,10,03,260.98. They would lastly contend, question of payment of interest would not arise at all. Six page letter did not deny specifically the liability of the company to the extent as claimed. It highlighted sufferance that the respondent had to bear due to indifferent attitude of the appellant. They also alleged that in view of severing of business relationship, their dealers did not make any prompt payment meaning thereby delay in realization of the precedents of the equipments delayed the ultimate payment. In paragraph-8 the respondent contended, the business cycle was such that we had to bear interest upon the said amount and could not repay it when they could sell the goods and collect the payments with your company not supporting our efforts and on the contrary pushing its excess products, it became a loss-loss situation for us . In paragraph-10 the company made a grievance, you had agreed to give credit notes for a sum of Rs.37,56,746.00 raised by us from time to time, but the same was never addressed till date . If one would read the letter as a whole he would get an idea, the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phased manner. Per contra, Mr. Pratap Chatterjee, learned senior counsel would contend, laws of limitation hopelessly barred the claim. The e-mails had no digital signature as required in law, hence, could not be relied upon. If e-mails could be avoided, the claim would be hopelessly barred by laws of limitation as the purchase orders were all dated 2008 and the winding up petition was filed in 2012 after about four years. As and by way of alternative submission, Mr. Chatterjee would contend, even if the e-mails could be relied upon, those could not be said to be unequivocal promise to pay or a definite acknowledgement of liability that would save the limitation. According to Mr. Chatterjee, the claim of the appellant was bona fide disputed. In any event, since the plea of limitation was successfully raised that would itself resist admission of winding up and the order of the learned Single Judge would not require any interference. OUR VIEW ON THE FACTUAL SCENARIO : The e-mails would speak for them. His Lordship correctly observed, the e-mails would prove the indebtedness of the company. His Lordship also correctly observed, the counter claim was vague. If we try to give a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the debtor is a corporate entity the creditor cannot enforce hid debt as a matter of a right in a winding up proceeding. It can only ask for winding up of the debtor and he becomes successful if the defence taken by the company, according to the Court, prima facie not sustainable . The Apex Court while deciding a Calcutta Case AIR 2005 Supreme Court 4175 [Mediqup Systems Pvt. Ltd. Vs Proxima Medical Systems G.M.B.H. observed as follows: This Court in catena of decisions held that an order under Section 433(e) of the Companies Act is discretionary. There must be a debt due and the company must be unable to pay the same. A debt under this section must be a determined or a definite sum of money payable immediately or at a future date and that the inability referred to in the expression unable to pay its dues in Section 433(e) of the Companies Act should be taken in the commercial sense and that the machinery for winding up will be allowed to be utilized merely as a means for realising debts due from a company . Similarly, the Apex Court in two earlier cases 42 Company Cases 125 [Madhusudan Gordhandas and Co. Vs. Madhu Woolem Industries Pvt. Ltd.] and [1994] Vol. 79 Company C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proof of the facts on which the defence depends. In the later case the Apex Court relying on an English decision[1962] Vol. 1 All E.R. 121 [Re Tweeds Garages Ltd.] dealt with the issue of plea of adjustment and observed, where there is no dispute (and there is none here) that the petitioner is a creditor for a sum which would otherwise entitled him to a winding-up order, a dispute as to the precise sum it is owed to him is not of itself a sufficient answer to his petition . The plea of adjustment was dealt with by Apex Court in a case[2009] 147 Company Cases 490 [Vijay Industries Vs. Natl Technologies Ltd.]. The Apex Court considered the earlier precedents including those referred to above and observed, the principles on which the Court acts are firstly, the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law, and, thirdly, the company adduced prima facie proof of the facts on which the defence depends. On a combined reading of the law on the subject we would find, basic concept of law of winding up is: - (i) The petitioning creditor must have a definite specific amount due and owing by the company to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of it. If we give a combined reading of the law of limitation we would find that such law would not prevent any live claim to be brought in Court, irrespective of the period taken by the plaintiff from the date when the cause of action first accrued. In the instant case, the parties were having a running and continuous account maintained by them. They maintained a jural relationship. They were exchanging mails making proposals and counter proposals to square off the dues. How could that period be ignored in the matter of computation of period of limitation? Mr. Chatterjee would suggest, we should ignore the mails, as it did not contain any digital signature. He probably missed out the specific finding of the learned Judge to the extent, the company did not question the authenticity of the mails. Mr. Chatterjee would rely upon two unreported decisions. In the first case[Unreported decision in C.P. No. 216 of 2010] [Unit Construction Company Private Ltd. Vs. Simplex, the statement of account was the seat anchor to save the limitation. The learned Judge found it not signed by anyone on behalf of the company. In the second case[Unreported decision in G.A. No. 1784 of 2010 [Tata Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other co-lateral security to the satisfaction of the Registrar, Original Side. Such security must be furnished within a period of four weeks from date. In default, the winding up petition would stand admitted for a sum of Rs.4,10,03,260.98 together with interest at the rate of 9% per annum on and from the date of receipt of statutory notice of demand until payment and the petition for winding up would stand revived and appellant would be entitled to approach the learned Company Judge for appropriate direction for advertisement as well as fixation of returnable date. Otherwise, the petition for winding up would remand permanently stayed. In case security is furnished in terms of the forgoing judgment and order the appellant would be at liberty to file a civil suit inter alia making claim in respect of the subject matter of the controversy. In case such suit is filed within a period of six weeks from the date of intimation of furnishing of security the appellant would be entitled to the benefit of Section 14 of the Limitation Act as they were proceeding with their claim bona fide before this Court. In case the company offers cash security, the Registrar, Original Side would keep ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
