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2017 (12) TMI 636

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..... not desire to precipitate the matter and were trying to resolve the same. Respondent i.e. the Appellant herein has not raised any substantial or genuine grounds to avoid the payment and the defences raised on behalf of the Respondent are therefore not bonafide. In our view, the learned Single Judge has in the facts and circumstances rightly issued the directions which are contained in the operative part of the impugned order. - APPEAL NO. 131 OF 2017, APPEAL NO.135 OF 2017, APPEAL (LODGING) NO.84 OF 2017, APPEAL NO.128 OF 2017, APPEAL NO.129 OF 2017, APPEAL NO. 130 OF 2017, APPEAL NO.132 OF 2017, APPEAL NO.132 OF 2017, APPEAL NO. 134 OF 2017 - - - Dated:- 8-12-2017 - MR. R. M. SAVANT AND SARANG V KOTWAL, JJ. COMPANY PETITION NO. 281 OF 2015, COMPANY PETITION NO.760 OF 2015, COMPANY PETITION NO.586 OF 2014, COMPANY PETITION NO.757 OF 2015, COMPANY PETITION NO.756 OF 2015, COMPANY PETITION NO.759 OF 2015, COMPANY PETITION NO.566 OF 2014, COMPANY PETITION NO. 16 OF 2014, COMPANY PETITION NO. 758 OF 2015 WITH NOTICE OF MOTION LODGING NO.21 OF 2017, NOTICE OF MOTION LODGING NO.539 OF 2017, NOTICE OF MOTION LODGING NO.25 OF 2017, NOTICE OF MOTION LODGING NO.23 OF 2017, NOTICE .....

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..... ,000/with the Prothonotary and Senior Master of this Court towards publication charges, within two weeks from the date of default, with intimation to the Company Registrar failing which the Petition shall stand dismissed for non prosecution. ( vi) All the petitions are disposed of in the above terms. ( vii) There will be no orders as to costs. 3 Since the above Appeals involve common questions of fact and law, they are heard together. 4 By consent of the learned counsel for the parties, Appeal No.131 of 2017 (Vision Millennium Exports Pvt. Ltd. v/s. M/s. Stride Multitrade Pvt. Ltd.) is treated as the lead matter as the facts in the Company Petition No.281 of 2015 filed by M/s. Stride Multitrade Pvt. Ltd. are referred to in the impugned order. 5 The facts giving rise to the filing of the above Appeals can in a nutshell be stated thus : The Appellant and the Respondents in each of the Appeals are all bodies Corporate engaged in the business interalia of high quality edible oils, soyabean meal and other agricultural commodities. The facts in all the above Company Petitions are identical, save and except the dates of the Sales Confirmation Notes, Contracts, .....

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..... t the contract value, quantity of the product, delivery schedule and the rate.) The amounts paid as advance by the Petitioner in the instant Company Petition and the other Petitioners in the companion Company Petitions are reproduced herein under : Sr. No. Company Petition No. Amount 1 16 of 2014 10,71,53,459 2 566 of 2014 15,00,00,000 3 586 of 2014 24,78,02,506 4 281 of 2015 51,00,00,000 5 756 of 2015 19,73,47,685 6 757 of 2015 32,00,00,000 7 758 of 2015 9,00,00,000 8 759 of 2015 10,76,68,029 9 760 of 2015 7,96,86,951 It is the case of the Petitioner that the Respondent failed to deliver the Soyabean Meal within six mont .....

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..... ng agreed to the purchase of Soyabean Meal for which it had paid the sum of ₹ 51,00,00,000/. The Petitioner contested the forfeiture of the advances and reserved its rights to recover the damages. In response the Respondent vide its rejoinder dated 31/07/2013 denied the contentions of the Petitioner and reiterated the contents of its letter dated 15/06/2013. Finally by a statutory notice dated 07/09/2013, the Petitioner set out the factual background called upon the Respondent to pay a sum of ₹ 51,00,00,000/along with interest @ 18% p.a. within three weeks. The Respondent replied to the said statutory notice by its letter dated 05/10/2013. The demand contained in the statutory notice was denied and the Respondent's advocate reiterated the claim contained in the letter dated 15/06/2013. The Respondent further contended that though the Petitioner had agreed to purchase the Guar Seeds, the Petitioner failed to make balance payment and had since come up with a fabricated case seeking supply of Soyabean Meal and finally contended that a total sum of ₹ 105,62,90,000/would be payable by the Petitioner on taking delivery of the entire quantity of Guar Seeds. .....

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..... and not for Soyabean Meal extract. The factum of supply of Guar Seeds during the period 20112012 and its acceptance against the advance without any objection/reservation was stated. A reference is made to the four Petitioners in Company Petition Nos.586 of 2014, 756 of 2015, 759 of 2015 and 760 of 2015 against whom it is the case of the Respondent that against the advances paid, certain quantities of Guar Seeds were supplied and that is how the balance amounts are shown against each of the said Petitioners. The discrepancy between various contracts dates supply dates as also the discrepancy in the numbers of the contracts was stated so as to highlight the case of the Respondent that there were no such contracts for supply of Soyabean Meal. The Respondent accordingly sought dismissal of the above Company Petition as also the companion Company Petitions. 7 An affidavit in rejoinder was filed on behalf of the Petitioner wherein the Petitioner reiterated its stand in the Company Petition. 8 The learned Single Judge as indicated above has by the impugned order dated 17th/18th October 2016 has disposed of the Company Petition as also the companion Company Petitions by issuing direc .....

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..... reply was filed on behalf of the Respondent, inspection of the email( s) forwarding the said five contracts was taken. The copies of the said emails have been annexed at ExhibitG1 and G2. The learned Single Judge has observed that apart from stating that the contracts are fabricated and that they had not sent any mail, there is no attempt on the part of the Respondent to dispute the signature or the rubber stamp appearing on the emails. The learned Single Judge has observed that the emails have originated from one Mr. Sujit/Betul Oils Ltd. whose email address has been referred to by the learned Single Judge. However, according to the learned Single Judge the fact remains that the deponent has not contended that the Respondent has not communicated through M/s. Betul Oils Ltd. (the group to which the Appellant belongs) The learned Single Judge has further observed that the signatures on the attachments of the emails have not been disputed nor has the Respondent disputed the fact that the rubber stamp appearing on these attachments. The learned Single Judge has also adverted to the fact that the Chartered Accountants of the Company were directed to remain present along with the Direc .....

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..... hat the learned Single Judge failed to appreciate that though the Petitioners claim to have entered into 5 contracts for supply of Soyabean Meal, the originals of the said contracts have not been produced by the Petitioners and therefore their case ought not to have been accepted; D] That the learned Single Judge erred in proceeding on the basis that the signatures of Mr. Bothra and the rubber stamp of Mr. Bothra were not disputed and in the said process losing sight of the discrepancy in the emails on which reliance has been placed by the Petitioner. E] That the learned Single Judge erred in not accepting the case of the Respondent that the funds received from the Petitioners were for purchase of Guar Seeds which the Respondent was purchasing through the broker Edelweiss Trading Holdings Pvt. Ltd. and the Petitioners failed to make payment due to sharp fall in price of Guar Seeds between the settlement Date and the delivery Date. F] That the learned Single Judge has failed to take into consideration the report of the Director General of Competition Commission of India (DG CCI) in Case No.76 of 2012 wherein a finding has been recorded that the amounts advanced by the Pet .....

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..... f its pleadings before the learned Single Judge. iii] That the Respondent also failed to produce the alleged Guar Seeds contract even in the Review Petition No.(L) 1 of 2017 filed in Company Petition No.586 of 2014 or along with the instant Appeal. The said Guar Seeds contracts have been sought to be produced for the first time by way of additional evidence by filing Notice of Motion (L) No.1548 of 2017 in the instant Appeal; iv] That the Respondent has failed to produce nor has made any reference in any of the pleadings of any email/ letter/correspondence through which the Respondent sent the alleged Guar Seeds contracts to the Petitioners or vice versa. v] That the Respondent has not produced even a single document showing the purchase of Guar Seeds on behalf of the Respondent through the broker Edelweiss Trading Holdings Pvt. Ltd. vi] That the Respondent has accepted the said Soyabean Meal contracts by conduct inasmuch as the Petitioners have made payment of 50% of the contracted amount as advance and therefore the contract can be said to be concluded by conduct. vii] That no proof of any loss suffered by the Respondent has been produced; viii] That the Direc .....

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..... lant herein that the advances can be adjusted with Guar Seeds. xv] That the supply of the Guar Seeds to the sister concerns of the Petitioners is of no avail. The said supply has to be considered in the context of the fact that as per the alleged Guar Seeds contracts between the Respondent and M/s. Vishal Victory Oiltech Pvt. Ltd; M/s. Addax Trading Pvt. Ltd; M/s. Utility Impex Pvt. Ltd. and M/s. Nova Trading Pvt. Ltd. are dated 14/01/2012 whilst the Guar Seeds are alleged to be supplied even prior to the contract date i.e. on 28/11/2011 and it is only in case of the alleged Guar Seeds contract between the Respondent and M/s. Nova Trading Pvt. Ltd. that the contract date is prior to the delivery date. xvi] That the reliance placed on the order of the Hon'ble Madhya Pradesh High Court is misplaced as the contract in issue before the Hon'ble Madhya Pradesh High Court was different. In the said case Betul Oils Ltd who was the Respondent therein had produced a contract for purchase of Guar Seeds bearing a signature of M/s. Nova Trading Pvt. Ltd. whereas the present Respondent has failed to produce any such contract. xvii] That though it is the case of the Respondent th .....

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..... nts contained in the statutory notice and in the event a suit is filed by the Petitioners i.e. the Respondents herein the said amount to be transferred to the account of the said suit, is required to be interfered with. The cause for issuing the said direction as can be seen from the impugned order is that the defence raised by the Respondent was not found to be genuine, bonafide and plausible one by the learned Single Judge and therefore the learned Single Judge deemed it appropriate to put the Respondent to terms. It is required to be noted that the only defence taken by the Respondent in the reply to the statutory notice and in the affidavit in reply to the above Company Petitions is the defence that there were never any contracts for purchase of Soyabean Meal but the contracts were for purchase of Guar Seeds. Though the said defence was taken by the Respondent, significantly the Respondent has not produced the alleged Guar Seeds contracts before the learned Single Judge or in the Review Petition filed against the order passed in the Company Petition being No.586 of 2014 filed by the Petitioner M/s. Nova Trading Pvt. Ltd. or even in the instant Appeal and an attempt has now been .....

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..... cts. Hence a reading of the said paragraph indicates that though the Respondent has alleged that the contracts are fabricated and the dates are created to mach the existing position of credit balance, on the other hand the Respondent has denied of having sent any email as annexed by the Petitioner to the Company Petition. Significantly the Respondent has not disputed the signatures on the contracts nor has disputed the authenticity of the rubber stamp affixed over the signature in the Sales Confirmation Note. 15 In so far as the alleged Guar Seeds contracts are concerned, the Respondent has not mentioned in any pleadings as to how the said Guar Seeds contracts were sent to the Petitioners. There is no reference to any email/ letter/correspondence by which the said Guar Seeds contracts were sent to the Petitioners. 16 Another aspect which dents the case of the Respondent in so far as the said defence is concerned is that its Director Mr. D Narsimhan and the representative of the Chartered Accountants of the Respondent Mr. P Bhargava have admitted before this Court that the amounts paid by the Petitioners are shown as advance received in the account of the Respondent whic .....

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..... ndertaking an inquiry under Section 26 of the Competition Act 2002. The statutory scheme comprising the said Act indicates that the investigation carried out by the DG CCI is a preliminary fact finding inquiry and is not by way of quasijudicial proceeding. In the said fact finding inquiry there is no opportunity given to the concerned parties to make submissions but only statements are recorded and material considered. In so far as the instant report of the DG CCI is concerned, reading of paragraphs 5.12.10, 5.12.11 and 5.12.14 indicate that the DG CCI's finding is solely based on the bank statements of the parties. The DG CCI did not have the benefit of the material facts which are necessary to determine the inter se disputes between the parties. In so far as the instant case is concerned, the DG CCI did not have access to the Soyabean Meal contracts bearing the signature and rubber stamp of the Respondent i.e. the Appellant herein, the email through which the Respondent forwarded the Soyabean Meal contracts to the Petitioners, admissions of Mr. D Narsimhan the Director of the Respondent and, Mr. P Bhargava the representative of the Chartered Accountants of the Respondent wher .....

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..... the Respondent i.e. the Appellant herein. 20 In so far as the discrepancies in the Soyabean Meal contracts alleged by the Respondent are concerned, it is required to be noted that the Soyabean Meal contracts bear the signature and rubber stamp of the Respondent. As indicated above the Respondent has not denied the authenticity of the signature and its rubber stamp on the Soyabean Meal contracts. Since the Soyabean Meal contracts have originated from the Respondent, the discrepancies if any cannot lie at the door of the Petitioner and it is for the Respondent therefore to explain such discrepancies. Hence the case of the Respondent that the Soyabean Meal contracts are fabricated and that the Respondent did not send any email does not seem to be bonafide and is devoid of merits as rightly held by the learned Single Judge. In our view, merely because the Petitioner did not enter into correspondence though breach was committed by the Respondent would not dent the case of the Petitioner in so far as their claim based on Soyabean Meal contracts is concerned. Since the parties had a running business relationship, it may be possible that the parties were trying to work out and in the .....

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..... on behalf of the Respondent that the Respondent is commercial solvent and therefore the order of the nature passed by the learned Single Judge was not required to be passed. In the said context, reference could be made to the judgment of the Apex Court in M/s. Madhusudan Gordhandas Co. 's case (supra) and IBA Health (I) Pvt. Ltd.'s case (supra) . In Madhusudan Gordhandas Co.'s case (supra), the Apex Court held that mere ability to pay but choosing not to pay cannot be a defence in a Petition for winding up. Paragraph 21 of the said report is material and is reproduced herein under : 21 Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt (See Re. A Company 94 S.J. 369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debt precisely (See Re. Tweeds Garages Ltd. 1962 Ch.406. (3) The principles on which the court acts are first that the defe .....

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..... Single Judge. In the said context it is necessary to make a reference to the judgment of the Apex Court in Wonder Ltd's case. (supra). Paragraph 14 of the said report is material and is reproduced herein under : 14 The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by the court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come .....

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