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2017 (12) TMI 636

Deposit of the amounts contained in the statutory notice - Held that:- 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 said process time might have elapsed. In the said context it is required to be .....

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7 - 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 .....

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tained the direction to deposit the amounts claimed in the statutory notices issued by each of the Respondents in the above Appeals. The said directions are reproduced herein under for the sake of ready reference : (i) The respondents shall deposit amount of advances by them in each of these petitions in this Court within a period of 12 weeks from today. The amounts to be deposited in each of the Petition is specified in the Orders passed in those petitions. (ii) Accordingly in each of these pet .....

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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 .....

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advance against the total purchase price of ₹ 101,34,00,000/. The said amount of ₹ 51,00,00,000/was transferred to the account of the Respondent by RTGS on various dates as mentioned in paragraph 9 of the Company Petition. The Petitioner in respect of the said payment has placed reliance on the bankers certificate annexed at Exhibit D to the Petition confirming that six remittances totalling to ₹ 51,00,00,000/have been made to the Respondents. The receipt of the advance in the .....

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any 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 months period from the date of the respective contracts and consequent upon such .....

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but this fell short of the requisite amount for supply of the 5500 MT of Guar Seeds. It was the case of the Respondent that at the request of the Petitioner, the Respondent reduced the advance by 30% of such price and the Petitioner agreed to pay further amounts against which the Respondent would supply Guar Seeds. It was the case of the Respondent that the amounts already paid were to be adjusted in the last lot of Guar Seeds to be supplied. It was the case of the Respondent that though the Pet .....

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ecover 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 .....

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was ₹ 6,62,90,000/. The Respondent accordingly called upon the Petitioner to pay the said amount. 6 It is in the background of the said statutory notice/notices that the above Company Petition along with the companion Company Petitions came to be filed by the Petitioners. In the said Company Petition the Appellant herein i.e. the original Respondent filed the affidavit of one Mr.Manish Bothra - Director of the Respondent opposing the above Company Petition interalia on various grounds. In .....

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itioner and the other Petitioners belong]. It was further stated in the said affidavit that the investigation reveals that the funds received by the Respondent Company from the 9 Petitioners were for purchase of Guar Seeds. A reference has been made to paragraph 5.12.15 of the investigation report. It was therefore the case of the Respondent that the funds received pertain to the supply of Guar Seeds and not for Soyabean Meal extract. The factum of supply of Guar Seeds during the period 20112012 .....

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2016 has disposed of the Company Petition as also the companion Company Petitions by issuing directions which are contained in the operative part amongst which as indicated above is the direction for the Respondent to deposit the advances paid by the Petitioner and the other Petitioners in the companion Company Petitions to the Respondent in this Court within 12 weeks. A further direction came to be issued that in the event the deposit is made and a suit is filed by the Petitioner and other Peti .....

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on that these are all fabricated and designed to reflect data matching the credit balances is farfetched. The learned Single Judge has further observed that the denial of the contracts' authenticity appears to be a feeble attempt to avoid liability and the consequences that follow. The learned Single Judge has observed that the signatures of Mr. Bothra - the deponent of the affidavit in reply which are on the contracts have not been denied. Having regard to the dispute raised by the Responde .....

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inated 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 rub .....

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ing allegedly induced to purchase large quantities of Guar Seeds at the instance of the Petitioners. The learned Single Judge having regard to all the aforesaid facts prima facie found that the defence set up by the Respondent does not appear to be bonafide. The learned Single Judge has observed that having regard to the fact that the Respondent has received the amount paid over by the Petitioners coupled with the fact that the Respondent has not relied upon any evidence of having purchased any .....

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he Respondent has a bonafide defence to the Company Petition as filed; C] That 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 .....

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s of the Petitioners viz. 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. which fact has been accepted by the said entities in their respective Petitions, hence the case of the Respondent was a plausible one. H] That the learned Single Judge failed to take note of the fact that it was the Respondent who was the first to initiate correspondence vide its letter dated 15/06/2013 whereas the Petitioner had not entered in .....

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an Meal contracts as signed by the Respondent with the rubber stamp of the Respondent appearing on the same. The Petitioners have also produced evidence of payment of ₹ 51,00,00,000/as advance to the Respondent. That being done so, the onus therefore shifted upon the Respondent to show that the defence raised is in good faith and is one of substance and it is likely to succeed; ii] That though the defence of the Respondent was that the amount was advanced for purchase of Guar Seeds which f .....

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t 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 Director of the Respondent Mr. D Narsimhan and the representative from the Chartered Accountants of the Respondent Mr. P Bhargava have admitted before this Court that the amounts .....

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s evidentiary value of the said report, reliance is placed on the judgment of the Apex Court reported in (2008) 12 SCC 73 in the matter of Raymond Woollen Mills Ltd. v/s. Director General (Investigation and Registration) & Anr. to contend that the said report does not have any evidentiary value. xiii] That the report of DG CCI is solely based on the bank statement of the parties. The DG CCI did not have the benefit of material facts necessary to determine the inter se disputes between the pa .....

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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 Co .....

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d therein being 27/07/2012, the Respondent also did not address any correspondence for almost a year before addressing the said letter dated 15/06/2013. xx] That it is well settled that the commercial solvency does not constitute a stand alone ground to avoid winding up. In the event the company refused to pay on no genuine and substantial grounds, there is a presumption that the company is unable to pay its debts and thus the company ought to be wound up. Reliance is placed on the judgment of t .....

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he parties, we have considered the rival contentions. The question which arises for consideration is whether the order passed by the learned Single Judge of this Court directing the Respondent i.e. the Appellant herein to make deposit of the amounts 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 dir .....

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by way of an application filed under Order XLI Rule 27 of the Code of Civil Procedure being Notice of Motion (L) No.1548 of 2017 which is filed in the instant Appeal. Hence the defence which was sought to be taken by the Respondent admittedly has not been buttressed by producing any cogent material in that regard. In so far as the Petitioners i.e. the Respondents herein are concerned, they have produced emails which according to them have been received from the Respondent comprising 5 contracts .....

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e Petitioner is concerned, each contract bears the signature and rubber stamp of the Respondent. Each contract identifies the quantity, rate, payment terms, delivery date. The Petitioner has given inspection of the emails to the Respondent. In so far as the said contracts are concerned, in the affidavit in reply though the authenticity of the email is sought to be disputed the denial is bare and bereft of particulars. The same can be seen by the averments made in paragraph 20 which are reproduce .....

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re 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 th .....

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question of Mr. Rajkumar Goyal making a proposal for purchase of Guar Seeds to be adjusted with the advances provided by the Petitioner. The said email therefore does not in any manner support the case of the Respondent that the amount advanced by the Petitioner was towards the purchase of Guar Seeds. The factum of supply of Guar Seeds to 5 entities which are sister concerns of the Petitioner also does not further case of the Respondent in so far as contracts being for purchase Guar Seeds and n .....

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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 .....

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ew, though the learned Single Judge has not expressed any opinion one way or the other as regards the efficacy of any of the findings recorded by the DG CCI, no evidentiary value could be attached to the said report of the DG CCI. Reliance placed on the judgment of Raymond Woollen Mills Ltd.'s case (supra) seems to be apposite. In the said case the Apex Court was concerned with the investigation report under the provisions of Section 11 of the Monopolies Restrictive Trade Practices Act, 1969 .....

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n, cannot be looked into. This is without prejudice to the contention that there is nothing stated in the preliminary investigation report, which in any way establishes that any competition was affected within the meaning of Section 2(o) of the Act and that competition was affected to any "material degree" in the relevant trade or industry, as contemplated under Clause (h) of Section 38(1) of the Act. In our view, therefore the findings of the DG CCI as contained in its report do not f .....

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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 said process time might have elapsed. In the said context it is required to be noted that even in respect of the Guar Seed contracts the delivery date as per the said contracts was 27/07/2012. The Respondent did not address any correspondence for almost a year before addressing the let .....

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ils Ltd had produced the contract for purchase of Guar Seeds bearing the signature of M/s. Nova Trading Pvt. Ltd.; whereas in the instant case the Respondent has failed to produce any such Guar Seeds contracts. Further before the Madhya Pradesh High Court there was no admissions as are in the present case by the Director Mr. D Narsimhan and the representative of the Chartered Accountants Mr. P Bhargava. In so far as the said order passed by the Madhya Pradesh High Court is concerned, it is requi .....

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'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 e .....

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as such, would be sufficient to reject the petition for winding up, unless substantial grounds for its rejection are made out. A determination of examination of the company's insolvency may be a useful aid in deciding whether the refusal to pay is a result of the bona fide dispute as to liability or whether it reflects an inability to pay, in such a situation, solvency is relevant not as a separate ground. If there is no dispute as to the company's liability, the solvency of the company .....

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ient to pay off the outstanding debts. 24 Now lastly coming to the issue as to whether this Court should interfere with the impugned order passed by the learned 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 .....

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would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph (1960) 3 SCR 713 : AIR 1960 SC 1156 : (SCR 721) ...... These principles are well established, but as has been observed by Viscount Simon in Charles Osention & Co. v. Johnston [1942 AC 130] …. the law as to the reversal by a court of appeal of an order made by a judge b .....

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