TMI Blog2005 (11) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-company. The statutory notice dated August 7, 1999, was sent by registered post to the registered office of the company demanding a sum of ₹ 2,52,508, to which no reply has been received from the respondent-company. I have gone through the defence taken by the respondent-company in the counter-affidavit of Hausala Prasad Tiwari holding power of attorney on behalf of the board of directors of the company. Paragraphs 7 to 11 of the counter-affidavit are quoted below: 7. That, although the payment for the entire supply was made through post-dated cheques, but the raw material was not used. When the company used the raw material namely, petro carbon supplied by the petitioner in manufacturing the ferro crome and ferro silic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f carbon. Both these defects were due to supply of defective petro carbon by the petitioner. That, after ascertaining the defects due to defective supply of petro carbon by the petitioner, the company complained to the petitioner over phone and the petitioner agreed to indemnify the loss to the extent of rupees two lakhs, although the company had suffered a loss to the extent of ₹ 2.82 lakhs. The petitioner also assured the company that a credit note to the extent of rupees two lakhs will be issued shortly. Despite the assurance, the petitioner did not issue credit note of rupees two lakhs, hence the company has written a letter dated December 28, 1998, asking the petitioner to issue credit note of rupees two lakhs so that the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has assured to compensate or indemnify is as under: (Rs.) (a) M/s. Ambika Steel Ltd., 51/2, Industrial Area, Site No. 4, Sahibabad, Ghaziabad 19,931 (b) Sri Ishar Alloy Steel Ltd., Sector-D, Industrial Area, Sukhilia, Sanwer Road, Indore 49,522 (c) M/s. H.C. Ferro Alloy Ltd., 1165, Main Meerut Road, Opposite DPS, Ghaziabad 1,54,510 (d) M/s. Alloys and Chemicals, 410, Konark, 16/2, Manoramganj, Indore 60,785 2. A perusal of the defence in these paragraphs shows that the supply was made after receiving post-dated cheques. Initially, the respondent-company pointed out that the material supplied were not as per required specification. However, on the assurance of the petitioner-company these materials were used in manufacturing the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a) of the Companies Act, 1956, of the inability to pay, is not to be raised where the company has omitted to pay the debt despite service of statutory notice of demand. It must be further shown that the company has omitted to pay, without reasonable excuse. A debt may be admitted, there may, however, be a valid counter claim or a good reason not to pay. It is only when omission to pay, is coupled with the fact that the company is unable to meet its current demands or its assets are insufficient to meet its liabilities and the company is heavily indebted, that the court may deem that it is unable to pay its debts. 6. The presumption that the company had not paid its admitted dues exceeding ₹ 500, even after expiry of three weeks o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judication, the defence must be examined to exercise the discretion conferred by the statute. There may be cases where the court may on the request of the respondent-company or otherwise grant sometime to the company to satisfy the debt. But in any case the proceedings should not be substituted for the ordinary process of law for realisation of debt. 9. In all the cases the enquiry must be confined only to find out whether there is any reasonable excuse for non-payment of the admitted debt. Where the refusal to pay is coupled with a false defence, dishonoured cheque or promissory note, breach of undertaking, failure to pay taxes on the transaction, etc., the court will be justified in taking strict stand and refuse to exercise its discre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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