[2009] 94 SCL 270 (CAL.)
HIGH COURT OF CALCUTTA
Juneja Chemical Industries (P.) Ltd.
v.
Alam Tannery (P.) Ltd.
SANJIB BANERJEE, J.
C.P. NO. 180 OF 2006
MAY 3, 2007
Section 433 of the Companies Act, 1956 - Winding up - Circumstances in which a company may be wound up - Whether in receiving a winding up petition, not only should factum of indebtedness be affirmatively established, but quantum thereof needs also to be conclusively demonstrated - Held, yes - Whether if indebtedness of company is apparent as to a part of claim, company court may receive such part of petitioner’s claim that is free from doubt and require other undetermined part to be established elsewhere - Held, yes - Whether where petitioner filed winding up petition against respondent-company and debtor-creditor jural relationship between them had been established but there was no admission of quantum of debt, petitioner’s claim could not be said to be indisputable and, therefore, winding up petition could not be admitted - Held, yes
FACTS
The petitioner-company supplied diverse chemicals to the respondent-company. The petitioner issued statutory notice to the company claiming that principal sum of Rs. 1.24 crore was due to it on account of price of goods sold and delivered. The company in reply claimed that the transaction was not the run-of-the mill and mundane exercise of goods being delivered against the orders placed. It asserted that the parties had entered into 13 high seas sale agreements in respect of leather chemicals. The terms of an oral agreement included a term that the goods were to be stored at the petitioner’s godown and were to be taken delivery of by the company after inspection. It claimed that the goods remained at the petitioner’s godown without the petitioner offering inspection, though the bills in respect thereof were raised on the company and that in view of the long standing relations between the parties it had no room to suspect any foul play. It further stated that from a show-cause notice dated 26-12-2003 issued by the Directorate of Revenue Intelligence under section 108 of the Customs Act, 1962 for furnishing evidence pertaining to certain transactions under which goods were cleared, the company for the first time came to know that the petitioner had sold a major portion of goods covered under the said high seas sale agreements from its godown to various other parties. The company claimed that because of such diversion and/or disposal of the goods by the petitioner, it had to pay customs duty which was otherwise payable on such imported goods and also interest on the duty amount. The company claimed from the petitioner such sum that it had paid to the authorities and also claimed Rs. 1 crore as damages. The company referred to letters of 3-6-2004 and 25-7-2004, by which it had asked the petitioner to sit for verification of accounts. Shortly after shooting off its reply, the company instituted a suit, in support of the claim found in its response to the statutory notice. The petitioner filed winding up petition praying for the company being wound up for its refusal to pay its dues. The petitioner urged that despite the company’s reference to the goods being sold to others, its letter conveyed a sense of indebtedness and a request for reconciliation of accounts. The reconciliation, the petitioner argued, was merely a ruse to buy time.
HELD
There was no doubt that nothing remarkable took place between the company’s letter, dated 3-6-2004, and its receipt of the statutory notice that could have resulted in the contrived stand being taken by it. Yet there was the petitioner’s acceptance of the company’s demand that accounts ought to be reconciled that was found in the petitioner’s letter, dated 4-6-2004. The two short letters of the petitioner issued on 4-6-2004 and 24-6-2004 supported the petitioner’s claim that it was, indeed, the creditor and the company the debtor. But in the petitioner’s acceptance found therein that the accounts were required to be gone into, the petitioner betrayed its awareness that its claim was not free from doubt. [Para 10]
In receiving a winding up petition, not only should the factum of indebtedness be affirmatively established, but the quantum thereof needs also to be conclusively demonstrated. If indebtedness of the company is apparent as to a part of the claim, the company court may receive such part of the petitioner’s claim that is free from doubt and require the other undetermined part to be established elsewhere. In the instant case, despite the company conveying the overwhelming sense of being a debtor in its letter dated 3-6-2004, and a substantial part of the company’s defencein response to the statutory notice being thereby discredited, the petitioner had failed to quantify such part of its claim that could be said to be free from doubt. Ordinarily, the cheques issued forRs. 57-odd lakhs would have gone some distance to pain the company down as to the quantum of its unimpeachable debt, but the company’s charge of the petitioner having sold goods to others found in its letter of 3-6-2004, would rob the sanctity of the amount covered by the cheques issued by it as being the sum, admittedly, due. No doubt, the petitioner had disputed such charge made by the company but upon the charge being made and it being refuted, there was a dispute that needed to be adjudicated upon. And it would be hazardous to accept the sum covered by the 27 dud cheques to be the quantum of the company’s indebtedness. [Para 11]
There is good reason for the company court requiring the quantum of indebtedness being established before it permits a creditor’s petition for winding up to proceed. For one, even though the floor limit set by the provisions of the Companies Act is a meagre Rs. 500, yet it would be unfair to subject a functioning company to the attendant miseries upon a winding up petition being admitted merely on the Company Judge’s subjective assessment of the quantum of debt being in excess of Rs. 500. Secondly, it is open to a company to secure a claim and such option pre-supposes an amount being determined. Thirdly, in the practice followed by the High Court where a winding up petition is considered at two stages, the usual order passed is one permitting the company to pay or secure the amount, prima facie found due, so that advertisements do not ensue and the matter does not progress to the second, and more prejudicial, stage. If the Company Judge is unable to ascertain the sum that is due to the petitioner, albeit prima facie, then no condition for avoiding publication of advertisements can be set. [Para 12]
If a creditor cannot establish the company’s inability to discharge its debts by demonstrating the quantum thereof, its petition need not proceed further. In the instant case, despite the debtor-creditor jural relationship being established by the company’s letter of 3-6-2004, there was no admission of the quantum of debt. If such relationship was established, it kept the claim alive but could not be relied upon to bypass the procedure ordinarily required to be followed to establish the quantum of debt. It was in such sense that the petitioner’s claim could not be said to be indisputable. [Para 13]
The claim of the petitioner was to be relegated to a suit and the petition was to be permanently stayed. [Para 14]
CASES REFERRED TO
SRC Steel (P.) Ltd. v. Bharat Industrial Corpn. Ltd. [2005] 4 CHN 343 (para 13) and Mannesmann Rexroth (India) Ltd. v. National Engg. Industries Ltd. [2007] 80 SCL 178 (Cal.) (para 13).
S. Chowdhury and Ms. Manju Bhutonia for the Petitioner. Surojit Nath Mitra, Ms. Reetabrata Mitra, S. Dutta and S. Dasgupta for the Respondent.
