* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 23rd September, 2013
% Date of Decision: 11th December, 2013
+ CO. PET. 206/2010 & CA No.532/2012
ALKA EXIM PVT. LTD. ..... Petitioner
Through: Mr.Subhiksh Vasudev and Mr.
Srivats Kausal, Advocates.
versus
M/S. CREST EXPORT PVT. LTD. ..... Respondent
Through: Mr.Vikram Dholakia, Advocate.
CORAM:
HON'BLE MR. JUSTICE R.V.EASWAR
JUDGMENT
R.V. EASWAR, J.:
1. This is a petition filed by Alka Exim Pvt. Ltd. under Section 433(e) and (f) of the Companies Act, 1956 (hereinafter referred to as the "Act") seeking winding-up of the respondent-company for non-payment of `2,55,11,173/- which includes the principal amount of `2,18,43,881/- and interest of `36,67,292/-.
2. The petitioner is a private limited company carrying on business in the supply of fabrics and allied items. The respondent-company was CO. PET. 206/2010 Page 1 of 18 carrying on business in fabrication/ exports. The directors of the respondent-company used to purchase fabrics on credit from the petitioner-company. The purchases so made between 17.10.2007 and 08.06.2009 amounted to `2,18,43,881/- and together with interest, the amount debited in the books of the petitioner to the account of the respondent-company came to `2,55,11,173/- as on 12.10.2009. The respondent company sought to discharge the dues to the petitioner by issue of post dated cheques but all these cheques were returned without being honoured. Therefore, a legal notice was sent by the advocate of the petitioner on 09.11.2009 threatening action against the respondent under Section 138 of the Negotiable Instruments Act, 1881 as well as Section 417/ 420 of the Indian Penal Code, 1860. Complaints were also filed with the Tis Hazari Courts, Delhi under Section 138 of the NI Act. In the reply to the aforesaid notice written by the respondent-company on 23.11.2009, it was pointed out that payments amounting to `1.73 crores were made in 2009 including the issue of some debit notes, that the cheques were not honoured because the mode of operation of the account was changed from single signatory to joint signatory in September, 2009 and that the respondent had requested the petitioner to return the cheques. CO. PET. 206/2010 Page 2 of 18
3. On 11.12.2009 the statutory demand notice under Section 434 (1)(a) of the Act was issued by the advocate of the petitioner to the respondent-company calling up the latter to pay the sum of `2,25,11,173/- together with interest @ 24% till date of payment along with costs of `11,000/- within a period of 21 days from the receipt of notice, failing which legal proceedings for the recovery of the amount, including winding-up proceedings were threatened to be taken. Receiving no reply to the statutory demand notice, the petitioner has filed the present petition in April, 2010.
4. In support of the winding-up petition, it is submitted on behalf of the petitioner that the respondent-company has not even complied with the order passed by this Court on 29.11.2010 in terms of Section 439A of the Act. It is submitted that the fabrics were sold on credit between October, 2007 and June, 2009 and the post dated cheques issued by the respondent were all dishonoured. It is further submitted that the debt was acknowledged by the directors of the respondent-company. It is contended that the debit notes annexed to the reply filed by the respondent-company (to the company petition) were false and no such debit notes were sent by the respondent-company. These debit notes CO. PET. 206/2010 Page 3 of 18 were sought to be contrasted with the debit notes annexed as Annexure- A2 to the rejoinder, which are admitted by the petitioner. It is pointed out that the debit note placed as Annexure-A2 to the rejoinder was duly signed by a director of the respondent-company with his seal and was also taken note of in the ledger account of the respondent-company borne in the books of the petitioner whereas the debit notes attached to the reply filed by the respondent to the company petition did not bear the signature of the director along with the seal, nor did these debit notes contain any details of the fabric returned by the respondent-company, as was the case in the debit note annexed to the rejoinder. It was further pointed out that the debit note annexed to the rejoinder was supported by printed challans issued by the respondent-company containing complete details of the goods returned whereas the debit notes attached to the reply filed by the respondent-company were not in printed form, nor were they supported by challans containing the full details of the fabric said to have been returned. According to the learned counsel for the petitioner, these were false debit notes. My attention was also drawn to the copies of the ledger account of the respondent-company in the books of the petitioner which showed a debit balance of `2,18,43,881/- which figure was also duly CO. PET. 206/2010 Page 4 of 18 reflected in the balance sheet as on 31.03.2010 as part of the sundry debtors. The copies of the ledger account and the balance sheet as on 31.03.2010 are annexed to the rejoinder. The learned counsel for the petitioner submitted that as per his information the directors of the respondent-company are absconding and, therefore, filing a suit for recovery of the amount would be an ineffective remedy.
5. In his reply, the learned counsel for the respondent refuted all the contentions and submissions of the petitioner. He submitted that the petitioner has concealed the relevant and material facts and if the debit notes are taken into account, there was no amount outstanding. He submitted that since the goods supplied by the petitioner were defective, debit notes aggregating to `70,52,864/- were issued by the respondent- company, copies of which are placed in Annexure-R2 to the reply. He further submitted that the entries made in the ledger account of the respondent-company in the books of the petitioner were unilateral, false and fabricated. By way of example he submitted that the statement of account attached to the company petition shows an amount of `19,00,000/- as having been received by the petitioner on different dates, whereas the respondent had paid an amount of `76,25,000/- through cash/ CO. PET. 206/2010 Page 5 of 18 RTGS, which has not been accounted for. My attention in this connection was drawn to Annexure-R1 to the reply, which is a copy of the ledger account of the petitioner in the books of the respondent- company for the period from 13.05.2009 to 26.07.2009.
6. The learned counsel for the respondent-company further contended that one Mr. Rajiv Gupta of the petitioner-company was informally inducted into the respondent-company so as to share in its profits and was made an authorised signatory of the respondent-company. Undated cheques were given to him as security during the year 2008. The petitioner-company filled up the dates and presented these cheques to the bank, even after receiving payments for the goods supplied, in full and final settlements. According to the learned counsel for the respondent- company, the undated cheques were not issued for any existing debt. It was pointed out that the cheques relate to a period much prior to their date of presentation.
7. A further contention of the learned counsel for the respondent- company was that there was no stipulation for any interest on account of delayed payment. The receipt of the legal notice under Section 434(1)(a) CO. PET. 206/2010 Page 6 of 18 was denied. It was also denied that the respondent-company was commercially insolvent.
8. The learned counsel for the respondent-company also drew my attention to the glaring difference between pages 10 to 16 of the company petition, which contain the statement of outstanding balance on the one hand and the copy of the ledger account of the respondent-company in the books of the petitioner. The suggestion was that certain invoices were falsely added in the ledger account of the respondent-company in the petitioner‟s books and it was this copy of the ledger account which was annexed to the rejoinder. The submission was that the petitioner had included further false debits to the account of the respondent-company to cover up the payment of `76,25,000/- made by the respondent-company through cash/ RTGS. The learned counsel for the respondent-company strongly objected to false documents being annexed to the rejoinder merely to support the false claim made by the company petition.
9. Another submission made on behalf of the respondent-company was that the petitioner claimed to have sold more goods than what it had purchased, which is impossible. My attention in this behalf was drawn to Annexure-C to the financial statements for the year ended 31.03.2010, CO. PET. 206/2010 Page 7 of 18 which is part of the balance sheet as on 31.03.2010 and gives the quantitative details of principal items of goods traded during the financial year which ended on 31.03.2010.
10. In support of the aforesaid submissions, the learned counsel for the respondent-company cited the following authorities: -
(i) Madhya Pradesh Iran and Steel Co. vs. G.B. Springs (P) Ltd. & Mehta Bright Steel (P) Ltd. : (2003) 117 Comp. Cas. 327 (Delhi)
(ii) DCM Financial Services Ltd. vs. Praxis Consulting and Information Services (P) Ltd. : (2005) 4 Comp. LJ 586 (Delhi)
11. In his rejoinder, the learned counsel for the petitioner drew my attention to paragraph 14 of the reply filed by the respondent-company in which it was admitted that the respondent-company was facing financial turbulence. It was further submitted that a few transactions/ entries were cherry-picked by the respondent-company out of the ledger account of the petitioner in its books to mislead the Court. The debit notes claimed to have been issued by the respondent-company were all false and fabricated as they were not in the printed form nor did they contain any details of the fabrics claimed to have been returned; they were also not supported CO. PET. 206/2010 Page 8 of 18 by the goods returned challan. It was also pointed out that payments amounting to `75,75,000/- have been taken into account by the petitioner and even then amounts were due by the respondent-company as claimed in the petitioner. My attention was also drawn to the affidavit of Mr. Vipul Gupta annexed with the rejoinder along with the board resolution authorising the same.
12. I have carefully considered the facts in the light of the rival contentions. The first objection of the respondent which is to be dealt with is that the petitioner did not account for the non-cash payment of `75,75,000/- (wrongly mentioned in the reply as `76,25,000/-). A verification of the copy of the ledger account of the petitioner in the books of the respondent-company with the copy of the ledger account of the respondent-company in the books of the petitioner shows that this is an incorrect submission. I find that the following cheque payments were made by the respondent-company to the petitioner between 13.05.2009 and 28.07.2009: -
Date Amount paid
13.05.2009 42,00,000
24.06.2009 7,75,000
CO. PET. 206/2010 Page 9 of 18
07.06.2009 6,00,000
13.07.2009 5,00,000
28.07.2009 10,00,000
28.07.2009 5,00,000
Total 75,75,000
13. All these payments are duly reflected in the ledger account of the respondent-company in the books of the petitioner (page 35-36 of Annexure P-2 colly.).
14. Coming now to the debit notes claimed to have been issued by the respondent-company to the petitioner which allegedly were not taken note of by the petitioner, I find from Annexure R-2 to the reply that the respondent claims to have returned goods of the value of `70,52,864.82 paise. A tabular statement containing the date, particulars, voucher number and the amount of the debit note is found at page 25 of Annexure R-2. From the next page upto page 50, copies of the debit notes, which according to the respondent-company have not been credited in the ledger account of the respondent-company in the books of the petitioner are enclosed. These debit notes are not in printed form. They are signed by an authorised signatory without any seal. They do not contain any details CO. PET. 206/2010 Page 10 of 18 of the bill/ invoice sent by the petitioner. They do not contain any detailed description of the quantity, etc. of the goods alleged to have been returned. The only description in all the debit notes is "Raw Mtr. Fabric (central)". Moreover, no copy of the covering letter, to which the debit notes were enclosed, has been filed. This is in stark contrast to the debit notes which were in fact sent by the respondent-company and which find credited to the account of the respondent-company in the books of the petitioner. At page 16 of Annexure P-1 (colly.), there is a letter dated 10.05.2008 sent by the respondent-company to the petitioner stating that an amount of `3,64,081/- has been debited to the account of the petitioner, being the value of fabric returned to the petitioner. This covering letter is signed by a director of the respondent-company with his seal. The covering letter itself mentions the relevant challan numbers under which the goods were returned. It also describes the goods in detail. For example challan No.11412 is the relevant challan for return of 3 items: -
(i) Polyster printer 52" 516.75 Mtr. at 44.00 per Mtr. for `22,737/-;
(ii) Polyster printer 42" 2897 Mtr. 39.50 per Mtr., `1,11,534/-;CO. PET. 206/2010 Page 11 of 18
(iii) Solid blue colour 2358.65 Mtr., 40.00 per Mtr., `93,146/-.
15. The relevant challan which is attached at page 17 of Annexure P-1 (colly.) is in printed form with the sales tax registration number and address, phone number, e-mail Id, etc. of the respondent-company. The challan is numbered and dated and gives the serial number, particulars and quantity of the goods returned and a description of the goods in detail. The vehicle number in which the goods were returned is also mentioned in the challan. The amount of `3,64,081/- mentioned in the covering letter dated 10.05.2008 is found credited to the account of the respondent-company on the same day in the books of the petitioner with the narration "By sales return" along with details of the goods returned as stated in the letter. Similarly, the debit note dated 07.07.2009 in the amount of `1,33,282/-, supported by the relevant details of the goods returned and the vehicle number is found credited to the account of the respondent in the books of the petitioner on the same date with similar narration and details. It is, therefore, difficult to believe the authenticity of the debit notes allegedly issued by the respondent-company to the extent of `70,52,864/-, the details of which are given in Annexure R-2 to the reply. I cannot believe that the same respondent-company would give CO. PET. 206/2010 Page 12 of 18 different types of debit notes, one set with full details supported by challans, vehicle number, etc. and another set of debit notes without such supporting documents/ details/ description. It appears to me that this story of debit notes is an afterthought. Consequently, I cannot also accept the claim of the respondent that false invoices were raised by the petitioner to cover-up the debit notes raised by the respondent to the tune of `70,52,844/-.
16. One of the objections raised by the respondent-company was that there was glaring difference between pages 10 to 16 of the company petition which contain the statement of outstanding balance and the copy of the ledger account of the respondent-company in the books of the petitioner (Annexure P-2 colly.). This statement of outstanding balance annexed to the company petition gives full details such as the date, bill number, amount, etc. which totals to `2,18,43,881/- which is the same figure as shown by the copy of the ledger account of the respondent- company in the books of the petitioner. The statement of outstanding balance also gives the calculation of the interest on the late payments after 60 days and such calculations show that the petitioner charged interest of `36,67,292/-. The principal amount and the interest aggregate CO. PET. 206/2010 Page 13 of 18 to `2,55,11,173/-. The statement of outstanding balance along with calculations of interest for the delay has been done in a detailed manner giving the number of days for and the outstanding amount for which interest is calculated. This is not a copy of the ledger account of the respondent-company but it is a statement showing the working of the interest on each and every bill which was not paid by the respondent- company. The claim of the respondent-company that there are glaring differences between the two is absolutely off the mark. Moreover, in the statement of account the payments made by the respondent between 13.05.2009 and 28.07.2009 are not separately shown in the first two pages since the transactions shown in these pages took place prior to the above dates. The payments have been duly credited in the ledger account of the respondent before arriving at the outstanding balance of `2,18,43,881/-. There is thus no difference in the principal amount outstanding which is the same in both. This contention of the respondent- company, therefore, fails.
17. A contention was raised that the petitioner could not have sold more goods than what it had purchased and in support of the said contention, my attention was drawn to Annexure-C to the balance sheet CO. PET. 206/2010 Page 14 of 18 of the petitioner as on 31.03.2010 which is attached to the rejoinder. Annexure-C to the balance sheet contains the particulars of quantitative details of principal items of goods traded during the said financial year. This is a statement which has to be furnished as part of the balance sheet and on which the statutory auditor has to report. According to Annexure- C, there are 30 items in which the petitioner traded during the year ended 31.03.2010 and the combined opening stock (in Mtrs.) was 23,264.34. The petitioner purchased 14,22,907.64 Mtrs. of all the items combined. It sold 12,29,550.60 Mtrs. (combined) during the said year thus leaving a closing stock of 2,16,621.38 Mtrs. (combined). From the said annexure, I am not able to find any single item out of the 30 items, in respect of which the sales were more than the combined figure of opening stock and purchases. I am unable to uphold the objection which seems to be without any basis.
18. Whatever may be the reasons for the dishonour of the cheques issued by the respondent-company, the fact remains that the cheques were not honoured and were returned. It can be due to insufficient funds or defective signatures. If the signatures were defective, they could have CO. PET. 206/2010 Page 15 of 18 been rectified and properly signed cheques could have been issued by the respondent-company. This was not done.
19. Thus none of the factual objections taken before me on behalf of the respondent-company appears to be with any merit.
20. In view of the foregoing I do not see any merit in the submissions made on behalf of the respondent-company. I, therefore, admit the winding-up petition. A copy of the petition and this order be served on the Official Liquidator („OL‟) attached to this Court within five days.
21. The OL attached to this Court is appointed as the Provisional Liquidator („PL‟) of the Respondent. The OL is directed to take over all the assets, books of accounts and records of the Respondent forthwith. The OL shall also prepare a complete inventory of all the assets of the Respondent before sealing the premises in which they are kept. He may also seek the assistance of a valuer to value the assets. He is permitted to take the assistance of the local police authorities, if required.
22. Publication of the citation of the petition be effected in the Delhi Gazette, "The Statesman" (English) and "Veer Arjun" (Hindi) in terms of Rule 24 of the Companies (Court) Rules, 1959 („Rules‟), by the CO. PET. 206/2010 Page 16 of 18 Petitioner. The petitioner is also directed to furnish a complete set of petition to the official liquidator.
23. The Directors of the Respondent are directed to strictly comply with the requirements of Section 454 of the Companies Act, 1956 and Rule 130 of the Rules and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit within a period of 21 days from today. They will also file affidavits in this Court, with advance copies to the OL, within four weeks setting out the details (including their value and location) of all the assets, both movable and immovable, of the Respondent company and enclose therewith the balance sheets and profit and loss accounts for the past three years and copies of the statements of all the bank accounts for the last one year. The respondent is also directed to furnish the names, address and telephone number etc. of its directors including the Managing Director, Chairman, if any, to the official liquidator along with the statement of affairs. The respondent shall also furnish the name, address and telephone number of its company secretary. It shall also file the details of its debtors and creditors with their complete address and the details of its workmen and other CO. PET. 206/2010 Page 17 of 18 employees and the amount, if any, outstanding to them. All these shall be filed with the OL.
A report be filed by the OL before the next date of hearing. Renotify on 15.04.2014.
(R.V. EASWAR) JUDGE DECEMBER 11, 2013 hs CO. PET. 206/2010 Page 18 of 18