Lloyds Finance Ltd. vs Emtex Industries (India) Ltd.
2001 Latest Caselaw 334 Bom

JUDGMENT

1. An Inter-Corporate Deposit in the amount of Rs. 2 crores was admittedly placed by the petitioner with the respondent by a cheque drawn by

the petitioner. On 24-11-1996 the respondent requested the petitioner to disburse the Inter-Corporate Loan in the amount of Rs. 2 crores. It has been stated in the company petition that in pursuance of the request, the petitioner under cover of a letter dated 25-11-1996 disbursed the amount of Rs. 2 crores for a period of 24 months repayable in full in one lump sum on 23-11-1998. Exh. B to the company petition which is a letter dated 25-11-1996 provides for the payment of interest at the rate of 28 per cent per annum payable quarterly. The amount of Rs. 2 crores was admittedly disbursed and again, it is common ground that the principal amount was repaid on 8-12-1998, Immediately thereafter, on 10-12-1998, a debit note claiming interest at, the rate of 28 per cent per annum compounded quarterly was issued to the petitioner by the respondent by which interest in the amount of Rs. 83,81,955 was claimed as due and payable. There has been no reply, at all to the debit note which was raised and addressed by the petitioner.

2. On 7-7-1999 a reminder was addressed by the petitioner in respect of the non-payment of the amount of interest which had been claimed in the debit note dated 10-12-1998.

3. In reply thereto, the respondent for the first time in a letter dated 19-7-1999 stated that the loan of Rs. 200 lakhs was extended without any specification as to the payment of interest. In other words, the respondent did not claim that no interest was payable on the loan at all but that the loan had been advanced under agreed terms which did not contain a specification as to the payment of interest. According to the respondent this was a measure of compensation for what was allegedly, an exorbitant rate of interest charged by the petitioner on a separate lease transaction. On 5-11-1999 the petitioner rebutted the contention of the respondent to the effect that no specification of interest had been made.

4. On 22-3-2000 a statutory notice for winding up was addressed on behalf of the petitioner to which admittedly there has been no reply. The company petition was instituted on 15-9-2000, nearly 8 months after the issuance of the statutory notice.

5. In the affidavit in reply that has been filed on behalf of the respondent, the respondent denies the authenticity of the document at Exh. B to the petition which, is a letter dated 25-9-1996 written by the petitioner setting out the terms and conditions of the deposit. According to the respondent, the rubber stamp of the respondent shown on the said letter 'appears' to be not that of the respondent and the initials shown thereon are not of any authorised representative or employee of the respondent. Moreover it has been stated that the letter dated 25-11-1996 was typed in 1998 since it bears telephone numbers of the office of the petitioner of

1998 but, which did not exist on 25-11-1996 when the letter was alleged to be written.

6. A rejoinder has been filed on behalf of the petitioner in which the allegation that the letter dated 25-11-1997 is fabricated is denied. The petitioners have denied that the letter dated 25-11-1996 was styled in 1998 or that it bears the telephone numbers which exists in 1998 and not on 25-11-1996.

7. The respondent in its reply relies upon a letter dated 27-9-1996 of the petitioner in which the letter head is different from the letter head used on the letter dated 25-11-1996. In order to deal with this submission, the petitioner states that the letter head of the letter dated 27-9-1996 has been used out of the old stock of stationary of the petitioner and that merely because different letter heads were available with the company at a given point of time, would not establish that the letter dated 25-11-1996 is fabricated. The petitioner has also annexed a letter dated 4-3-1997 as and by way of comparison to establish that the letter dated 25-11-1996 is genuine.

8. In order to assess as to whether the defence which has been urged on behalf of the respondent; should be relied upon the substance of the defence shall made now be considered. The defence which the respondent would urge for acceptance in a petition for winding up is that a loan of Rs. 2 crores was granted to it over a period of 2 years but that no interest was payable by the respondent. According to the respondent there were several business transactions between the parties arid the respondent by a letter dated 31-12-1999 had requested the petitioner to reduce the rate of lease finance payable on a separate transaction. This, according to the respondent, was agreed by the petitioner by its letter dated 24-4-1997. At the outset it may be noticed that the petitioner could not have agreed on 24-4-1997 to a proposal made by the respondent in a letter dated 31-12-1999. Moreover, a reading of the letter of the petitioner dated 24-4-1997 does not indicate any acceptance by the petitioner of a reduction in the lease rentals. The averment in para 4 of the reply is sufficient to establish that the defence is not bona fide.

9. The case of the respondent in para 4 of the reply and which was reiterated in the submission before the Court is that the loan of Rs. 200 lakhs was extended to the respondent without any specification as to the payment of interest and as a measure of compensation for an exorbitantly high rate of interest charged by the petitioner on the lease finance availed by the respondent in a separate transaction. Therefore, according to the respondent no interest was payable at all on the inter-corporate deposit of Rs. 2 crores. The basic nature of the defence would be apparent

from the respondent's letter dated 31:12-1999 which is annexed, as Exh. 4 to the affidavit in reply. Before appreciating the contents of the said letter it would be necessary to set, out that the principal amount of the loan had been repaid in its entirety on 8-12-1998. But by the letter dated 31-12-1999 the respondent seeks to suggest that looking to the past business relationship between the parties the difference of the lease rents may be adjusted in repayment of the inter-corporate deposits availed of by the respondent from the petitioner. Now it is common ground between the learned counsel that-only one inter-corporate deposit that forms the subject-matter of the present proceeding was availed of. Since the admitted position before the Court is that the entire amount of principal had been repaid on 8-12-1998 and if, as is suggested by the respondent, nothing further remained to be due and payable, there was no occasion, for the respondent to state as late as on 31 -12-1999 that the differential in the lease rents should be adjusted in repayment bf the ICD which had been availed of from the petitioner. The fact that such ah adjustment could be carried out in respect of the ICD must necessarily mean that the adjustment Was in respect of the payment of the interest on the ICD of Rs. 2 crores since there was no other amount which was due and outstanding by the respondent against which the adjustment could have been made. Therefore, the letter of the respondent dated 31-12-1999 provides intrinsic evidence to the effect that the payment under the ICD placed on 25-11-1996 by the petitioner had still not been settled after the payment of the principal on 8-12-1998 until 31-12-1999. The facts and circumstances of the present case would also show that upon the repay ment of the principal on 8-12-1998, the petitioner addressed a debit note on 10-12-1998 claiming interest at the rate of 28 per cent per; annum.

There was no reply to the debit note. There was also no reply to the statutory notice. The defence that there was no specification as to the payment of interest or that the parties understood that no interest at all shall be payable is, therefore, clearly an afterthought.

10. The learned counsel appearing on behalf of the respondent submits that in view of the fact that the respondent has disputed the authenticity of the letter dated 25-11-1996, this Court should relegate the petitioner to the remedy of a suit and the petition for winding up should not be entertained. While there is no doubt about the general proposition of law that the question as to the validity or the authenticity of a document is one upon which, ordinarily, evidence is required to be adduced, this cannot be equated with a proposition that the winding up petition cannot entertained the moment a defence of authenticity of a document is taken up. Otherwise, it would merely suffice if a defence disputing the authenticity of a document is raised to defeat a just claim. In every case the company

court has to be satisfied that the defence is bona fide and is not just a ruse to defeat a valid claim. The present is not one of those cases where a bona fide defence has been raised. To countenance a defence that a company granted an ICD of Rs. 2 crores for two years in facts such as those in this case stretches credulity and would defeat all precepts of commercial morality in business transactions. The defence, it must be noted in the present case is not that a lower rate than what was charged was payable but that no interest at all was payable. The defence is not bona fide and is belied by the intrinsic material on the record; Once, the Court comes tb the conclusion that the defence of no interest being payable is not tenable of bona fide there is clearly a debt due arid payable on the basis' that interest on the inter-corporate loan of Rs. 2 crores, which was utilised for two years has not been paid by the respondent.

11. Accordingly, while directing the petitioner to file a suit for the recovery of its dues it would be appropriate to direct the respondent to deposit in the Court an amount of Rs. 40 lakhs which shall lie to the credit of the suit. Accordingly, the following conditional order is passed.

12. The respondent shall within a period of ten weeks from today deposit in this Court an amount of Rs. 40 lakhs. Upon deposit of the aforesaid amount the petitioner shall within a period of 8 weeks of the respondent furnishing intimation to the petitioner, of the deposit, file a suit for the recovery of its dues. The amount of deposit shall lie to the credit of the suit and it will be open to the parties to seek necessary directions from the appropriate Court in regard to the moneys which have been deposited.

13. The petition shall stand admitted upon the respondent failing to deposit the aforesaid amount within the stipulated period. In that event the petition to be advertised in Free Press Journal, Navshakti and Maharashtra Government Gazette. The petitioners to deposit a sum of Rs. 2000 with the Prothonotary & Senior Master within a period of four weeks from default towards publication charges.