Bombay High Court
Companies Act vs Companies Act on 17 October, 2012
Bench: Anoop V.Mohta
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dgm
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY PETITION NO. 198 OF 2012
Tata Advanced Materials Ltd.,
a Company incorporated under the
Companies Act, having its Registered Office
at 10, Jigani Industrial Area, Jigani,
Bangalore - 560 105. .... Petitioner
vs
Tooltech Global Engineering Pvt. Ltd.,
a company incorporated under the
Companies Act, 1956 and having its
registered office at 401, Beta 1, Giga Space,
Viman Nagar, Pune 411 014. .... Respondent
Mr. Pankaj Vijayan i/by M/s. Intra Legal for the petitioner.
Mr. Ajit Kulkarni i/by Mr. Hitesh Vyas for the respondent.
CORAM: ANOOP V. MOHTA, J.
DATE : October 17, 2012
ORAL JUDGMENT:
The Petitioner has invoked Sections 433 and 434 of the
Companies Act, 1956, as the Respondent/Company, inspite of service
of statutory demand notice, failed to make the due payment of
amount (Principal amount of Rs.60,40,220/- plus interest
Rs.39,34,564/-) total Rs.99,74,784/-.
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2 The Petitioner, at the instance of Respondent/Company, which
is basically the designer manufactured certain materials which are
required to be delivered to Hindustan Aeronautics Ltd. (HAL), the
manufacturer of Helicopter.
3 There is no serious dispute with regard to the service of
statutory demand notice which was replied by the
Respondent/company.
4 The contract is a written document for the supply of materials.
The terms and conditions are the basic factors, apart from the nature
of transaction which Court need to consider before deciding the claim
so raised as well as the denial so made by the Respondent/company.
5 Apart from the various terms and conditions, the relevant
clauses for the purposes of the present Petition, according to me, are
Clause no.3.0 (Prices) (Annexure I - Terms and Conditions) - pages 1
and 2, and Clause 5.2 (Amendment 198-C to Annexure I dated
1.2.2008.). Clause 5.2 reads as under:
"5.2 Tooltech shall release to TAML all payments
due to them (and provide all Reasonable
documentation as proof, as required), within 3 to 5
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working days on receipt of their (Tooltech's) payment
from HAL on a back to back basis. However, Tooltech
would effect the payment within 3 to 4 weeks from the
date of receipt of certified bills from TAML."
6 Statutory notice dated 25.01.2012 issued under Section 434 of
the Companies Act, 1956, referred in paragraph 4 as under :
"4 Our Client informs us that, Your Company had
executed an "Undertaking" dated July 29, 2009
wherein Your Company had un-disputedly admitted
liability to pay a sum of Rs. 81,94,426/- (Rupees Eighty
One Lakhs and Ninety Four Thousand and Four
Hundred Twenty Six only). Your Company had also
agreed that any default in paying the aforesaid sum,
would entitle Our Client to initiate action against Your
Company under Section 433 of the Companies Act,
1956."
The Petitioner, therefore, on above basis, as there was no payment
made, demanded the amount with interest within 21 days from the
receipt of the notice.
7 The Company denied and replied the same and referred the
undertaking dated 29.07.2009 and denied the liability also on the
ground that they made the payment of Rs. 25 lacs towards full and
final settlement against all claims.
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8 The relevant clause of undertaking as it goes to the root of the
rival submissions need to be considered for the purposes of
adjudicating the claim so raised in the present Petition. The relevant
extract of the Undertaking dated 29.07.2009 is as under :
"We hereby further acknowledge and declare that that
said amount of Rs.81,84,426 (subject to material cost
reconciliation) is due and outstanding which was not
discharged by us due to financial constraints and there
are no claims by us against Tata Advanced Materials
Limited against the said sum for any reason
whatsoever.
We further acknowledge and declare that without
prejudice to the claims of Tata Advanced Materials
Limited, which is unhindered and absolute, Tata
Advanced Materials Limited shall have the first and
absolute lien on all payments received from Hindustan
Aeronautics Limited, which we further acknowledge
and declare would be utilized to discharge the entire
dues of Tata Advanced Materials Limited, as stated
above and the said amounts received from Hindustan
Aeronautics Limited would not be used or
appropriated by us for any other purpose till the entire
dues of Tata Advanced Materials Limited is cleared."
9 It is clear from the averment so made in the Petition as well as in
the defence reply read with the document so referred that the
Petitioner were fully aware of the nature of transaction and their
entitlement of the amount for the goods/material, they supplied at the
instance of the Respondent/company.
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10 Clause 5.2, which is not in dispute makes the position very clear
that the Respondent/company should release to the Petitioner (TAML)
due payments within 3 to 5 working days of receipt of the payment
from HAL on back to back basis. It is specifically mentioned "
However, Tooltech would effect the payment within 3 to 4 weeks from
the date of receipt of certified bills from TAML (Petitioner).". The
parties, based upon this, proceeded. The undertaking dated
29.07.2009 further recognized and endorsed in the paragraph as
referred above, that "the Petitioner shall have the first and absolute
lien on all the payments received from HAL". It is further
acknowledged and declared that it would be utilized to discharge the
entire dues of the Petitioner (TAML). It is further stated that the
amount received from HAL would not be used or appropriated for any
other purpose till the entire dues of the Petitioner (TAML) is cleared,
there was no occasion for the Petitioner to agree for this undertaking,
but for them existing and agreed clause 5.2, as referred above. The
Petitioner fully aware of the clauses and the agreement between the
parties. However, to secure the amount they took this written
undertaking. In a way they secured the amount also.
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11 The next issue is, as per the undertaking itself, apart from the
defence submission, that the payment so mentioned is subject to
material cost reconciliation. In rejoinder, the Petitioner has
made averments that invoices and the demand so raised, only after
reconciliation. Considering the agreement itself and the documents so
placed on record, it is clear that reconciliation itself means meeting of
all the concerned, including HAL. There is nothing on record to show
and/or suggest that such meeting took place. The defence is
specifically raised that there is no such discussion and/or
reconciliation took place as mentioned in the undertaking.
12 The learned counsel appearing for the Petitioner has strongly
relied on an acknowledgement dated 8.3.2011 and submitted that this
amount, if is due and payable and there is no denial to the same, on
the basis of this itself, a winding up order should be passed. The
demand notices itself referred the undertaking in question, in my
view, it is difficult to read the documents and the clauses in isolation.
The Petitioner's case has foundation of the undertaking for all the
purposes. The Respondent in defence has not denied the liability but
contended it to be payable as per the undertaking and subject to
reconciliation.
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13 The contradictory & inconsistent defence raised about the full
and final settlement by the Respondent/company, in my view, is
without any basis and cannot be accepted. I am not deciding finally
that the amount is due or not and payable to the Petitioner by the
Company. The factor which is relevant at this stage, is not the liability
to make the payment, but it is subject to the reconciliation and the
receipt of payment from HAL. I am inclined to observe that therefore,
no case is made out by the Petitioner to pass an order of winding up as
prayed, on the basis of the statutory notices, undertaking and the
clauses of the agreement as referred above. The claim is premature.
14 The purpose and object of Sections/provisions in question is to
see and secure the amount due and payable on the date of demand
and/or at the time of filing of the Petition. Merely because in the
present case, the amount is due and payable as claimed and/or as
acknowledged that itself is not sufficient to pass winding up order, in
the present matter. The amount even if crystalized is subject to
certain agreed conditions, in that case the Court needs to consider the
situation before exercising the discretion while passing the winding up
order.
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15 The learned counsel appearing for the Petitioner, referring to
Clauses 3 and 5.2, submitted that the Respondent/company in fact is
liable to make the payment within 3 to 4 weeks from the date of
receipt of certified bills from the Petitioner. I am not inclined to
accept this submission for the simple reason that the word "However"
which is an adjacent, cannot be read without referring to the earlier
sentence and/or sentences. The payment on the basis of concept of
back to back basis, if accepted, then, it is only after that receipt of the
payment by the Respondent/company from HAL, the Company is
liable to make the payment, after receipt of the certified bills from the
Petitioner or subject to the documentation as required. The
interpretation of words "subject to material cost and reconciliation"
itself is a matter which cannot be read in isolation without reading the
other provisions of the contract. Therefore, in all, if there is serious
question of even interpretation of the contract between the parties
and unless that is adjudicated, I am not inclined to accept the case of
the Petitioner to grant the prayers so made in the Petition, specifically
when there is nothing on record to show that the
Respondent/company, pursuance to this agreement/contract, has
received the payment and they are deliberately avoiding to make the
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payment inspite of the undertaking and the bond so given. The
Petitioner failed to satisfy that the Respondent company deliberately
and intentionally neglecting to pay the agreed and due amount.
16 The Apex Court recently in IBA Health (India) Private Limited
vs. Info-Drive Systems SDN BHD 1, while dealing with the concept of
bonafide dispute, referring to winding up Petition under the
Companies Act, observed as under :
"23 The principles laid down in the
abovementioned cases indicate that if the debt is bona
fide disputed, there cannot be `neglect to pay' within
the meaning of Section 433 (1)(a) of the Companies
Act, 1956. If there is no neglect, the deeming
provision does not come into play and the winding up
on the ground that the company is unable to pay its
debts is not substantiated and non-payment of the
amount of such a bona fide disputed debt cannot be
termed as "neglect to pay" so as to incur the liability
under Section 433(e) read with Section 434 (1)(a) of
the Companies Act, 1956."
The Apex Court has elaborated that the amount due and payable
should be clear and outstanding on the date of the demand. If any
amount, though crystalized, liable to be paid subject to contingencies
and/or certain conditions, that just cannot be stated to be the amount
due and payable by the company.
1 (2010) 10 SCC 553
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17 Therefore, taking overall view of the matter and without
expressing anything so far as the amount so claimed, as the same
itself cannot be the basis for granting relief so prayed at this stage of
the proceeding. Let the amount be received by the company and be
payable after settling the account in accordance with the terms and
conditions. All points are kept open. The Company Petition is
disposed off, with liberty. There shall be no order as to costs.
(ANOOP V. MOHTA, J.)
