Delhi High Court
Rishi Pal Gupta vs S.J. Knitting And Finishing Mills ... on 2 November, 1993
Author: S U Mehra
Bench: U Mehra
JUDGMENT
Smt. Usha Mehra, J.
1. Shri Rishi Pal Gupta has sought for the winding up of S. J. Knitting and Finishing Mills Pvt. Ltd., inter alia, on the grounds that the respondent-company was supplied various items of Chemicals both at Delhi and Faridabad on regular basis on credit. The running account was maintained in respect of the supplies made to the respondent. The payments received from the respondent were given due credit in the books of account of the petitioner. It has been further averred that on the close of the financial year, the copy of the account used to be sent to the respondent and as per the books of account a sum of Rs. 7,19,546.12 is due and outstanding against the respondents. The petitioner has also filed a suit in the High Court of Delhi against the respondent-company for a larger amount which is still pending. When the respondent did not make the payment of the outstanding amount statutory notice was issued. A complaint was also lodged with the Registrar of Companies, who in turn issued notice to the respondent-company and the respondent-company submitted the reply acknowledging the liability towards the petitioner to the tune of Rs. 6,89,870.76. This amount is due and payable by the respondent and since the respondent has failed to make payment, hence this petition.
2. Notice of this petition was issued to the respondent. In spite of service, the respondent-company did not put in appearance, the same was proceeded ex parte, vide order dated March 12, 1993. The petitioner was allowed to lead ex parte evidence. The petitioner filed evidence by way of affidavit and also examined Shri R. C. Meena, senior technical assistant of the office of Registrar of Companies, in support of his case.
3. In his evidence by way of affidavit Sh. Rishi Pal Gupta, petitioner, has reiterated what has been stated in the petition. So far as the official of the Registrar of Companies is concerned he proved on record the reply filed by Shri Subhash Sahni, director of the respondent company. Photocopy of the same has been exhibited as exhibit X-I. The petitioner is in fact relying on this document and states that an amount of Rs. 6,89,870.76 is due. It is the petitioner's own admission that this petition is based on the running account maintained between the parties. That every year the accounts were sent to the respondent. The respondent-company had been making the payment and these were also adjusted against the running account. Section 34 of the Evidence Act stipulates that mere entries in the books of account will not be sufficient to fix liability on any person and that each entry in the books of account shall have to be proved. In this regard, reliance can be placed on the decision of the Supreme Court in the case of Chandradhar Goswami v. Gauhati Bank Ltd. [1967] 37 Comp Case 108 (SC). Admittedly, the respondent has not put in appearance nor has raised any dispute nor any reply has been filed. But, as per the petitioner's own admission, since the basis of the filing of this petition is running account, therefore, such a petition, to my mind, cannot be the subject-matter of winding up petition. Nor can there be a presumption of inability to pay. The appropriate remedy is not a winding up petition but a suit. Counsel for the petitioner contended that a similar view was taken by this court in C.P. No. 191 of 1987, decided on February 8, 1988, against which appeal was preferred and the Division Bench set aside that order in Company Appeal No. 10 of 1988, decided on January 13, 1992. I have perused the decision of the Division Bench, I am afraid the point at issue before the Division Bench was not the maintainability of the petition on the ground of the running account. However, the present petition is based on the running account which was not the subject-matter before the Division Bench. From the perusal of the judgment of the Division Bench, it can be inferred that this appeal arose against the decision of this court in O.P. No. 191 of 1987. Furthermore, the Supreme Court, in the abovementioned case of Chandradhar Goswami [1967] 37 Comp Case 108 (SC), has held in no uncertain words that each entry has to be proved in the books of account and this cannot be done in a summary procedure under section 433 of the Companies Act. This can be gone into in a civil suit.
4. For these reasons the winding up petition is not maintainable. The remedy available with the petitioner is to file a civil suit, if within time.
