Travels & Rentals vs Network Limited
1998 Latest Caselaw 863 Del

JUDGMENT

Usha Mehra, J.

1. Winding up of M/s Network Limited has been sought by M/s Travels and Rentals, inter alia, on the ground that the respondent company is indebted to the petitioner for a sum of Rs. 1,13,289.16 paise being the cost of the air tickets sold and delivered to the respondent by the petitioner. Beside this amount the petitioner has also claimed interest at the rate of 24% p.a. from 1st January,1997.

2. Briefly stated the facts of the case are that the respondent company appointed the petitioner as its official travel agency vide letter dated 22nd March, 1995. Utilisation of the petitioner as travel agency was as per the terms and conditions contained in the said letter. Two accounts were to be maintained by the petitioner; one in the name of M/s Network Limited and another in the name of M/s Network Medical. This was done at the behest of the respondent company. According to petitioner air-tickets were purchased by respondent of various air-lines between May,1995 to November, 1995. Bills were accordingly raised on diverse dates in respect of air-tickets so purchased by the respondent. Respondent Company had been making payments from time to time against various bills raised against M/s Network Limited as well as its unit M/s Network Medical. Adjustment of those payments were given. Some of the bills still remain to be paid. The payment of these bills till date have not been made by the company thereby leaving balance of Rs. 1,13,289.10 paise. When this debt was not cleared by the respondent company and committed a default, the petitioner served statutory notice dated 2nd April, 1996 on the Company. This was replied by the company. Respondent denied its liability. Company, however, admitted that a sum of Rs. 75,143/- was due and payable against outstanding bills of M/s Network Medical. It assured that the said amount would be paid to the petitioner. Papers had already been sent for approval to the Head Office. With regard to other outstanding bills of M/s Network Limited, it took the stand that the amount of Rs. 19,082/- had been paid in full and final settlement. Petitioner denied these assertions of the Company. Therefore, when the outstanding dues were not paid the present petition was preferred.

3. The respondent company in its reply has taken various defenses based on legal submissions as well as on merits. According to respondent petition is not maintainable as it is based on running account. Secondly M/s Network Medical and M/s Network Limited are two distinct entities. Claim against Network Medical is not maintainable as the same is not a company registered under Companies Act. Once petitioner admits that he maintained two separate accounts of these two separate entities and the statutory notice having been served only on M/s Network Limited no claim against M/s Network Medical can be preferred in these proceedings. More- over, the payment made by the respondent company have not been correctly reflected in the accounts of the petitioner. There exist bonafide dispute with regard to the amounts due and payable. Finally statutory notice having not been served at the registered office of the company, hence the petition is not maintainable.

4. Heard Mr. Deepak Dhingra, counsel for petitioner and Mr. Rajiv Nayyar, Senior Advocate, for the respondeni. At the out set it must be stated that the arguments of the respondent regarding the maintainability of the petition on account of alleged running account is without substance. Claim of the petitioner is in fact not based on running account. Petitioner raised bills for the goods supplied. It is the outstanding amount against those bills that petition has been preferred. Moreover, the Company admitted its liability regarding the outstanding amount of M/s Network Medical vide its letter dated 14th May,1996. Company not only admitted tlie supply of the material but also the amount due to the tune of Rs. 75,143/-, In the said letter it was expressed by the Company that the amount would be paid to petitioner as soon as the approval received from head office. In similar circumstances the Division Bench of this Court in Company Appeal No. 32/93 in the case of Rishi Pal Gupta v. S.J.Knitting and Finishing Mills (P) Ltd., held that when the company accepts the liability and acknowledges the dues then even if it is a running account the petition would be maintainable. In the present case company having admitted its liability to a sum of Rs/75,143/- due and payable cannot now turn around and deny its liability. It is nothing but malafide. Admittedly, this amount has not been paid. Therefore, it does not lie in the mouth of respondent to say that petition of the petitioner is based on running account or not maintainable. So far as the amount due against M/s Network Limited according to respondent the amount of Rs. 19,082/- was paid on 26th December, l995 which was in full and final settlement of the outstanding amount of the petitioner. The amount due as per the account of the petitioner against the company was Rs. 25,734.16 paise. This amount the respondent has not paid till date. However, the company did pay a sum of Rs. 19,082/- but this amount was towards three bills as mentioned in receipt No. 410. A perusal of this receipt shows that this amount was paid against bills number 3376, 3771 and 3898. Amount due against these three bills was to the tune of Rs. 19,672/- whereas the parties settled the amount against these three bills for Rs. 19,082/-in full and final settlement. Adjustment of this has already been given by the petitioner in his account. Therefore, the defense set up by the respondent that it has already paid full amount appears to be malafide, rather it goes to show that respondent has no intention to pay the amount due to petitioner regarding other bills the details of which was given in the notices as well as in the petition. Hence I find no merit in this submission of Mr. Rajiv Nayyar.

5. Now turning to the question of separate entity of M/s Network Limited and and M/s Network Medical. I find no force in the submission of Mr. Nayyar. It has never been the case of respondent that the M/s Network Medical is a company in its own right or a distinct entity. Rather petitioner's plea throughout had been that petitioner was appointed as travel agency by M/s Network Limited. That Network Medical is a unit of M/s Network Limited. Bills for the same were raised on M/s Network Limited though two separate accounts were kept by the petitioner i.e. of the company as well as of its unit. But that would not mean that these are two independent companies. Merely maintaining two accounts of the same company under different heads or of different units will not make it a distinct entity. Even in the reply filed in this Court, the respondent nowhere stated that M/s Network Medical is a separate entity or that it is not a unit or part of M/s Network Limited. Rather from the documents placed on record show that Company had been dealing on behalf of M/s Network Medical as well. Therefore, arguments of Mr. Rajiv Nayyar does not cut any ice. It is not based on pleadings nor any document has been produced on record to show that M/s Network Limited and Network Medical are two separate entities.

6. I also find no merits in the arguments of Mr. Rajiv Nayyar that the petitioner has not reflected discount in the statement filed with the petition. After some arguments Mr. Nayyar gave it up because he realised that in the statement of account filed with the petition discount had been given to the respondent. It has in fact been reflected. Payments made by respondent have been reflected in the accounts maintained by the petitioner. Mr. Rajiv Nayyar has not been able to show from record as to which of the amount paid by the respondent has not been reflected in the account. For this reason I find prima facie no merits in the submissions of the respondent.

7. Lastly Mr. Rajiv Nayyar's argument that the statutory notice was not served at the registered office is not supported from the record. Perusal of the notice dated 2nd April,1996 clearly show that it was sent to M/s Network Limited at its registered office at New Delhi. There is nothing on the record to show that it was served at Calcutta. D-10, Commercial Centre, Purview Marg, Vasant Vihar, New Delhi-110057 is admittedly the registered office of the respondent company. The notice was addressed at that address, therefore, there was no question of its being served at Calcutta. Respondent replied this notice vide letter dated 14th May,1996 in which it was nowhere indicated that notice was received at Calcutta. Hence on this count also I find no merits in the submission of the respondent.

8. Contention of Mr. Rajiv Nayyar that there is a bonafide dispute with regard to the amount due, I am afraid this argument is not born out from the record. On the contrary, as already pointed out above, respondent company has not been able to raise any bonafide dispute. The defense raised prima facie appears to be not bonafide. Respondent company having not denied its liability of the sum of

Rs. 25,734.16 paise and the defense of having paid Rs. 19,082/- in full and final settlement having been rejected being nullified coupled with the fact that company acknowledged the liability of M/s Network Medical to the tune of Rs. 75,143/- the pleas raised by Company appear to be malafide. No explanation has been given why these amounts after having been admitted not paid. I am prima facie of the view that defense raised by the respondent company is not bonafide. These have been raised with the intention to avoid its liability of the amounts payable by the respondent company.

9. For the reasons stated above the petition is admitted.

10. Citation is ordered to be published in the newspaper "Statesman" (English edition), "Veer Arjun" (Hindi edition) as well as in Delhi Gazette for 12th March, 1999.

11. That Official Liquidator attached to this Court is appointed as the Provisional Liquidator of the Company. He is directed to lake into custody and possession the assets, stocks and books of accounts of the respondent company immediately and prepare inventory of the same.