The Press Syndicate Ltd. vs Goga Foods Ltd.
2004 Latest Caselaw 1151 Del

JUDGMENT

A.K. Sikri, J.

1. This petition is filed under Section 433 (e) and (f) as well as Section 434 readwith Section 439 (i) and (h) of the Companies Act, 1956 (for short `the Act') seeking winding up of the respondent company. The allegation is that the respondent company owes a sum of Rs. 16,31,819/- and inspite of statutory notice dated 21st June, 1998 sent through petitioner's lawyer under Sections 433 and 434 of the Act, the said amount is not paid and, therefore, the petitioner wants this court to hold that the respondent company is unable to pay the debts and wants that it should be wound up.

2.The circumstances under which the aforesaid amount became payable by the respondent company to the petitioner are mentioned in the petition. Stated briefly, it is averred that the respondent company functions under the name and style of JVG Group of Companies (hereinafter referred to as `the JVG') consisting of the following, among others, companies:

(1) M/s JVG Finance Limited

(A company incorporated under the Companies Act) having its Registered Office at B-22, Ansal Chamber 1, Bhikaji Cama Place, New Delhi-110066

(2) M/s JVG Departmental Stores Ltd.

(A company incorporated under the Companies Act) having its Registered Office at B-402, Ansal Chamber 1, Bhikaji Cama Place, New Delhi-110066

(3) M/s Goga foods Limited.

(A company incorporated under the Companies Act) having its Registered Office at 1207, Hemkunt, Rajendra Place, New Delhi-110008.

3. The petitioner has further alleged that the Vice President of the respondent company, Sh. Raja for and on behalf of the JVG approached the petitioner for running services as per the terms of Agreement dated 20th December, 1996 for carrying out jobs of advertising i.e. handling publicity, promotion of their products, services and for acting as their advertising consultants during the period from January, 1997 to June, 1997. In para 8 of this Agreement it was stated: '' Para 8: It is extremely important that all publishers' and suppliers' bills are paid promptly by us on your behalf and it is therefore fundamental to this agreement between us that our bills are paid by you according to the following schedules:

a. Press advertising: Within 45 days from the date of release of advertisement in Press.

b. Radio/TV 45 days from the date of broadcast/telecast.

c. Printing Within 45 days from the date of receipt of the bill.

d. Production/Artworks 15 days from date of bill.''

4. The terms of this Agreement, according to the petitioner, were agreed to by the respondent company vide their fax message dated 14th January, 1997. It is stated that the petitioner was entitled to interest at the rate of 21 per cent per annum in case the amount was not paid by the respondent company within fifteen days and forty five days as per the terms and conditions incorporated in the bill. The petitioner rendered services to the respondent company from time to time and the total bills raised for these services were in the sum of Rs. 26,31,819/- as per the statement of account. However, the respondent company paid a sum of Rs. 10 lacs only vide two cheques of Rs. 5 lacs each leaving a balance of Rs. 16,31,819/-. Various letters were written to he respondent company for making the aforesaid payment. Thereafter statutory notice dated 21st June, 1998 under Sections 433 and 434 was also sent. It was, however, received back on 23rd June, 1998 with the postal endorsement that `addressee left without address, returned to sender'. According to the petitioner, it should be treated that the respondent company is duly served. As the amount was not paid, present petition was filed.

5. In the reply filed by the respondent company, it has denied any privity of contract between the petitioner and the respondent company. It is stated that the respondent company, namely, M/s Goga Foods Limited is not a part of the JVG as alleged. The Agreement dated 20th December, 1996 was with the JVG and not with the respondent company. It is alleged that the respondent company is a separate independent company/entity and engaged in production of food products, mainly milk and the services of the JVG were utilized only for the purposes of marketing the products of the respondent company. According to the respondent company, it is producing milk products and was selling to the JVG and the JVG in turn was marketing the same under the brand name `Goga'. Since for marketing of these products, advertising was required, the JVG entered into the Agreement dated 20th December, 1996 with the petitioner. This Agreement was thus between the JVG and the petitioner with which the respondent company was not concerned at all. It is further submitted that a sum of Rs. 10 lacs was paid by the respondent company to the petitioner at the request of the JVG as the respondent company owed some amount to the JVG and mere payment of these two cheques does not create any contractual or legal relationship between the petitioner and the respondent company.

6. It is not in dispute that the Agreement dated 20th December, 1996 is between the petitioner and the JVG. Thus the petitioner cannot dispute that the services were rendered by the petitioner to the JVG on the basis of terms of appointment stated in letter/Agreement dated 20th December, 1996. The petitioner endeavor to fasten the respondent company with liability on the ground that ground that the respondent company is part of the JVG. The respondent company denies this. This is the pivotal issue on which hangs the fate of the petitioner's case. That would, therefore, be first aspect which needs to be determined.

7. The petitioner has not been able to place any documents on record which would support its allegation that the respondent company is part of the JVG group. On the other hand, the respondent company has specifically denied this allegation. Order was passed directing the respondent company to file an affidavit to this effect and in compliance thereof, an affidavit of Mr. D.K. Aggarwal , Director of the respondent company is filed wherein following averments are affirmed on oath:

''Para 2: That there are also two other Directors of the Respondent Company, namely, Dr. Arvind Kumar, s/o Sh. Trilok Chand Tyagi, r/o. L-667, Shastri Nagar, Meerut and A.C. Patel, s/o Shri GC Patel, r/o 94-E, Phase 3, Mayur Vihar, New Delhi.

Para 3: That the aforementioned Directors are major shareholders in the respondent company.

Para 4: That the Directors of the Respondent Company were never Directors or shareholders of the JVG Group of Companies at any point of time.''

8. The learned counsel for the petitioner drew my attention to certain bills raised by the petitioner mentioning the name of `Goga Foods Limited'. He also referred to the payment of Rs. 10 lacs to the petitioner for which two cheques were given by the respondent company. From these two circumstances, it was sought to establish that the respondent company is a part of the JVG. However, in my opinion, the petitioner cannot make any capital out of this. These circumstances are explained satisfactorily by the respondent company. Thee is another important fact that would nullify the claim of the petitioner in this behalf. It is a matter of common knowledge that orders for winding up of the JVG have been passed by this court. In one of the orders this court mentioned as to which are the companies belonging to the JVG.

9. The name of the respondent company does not figure therein. When all the companies of the JVG are in liquidation with specific orders of this court, that too on a petition filed by the Reserve Bank of India, not including the name of the respondent company, it would be a clinching evidence to show that the respondent company is not a part of the JVG. On the direction of this court, the respondent company had placed on record its arrangement with the JVG as per which the respondent company had agreed to supply milk packed in pouches to the JVG. This is contained in letter dated 14th May, 1996 written by the respondent company to the JVG Departmental Stores Limited. It stated that the respondent company was accepting the proposal of JVG Departmental Stores Limited for supply of milk packed in pouches under various categories as detailed in the said letter. It further stipulates that the respondent company will arrange to provide standardization, pasteurization and packing of three varieties of milk as per specifications (fat and SNF content) provided by JVG Departmental Stores Limited. Apart from stipulating terms defining scope of work/services, price, specification of polyfilm, time or order of quantity, time of supply, transport, quality test, as far as `marketing' is concerned, it was stipulated as under:

"Responsibility of JVG Departmental Stores Ltd. The marketing and publicity expenses would be borne by JVG Departmental Stores."

10. The respondent company has also produced on record copy of the ledger account of JVG Departmental Stores Ltd. maintained with the respondent company and also copy of certain bills raised by the respondent company on the JVG to show the genuineness of the arrangement between the JVG and the respondent company.

11. A reading of this Agreement makes it clear that the respondent company is a different entity and not a part of the JVG. It further lends credence to the averment of the respondent company that it had entered into an arrangement for supply of milk in packed pouches to the JVG and it was the responsibility of the JVG to market the same and it was their outlook to pay for publicity expenses as well. Thus if for the purpose of marketing, the JVG wanted advertising of the product and engaged the services of the petitioner for advertising of these products, the payment has to be made by the JVG and not by the respondent company. The respondent company, therefore, would not be having any privity of contract with the petitioner as rightly contended by learned counsel for the respondent company. It appears that since the JVG group companies have gone into liquidation and realization of the amount due to the petitioner from the JVG is in jeopardy, the petitioner filed this petition against the respondent company with sole motive to recover the dues which cannot be done by filing such a winding up petition.

12. The petition is accordingly dismissed without any order as to costs.