M/S Shyam Dri Power Ltd vs Bhav Shakti Steel Mines
2012 Latest Caselaw 4709 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                          Judgment reserved on :07.08.2012
                           Judgment delivered on:09.08.2012

+     CO.PET. 475/2009

M/S SHYAM DRI POWER LTD.                                ..... Petitioner
                 Through              Mr. Upamanyu Hazarika, Sr.
                                      Advocate with Mr. Raka Phookan
                                      and Mr. Paul Ray Paske,
                                      Advocates.
                  versus

BHAV SHAKTI STEEL MINES
PRIVATE LIMITED                                     ..... Respondent
                  Through             Mr. Virender Ganda, Sr.
                                      Advocate with Mr. Ashish
                                      Middha and Mr. S.K. Giri,
                                      Advocates.
      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J.

1 M/s Shyam Dri Power Mines Limited (hereinafter referred to as

the 'petitioner') seeks winding up of Bhav Shakti Steel Mines Pvt.

Limited (hereinafter referred to as the 'respondent company') under

Section 433 read with Section 434 of the Companies Act, 1956.

2 Submission is that the respondent company had placed various

purchase orders between the period from 17.04.2007 to 10.06.2007 upon

the petitioner for the supply of 386.140 metric tons of sponge iron lumps

at Sinnar, Nasik; the same were accordingly supplied by the petitioner to

the respondent company from time to time. The total value of the

aforenoted goods was Rs.62,22,401/-. The entire quantity of the

aforenoted goods was supplied by the petitioner to the respondent which

were received by the respondent pursuant to which a Form 'C' dated

07.03.2009 was also issued by the Central Sales Tax Department,

Government of Maharashtra.

3 Submission of the petitioner company is that it had raised 25

invoices upon the respondent company. Payment of Rs.22,23,647/- was

alone made by the respondent to the petitioner. Goods supplied by the

petitioner to the respondent were valued at Rs.62,22,401/-. The balance

sum of Rs.39,98,754/- was still due and payable by the respondent.

4 Inspite of the repeated visits and reminders to the respondent

company, the said payment had not been liquidated.

5 On 07.09.2009, a legal notice had been sent by the petitioner to

the respondent which was received by the respondent but no reply was

filed and the amount was also not liquidated. Hence the present petition

was filed.

6 Reply has been filed by the respondent. Submission is that this

petition is not maintainable as the orders have been placed upon the

petitioner by the respondent through the Commission Agent Mr. Pramod

Avasthi; the goods which were to be supplied by the petitioner to the

respondent were to contain an iron ore content of 77.80% FE which

after melting contained 87% iron. The goods supplied by the petitioner

however contained only 50% FE which was like a waste to the

respondent and the same could not be used. The respondent had

immediately informed the petitioner as also the Commission Agent

about this and the petitioner had also undertaken to lift the goods but the

goods have not been lifted up to date; goods are lying at the factory

premises of the respondent; they are a waste material for him; Form 'C'

issued by the respondent on 17.03.2009 was for the reason that the

petitioner had not taken back the defective goods; the petitioner had

assured the respondent that the defective goods will be removed but

inspite of this assurance, the goods were not lifted; Form 'C' was issued

only because the goods were lying in the factory premises of the

respondent; the petitioner is seeking to take benefit of this Form 'C'; he

has wrongly relied upon this document to base the present petition.

7 Along with the reply the affidavit of the Commission Agent has

also been filed. There are in fact two affidavits filed by the said

Commission Agent. The first affidavit is dated 30.10.2010 and the

second affidavit is dated 21.09.2011; submission being that in this

affidavit also, the Commission Agent has disclosed that initially the

goods supplied by the petitioner contained the iron ore content of 80%

but thereafter the sponge iron contained only 50% FE; the respondent

had informed the Commission Agent who in turn had informed the

petitioner who had agreed to lift the aforenoted defective goods but the

same have not taken back; the affidavit further discloses that Form 'C'

had been issued after two years only at the assurance of the petitioner

that he would lift this defective material.

8 Rejoinder has also been filed to the reply of the respondent. It is

not in dispute that the Commission Agent was the commissioning agent

between the petitioner and the respondent; it has been reiterated that

goods were supplied by the petitioner to the respondent which fact has

been admitted; further submission being that the affidavit of the

Commission Agent is a mere collusive device to harass the petitioner.

9     Arguments have been addressed at length.

 10      On behalf of the petitioner it has been submitted that the liability

of the petitioner is clear and unequivocal; admittedly the goods have

been supplied; admittedly Form 'C' dated 17.03.2009 has been issued

by the Central Repository, Sales Tax Department, Government of

Maharashtra which clearly states that the petitioner had supplied goods

to the respondent worth Rs.62,22,401/-. Reliance has been placed upon

(1997) 2 SCC 591 Phool Chand Gupta Vs. State of A.P. as also (2000) 1

SCC 688 Shree Digvijay Cement Co. Ltd. and Another Vs. State of

Rajasthan and others to support a submission that the issuance of 'C'

form is a proof of the sale of the goods having being effected by the

petitioner to the respondent and the goods have been accepted without a

demur. Reliance has also been placed upon 2008 (105) DRJ 236

Paharpur 3 P (A division of M/s Paharpur Cooling Towers Limited) Vs.

Dalmia Consumer Care Private Limited to support the submission that

the defence set up by the respondent at this stage which was at the stage

of filing of the reply to the winding up petition which defence is that the

goods are defective and there admittedly being no written

communication of this defect having been intimated by the respondent

to the petitioner is clearly a moonshine and sham defence; it has been set

up only to defeat the winding up petition which has been filed by the

petitioner.

11 Arguments have been countered. At the outset, learned counsel

for the respondent has pointed that the affidavit filed by the petitioner in

support of his petition is defective; there are certain blanks which have

not been filled in. Reliance has been placed upon a judgment of the

Apex Court reported in W.P.(C) No. 39/2006 Amar Singh Vs. Union of

India delivered on 11.05.2011 to support his submission that a

perfunctory and slipshod affidavit which is not consistent either with the

provisions of Order XIX Rule 3 of the Code of Civil Procedure or with

Order XI Rules 5 & 13 of the Supreme Court Rules should not be

entertained by the Court.

12 This objection of the respondent does not have any force. The

purported blanks are filled in the petition which is a part of the Court

record. That apart, the judgment relied upon by the petitioner related to

defects in the two affidavits where the said affidavits were clearly in

contradiction to one another. As noted supra, there are no blanks in the

affidavit which is a part of the record of this Court.

13 On merits, the learned counsel for the respondent submits that this

is a civil liability which has arisen as there are disputed questions of fact

and law which cannot be entertained in a winding up petition. He has

placed reliance upon a judgment of this Court reported as 2007 (3)

ARBLR 402 Delhi Taipack Limited and Others Vs. Ram Kishore Nagar

Mal; submission being the 'C' form heavily relied upon by the petitioner

although admittedly has been issued by the company but can at best be

treated only as an acknowledgment of the goods received under the

contract of the supply of goods and the price fixed to be paid for them;

submission of the respondent being that the goods were defective and

coupled with the fact that the Commission Agent has filed his affidavit

supporting the stand of the respondent that the defective goods had been

promised to be lifted by the petitioner clearly shows that a dispute has

arisen on facts which cannot be answered in this petition.

14    Record has been perused.

15    The transaction between the parties is admitted. Admittedly goods

had been supplied by the petitioner to the respondent. It has also come

on record that the goods supplied by the petitioner to the respondent

were valued at Rs.62,22,401/-. The Central Sales Tax Form (Form 'C')

issued by the State of Maharashtra clearly shows that the petitioner had

raised invoices upon the respondent for the aforenoted sum of Rs.

62,22,401/-; this is an admitted document. The law is well settled. A

'C' Form is a proof of sale made by one party to another; it is an

acknowledgement by the respondent that the goods in the value of

Rs.62,22,401 has been received by the respondent from the petitioner.

The respondent has in fact admitted that 'C' Form had been issued on

17.03.2009 as the goods up to the value of the aforenoted figure were

supplied and were lying in his factory premises on that date. The

defence set up by the respondent is that these goods were defective and

the same had been intimated to the petitioner as also to the Commission

Agent; the petitioner had agreed to lift these defective articles from his

factory premises pursuant to which the 'C' Form had been issued.

16 This defence of the respondent was taken by him for the first time

after the winding up petition had been filed. Admittedly there is no

communication on record to show that the defect which the respondent

had allegedly noticed in the goods supplied by the petitioner had ever

been communicated to the petitioner. The reply filed to this petition

clearly and categorically states that this defect had been notified both to

the petitioner as also to the Commission Agent but no such

communication to the petitioner is on record.

17 There is no doubt that the affidavit of the Commission Agent has

been placed on record. In fact there are two affidavits filed by the said

Commission Agent. The first affidavit is dated 30.10.2010. In this

affidavit it has been stated that Mr. Pramod Avasthi was acting as a

commission agent for both the parties and the petitioner had initially

supplied material till April, 2008 as per requirement containing an iron

ore content of 80% but thereafter the material supplied contained a 50%

FE which was a waste; assurance was given by the petitioner that he

would lift his defective material and that is why 'C' Form came to be

issued two years later. In this affidavit, it has been stated that the

material supplied by the petitioner was till September, 2008; as per the

respondent it was a typographical error and in view of an application

filed by him, a fresh affidavit of the Commission Agent was permitted

to be taken on record. This second affidavit is dated 21.09.2011.

18 Learned counsel for the petitioner points out that the Commission

Agent was only acting as an agent between the parties for a transaction

which had last culminated in July, 2007; his knowledge about the defect

in the goods supplied by the petitioner to the respondent and the promise

of the petitioner to lift these goods is based on un-known information as

admittedly he had no role to play between two parties after the

transaction had been completed between them in July, 2007. The

additional fact incorporated in the second affidavit has also been pointed

out by the learned counsel for the petitioner which is to the effect that

the petitioner had given an assurance to lift the defective goods in

March, 2009 which date did not find mention in the first affidavit dated

30.10.2010; submission being that the affidavit of the Commission

Agent is a collusive arrangement between the respondent and the

Commission Agent; this submission also finds mention in the rejoinder

affidavit filed by the petitioner.

19 It is also relevant to note that in the first affidavit the Commission

Agent has not mentioned any date when the petitioner would lift the so

called defective material but in the later affidavit, he has made a

substantial improvement that the petitioner had agreed to lift the

defective material in March, 2009 and that is how the 'C' Form came to

be issued on 17.03.2009. The defence of the respondent largely based on

these affidavits clearly appears to be suspect.

20 The reply of the respondent also clearly and categorically states

that he had sent a communication to the petitioner about the defect in the

goods; no such communication is on record; this defect relates to a

transaction which had taken place in July, 2007 even then the

respondent issued 'C' Form on 17.03.2009 i.e. two years later without a

demur.

21 No mention of the defect in the goods supplied by the petitioner

to the respondent had ever been pointed out to the petitioner right up to

November, 2010 i.e. when the reply was filed by the respondent; on

08.09.2010, the Court had recorded this oral submission of the

respondent but admittedly in this entire intervening period from July,

2007, the so called defects in the goods and the nature of such defects

were never communicated to the petitioner; the defence of the

respondent company does not appear to be either bonafide or probable.

It is sham and moonshine; it appears to be illusory.

22 In Joti Prasad Bala Prasad Vs. ACT Developers Pvt. Ltd. (1990)

68 CC 601 (Delhi) in similar circumstance where the defence sought to

be set up by the respondent company that the goods supplied were

defective and not up to the mark; the Court had noted that this defence

clearly appears to be an afterthought as the respondent has failed to

prove that these defects were ever communicated to the petitioner; the

so called defence was accordingly rejected as it was only to ward off the

winding up petition.

23 Considering all the aforenoted aspects, this Court is satisfied that

the respondent owes a debt to the petitioner; despite service of the

statutory notice by the petitioner to the respondent, it has failed to

liquidate the demand of the petitioner.

24 Petition is accordingly admitted. However, the order for

publication of the citation is deferred for a period of two weeks; the

respondent is granted two weeks time to make the payment of

Rs.39,98,754 along with interest @ 12% per annum (w.e.f. 20.12.2009

till payment) to the petitioner failing which citations of this petition shall

be published in the 'Statesman' (English edition) and 'Jansatta' (Hindi

edition); publication shall also be effected in the official gazette. The

petitioner will take effective steps in this regard after a period of two

weeks from today.

25    Petition disposed of.

                                          INDERMEET KAUR, J
AUGUST 09, 2012
A