M/S Gulati Agencies(P) Ltd vs M/S Hallex Applied Power Pvt Ltd
2012 Latest Caselaw 5765 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                           Date of Judgment on :26.09.2012
+     CO.PET. 131/2010

      M/S GULATI AGENCIES(P) LTD                           ..... Petitioner

                            Through    Mr. Amit Sachdeva, Adv.

                   versus

      M/S HALLEX APPLIED POWER PVT.LTD.                  ..... Respondent

                            Through    Mr. Rajender Sahu, Adv.

CORAM:
    HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J.(Oral)

1     M/s Gulati Agencies Private Limited (hereinafter referred to as

the 'petitioner') seeks winding up of Hallex Applied Power Private

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

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

2 The respondent had placed purchased orders upon the petitioner

for the supply of Mobil Delvac Super 1300 15W40 (hereinafter referred

to as the 'goods') which were duly supplied and consumed. Submission

of the petitioner is that the respondent has admitted his liability in the

correspondences exchanged between the parties and also by issuance of

a cheque dated 30.03.2009 for Rs.15,72,024/- which was to discharge

the then due and existing liability. There is no dispute to this fact that a

cheque of Rs.15,72,024/- dated 30.03.2009 had been issued by the

respondent to the petitioner which stood dishonoured on 17.07.2009.

This was in fact a second dishonor; the cheque was dishonoured for the

first time on 15.07.2009 (at that time the validity of the cheque was six

months). To support this argument, the learned counsel for the petitioner

further points out that on 19.09.2009, a sum of Rs.1,25,000/- had been

repaid by the respondent and deducting the sum of Rs.1,25,000/- from

the amount of Rs.15,72,024/- (the amount for which the cheque dated

30.03.2009 had been issued), the figure arrived at would be

Rs.14,47,024/- for which the legal notice of demand had been issued.

Submission being that this cheque of Rs.15,72,024/- which had been

paid by the respondent to the petitioner was a clear admission of his

liability and the subsequent dishonor of the cheque on two separate

dates clearly shows that the respondent company owed a debt to the

petitioner which he is not in a position to pay; the respondent company

being unable to pay its debt is liable to be wound up. Reliance has also

been placed upon the provisions of Sections 9, 118 and 139 of the

Negotiable Instruments Act. Submission being that a 'holder in due

course' means any person who for consideration becomes the possessor

of a promissory note, bill of exchange or cheque. Under Section 118 of

the said Act until the contrary is proved, the presumption shall be that

every negotiable instrument was made or drawn for consideration; the

word 'shall' appearing in Section 118 is a mandate upon the Court and

unless there is anything to the contrary, the submission of the learned

counsel for the petitioner on this count is that this presumption that he

was the holder of a cheque for a valuable consideration arises in his

favour. To the same effect is the provision contained in Section 139 of

the said Act.

3 To support this submission, reliance has also been placed upon

Vol. CXXXV-(2003-3) page 20 Hotline Teletubes and Components Ltd.

Vs. A.S. Impex Ltd. where when the cheque issued by the respondent

company had stood dishonoured, when presented for encashment, the

indebtedness of the respondent to the petitioner was made out.

4 The next submission of the learned counsel for the petitioner is

that on 12.10.2009, another cheque of Rs.15 lacs had been issued by the

respondent to the petitioner wherein it was stated that this cheque should

be kept only for a security purpose and should not be encashed. Issuance

of this cheque is also not in dispute. Submission of the petitioner again

being reiterated that the very fact that this cheque has been issued for a

security purpose means that this is a security for a liability which is due

by the respondent to the petitioner.

5 The last submission of the learned counsel for the petitioner is

that 'C' form have also been issued by the respondent to the petitioner.

The said documents are clearly an admission of the transactions between

the parties and even if it is not stretched to the limit that it is an

admission of the liability by the respondent to the petitioner, yet

undisputed position being that issuance of 'C' Forms by the respondent

amounted to a transaction between the parties. To support this

submission, reliance has been placed upon a judgment of this Court

delivered on 09.08.2012 in Co. Petition No. 475/2009 M/s Shyam Dri

Power Ltd. Vs. Bhav Shakti Steel Mines Private Limited wherein it has

been noted that a 'C' Form is a proof of sale made by one party to

another; it is an acknowledgement of the transactions between the

parties. For the same proposition, reliance has also been placed upon a

judgment of the Punjab and Haryana High Court Vol. C XXI (1999-1)

Ram Kumar and others Vs. the Haryana Cotton Mills. Attention has also

been drawn to the Central Sales Tax Act, 1956; Section 8 (4) provides

that embargo of 3% tax contained in sub-section (1) will not apply to

interstate sales. Rule 12 of the Central Sales Tax (Registration and

Turnover) Rules, 1957 postulates that the declaration and the certificate

referred to in Section 8(4) shall be in Forms 'C' and 'D' respectively.

Form 'C' is the declaration where the name of the purchasing dealer to

whom it is issued along with his registration certificate has to be given.

Attention has been drawn to Annexure 'G'; the three documents

(forming a part of the Annexure-G) show that the transactions between

the petitioner and the respondent to the tune of Rs.68,544/-,

Rs.15,03,480/- and Rs.5,31,930/- had been effected. These figures total

to Rs.21,03,954/- which as per the case of the petitioner was the value of

the transactions which had been entered into between the parties. Three

payments of Rs.1,51,980/-, Rs.3,79,950/- and Rs.1,25,000/- were

thereafter made by the respondent to the petitioner on 23.10.2008,

01.04.2009 and 19.09.2009 respectively. The balance amount due and

payable from the respondent was Rs.14,47,024/- for which a legal notice

of demand had been issued to the respondent. The legal notice dated

21.11.2009 has been perused. Proof of dispatch at the registered office

of the company at Mathura Road, Delhi has been annexed at pages 83-

85 of the paper book. Admittedly no reply has been sent to this legal

notice.

6 This Court shall now revert to the defences set up by the

respondent company. Admittedly no reply has been filed to the legal

notice. The first submission of the learned counsel for the respondent is

that the legal notice had not been received. In this context, it is relevant

to note that the registered A.D. Card has been placed on record by the

petitioner showing dispatch and receipt of the aforenoted legal notice.

Presumption under Section 27 of the General Clauses Act and Section

114 (8) of the Indian Evidence Act arises in favour of the petitioner.

Nothing contrary has been shown to rebut this presumption. It was only

for the first time that in the reply filed to the present petition that a

defence has been sought to be set up. This defence is largely bordered

upon the submission that the bills which have been presented for

payment by the petitioner to the respondent are forged and fabricated

bills. Attention has been drawn to the aforenoted bills; they are

Annexure 'D' to the petition. Submission being that the payment has not

been mentioned in the said bills; there is also no signature in column of

the receiver. Further submission being that the name of the petitioner

company i.e. M/s Gulati Agencies Private Limited has been stamped on

top which also shows that this document has been fabricated and is also

not a printed format. This submission of the respondent is palpably

incorrect. It is a printed format and clearly shows that M/s Gulati

Agencies Private Limited has three addresses; the head office and two

branch offices have been detailed in the last but three lines of the

aforenoted document (page 36 of the paper book). In fact this defence

set up by the respondent does not match his second defence which he

has taken which is to the effect that the goods were of a lower quality

and were returned back by the respondent to the petitioner. In one

breath he appears to be denying the transaction stating that the bills of

the petitioner are forged and fabricated and in the very same breath his

submission is that the goods were defective and had to be returned. The

issuance of 'C' Forms has however not been denied by the respondent.

His defence qua this argument that the 'C' Forms had been issued in

good faith and are now being used by the petitioner only to harass the

respondent. The submission qua the cheque of Rs.15 lacs (dated

12.10.2009) is that this cheque was only given as a security and was not

an admission of the liability; it does not confer any right on the

petitioner.

7 What was the security and why it was given and relating to what

transaction has neither been explained and nor answered by the

respondent. The earlier cheque of Rs15,72,024/- (dated 30.03.2009)

which also stood dishonoured has also not been explained; presumption

that this cheque was issued for a valuable consideration has not been

rebutted. Moreover, this figure of Rs.15,72,024/- squarely meets the

figure contained in the legal notice; the legal notice had been sent on

21.11.2009 claiming an amount of Rs.14,47,024/- along with interest.

Cheque dated 30.03.2009 was issued by the respondent for

Rs.15,72,024/- but the legal notice had made a demand for the lesser

amount of Rs.14,47,024/- for the reason that a sum of Rs.1,25,000/- had

been paid by the respondent to the petitioner on 19.09.2009. These

figures fully tally with one another.

8 The e-mails and correspondences exchanged between the parties

are also very relevant to determine the admission made by the

respondent of his liability towards the petitioner. These e-mails are

annexed at pages 45 to 61 of the paper book. There is no denial to these

communications. Mr. Mohnish Mukkar, Director of the respondent on

21.08.2009 has specifically admitted that six payments of Rs.2.5 lacs

each will be made within the next ten days; this is in the nature of a

proposal; this proposal made by the Director of the respondent company

was obviously based on the intention of the company to wash off its

liability. So also is the earlier e-mail dated 07.08.2009 addressed by

Mohnish Mukkar to Vinayak Gulati wherein again, the interest figure of

18% has been accepted by the respondent; the respondent has gone to

the extent to state that whatever the petitioner company chooses will be

accepted by the respondent. On this score, a half baked submission has

been made by the respondent that Mohnish Mukkar was not authorized

to act on behalf of the company; relevant would it be to state that this

defence has not been taken up in the reply filed to the petition and this

oral submission has no basis. The submission of the respondent that the

matter requires trial has to be rejected in view of the clear admission

made by him. In no manner can it be said that the defence of the

respondent is bonafide; it is wholly imaginative.

9 Commercial solvency of the company is also not by itself a

ground for not entertaining a winding up petition. In this context, the

Apex Court in (2010) 10 SCC 553 (SC) IBA Health (I) Pvt. Ltd. Vs.

Infor-Drive Systems has held as under:-

"If the company refuses to pay on no genuine and substantial grounds, it should not be able to avoid the statutory demand. The law should be allowed to proceed and if demand is not met and an application for liquidation is filed under Section 439 in reliance of the presumption under Section 434(1)(a) that the company is unable to pay it debts, the law should take its own course and the company of course will have an opportunity on the liquidation application to rebut that presumption.

22. An examination of the company's solvency may be a useful aid in determining whether the refusal to pay debt is a result of a bona fide dispute as to the liability or whether it reflects an inability to pay. Of course, if there is no dispute as to the company's liability, it is difficult to hold that the company should be able to pay the debt merely by proving that it is able to pay the debts. If the debt is an undisputedly owing, then it should be paid. If the company refuses to pay, without good reason, it should not be able to avoid the statutory demand by proving, at the statutory demand stage, that it is solvent. In other words, commercial solvency can be seen as relevant as to whether there was a dispute as to the debt, not as a ground in itself, that means it cannot be characterized as a stand alone ground."

10 On all counts, the petitioner has been able to establish before this

Court that the respondent owes a debt to the petitioner which he was

unable to liquidate. Even today before this Court, the counsel for the

respondent has been queried as to whether he is willing to make the

payment to the petitioner but he is not inclined for the proposal.

11 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.

12 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.14,47,024/- along with interest @ 18% per annum 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.

13 Petition disposed of.

Co. Application No.558/2010 (for appointment of Provisional Liquidatator) 14 Since the petition is admitted, the Official Liquidator attached to

this court is appointed as Provisional Liquidator to take charge of the

assets and books of accounts of the respondent-Company; he will act in

accordance with law. For this purpose, Official Liquidator would be

entitled to obtain police aid and the local police is directed to render all

assistance to the Official Liquidator.

1515 In the meantime, respondent-company, its directors, officers, [

employers, authorised representatives are restrained from selling,

transferring, alienating, encumbering and parting with the

possession of any movable and immovable assets and funds of the

respondent-company. They are also restrained from withdrawing any

money from the accounts of the respondent-company. The directors of

the respondent-company are directed to forthwith hand over all the

records of the respondent-company to the Official Liquidator including

its books of account. The directors of the respondent-company are also

directed to provide the statement of affairs and file their statements

under Rule 130 within a period of twenty one days as provided for in the

Companies Act, 1956.

16     This order is however deferred for two weeks.

17     Application disposed of.

18     Status report be filed by the Official Liquidator.

19     Renotify for 04.01.2013.

                                               INDERMEET KAUR, J
SEPTEMBER 26, 2012
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