M/S Credo Brands Marketing Pvt Ltd vs Store One Retail India Ltd.
2014 Latest Caselaw 2055 Del

           THE HIGH COURT OF DELHI AT NEW DELHI
%                                  Judgment delivered on: 24.04.2014
+        CO. PET. 293/2012
M/S CREDO BRANDS MARKETING PVT LTD                         ..... Petitioner
                          versus

STORE ONE RETAIL INDIA LTD.                                ..... Respondent
Advocates who appeared in this case:
For the Petitioner        : Mr Vijay M. Chauhan.
For the Respondent        : Mr Abhinav Vashisth, Sr. Advocate
                            with Mr Arnav Kumar.
CORAM:-
HON'BLE MR JUSTICE VIBHU BAKHRU

                               JUDGMENT

VIBHU BAKHRU, J (ORAL)

1. This is a petition filed under Section 433 (e) of the Companies Act, 1956, whereby the petitioner has alleged that the respondent is unable to pay its debts.

2. The petitioner has contended that the petitioner had supplied goods to the respondent between period June, 2007 to October, 2008 (both months inclusive) and had raised invoices for the same. It is contended that there is no dispute that the said goods were received by the respondent. The learned counsel for the petitioner has also placed copies of the invoices on record. The first invoice is dated 23.06.2007 and the latest invoice placed on record is dated 11.06.2008. The petitioner states that a notice under Section 434 (1) (a) of the Companies Act, 1956, dated 09.09.2011 calling upon the

respondent to pay a sum of `41,34,310.02/- was served on the respondent. However, the respondent failed and neglected to pay the same. It is stated that the presumption under Section 443 (1) (a) of the Act would be applicable and the respondent would be deemed to be unable to pay its debts.

3. Notice of this petition was issued and the respondent has filed its reply contesting the claim of the petitioner. The principal ground raised by the respondent is that the debt as claimed by the petitioner is ex-facie barred by limitation. During the course of proceedings, the respondent was directed to file a breakup of the amount of sundry creditors reflected in the balance sheet for the year ending 31.03.2012. Although, the respondent did not file the statement indicating the said break up of the amount reflected as liability in its Balance Sheet, the same was produced in Court. The learned counsel for the respondent conceded that the books of account of the respondent company reflected a sum of `12 lakhs as due and payable to the petitioner. The said amount has since been paid by the respondent to the petitioner.

4. I have heard learned counsel for the parties.

5. The principal question that arises for consideration in the present case is whether the defence raised by the respondent that the claims of the petitioner are barred by limitation is a bona fide and substantial defence?

6. It is well settled that a petition under Section 433 (e) of the Companies Act, 1956, will not lie in respect of a debt which is barred by limitation and cannot be enforced. A debt which is not enforceable cannot

be considered as an amount which is due and payable by the respondent. This Court in the case of Gautam Electricals Co. Pvt. Ltd. v. Seth & Sons Pvt. Ltd.: 29 (1986) DLT 102 has examined the question and has held as under:-

"(4) But can a creditor seek a winding up order on the basis of the company's deemed inability to pay the debt which is barred by time ? The answer to this question has to be in the negative. The debt could be a valid basis for the petition and the winding up order only if the debt that remains unpaid, notwithstanding statutory notice, is both "due" and recoverable.....

xxxx xxxx xxxx xxxx xxxx (7) A winding up petition, solely based on a claim, which was barred by time at its inception, or which was allowed to be barred during its pendency would be a gross abuse of the process of this court, and would be a misuse of the special jurisdiction under the Companies Act created for an entirely different purpose."

7. The learned counsel for the petitioner accepted that there was no written acknowledgement that had been furnished by the respondent to the petitioner except a letter dated 29.12.2010 sent by K. Nath "General Manager Group Legal & Company Secretary" on behalf of Ashok Piramal Management Operation Ltd. The said letter is also on the letterhead: "Ashok Piramal Group". In my view the said letter cannot be accepted as an acknowledgement by the respondent company for the reasons that, neither the letter purports to be on behalf of the respondent company nor is it signed by an authorized signatory of the respondent company. In any event, the question whether the said letter binds the respondent would raise

a contentious issue which cannot be examined in the present proceedings.

8. The fact that the respondent has paid a sum of `12 lakhs during the course of the present proceedings also would not extend limitation in favour of the petitioner. This is so because the said payment has been made after the period of limitation has expired and therefore the provisions of Section 19 of The Limitation Act, 1963, are not applicable. Accordingly, the present petition is dismissed.

VIBHU BAKHRU, J APRIL 24, 2014 pkv/RK