Delhi High Court
Inflow Technologies Pvt Ltd vs Gramtech(India) Pvt Ltd on 6 April, 2018
$~CP-19
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 06.04.2018
+ CO.PET. 534/2013 and Co. Appl. 1842/2013, 197/2017
INFLOW TECHNOLOGIES PVT LTD ..... Petitioner
Through Mr. Gaurav Kejriwal and Mr.Sujit
Kuma Keshri, Advs.
versus
GRAMTECH(INDIA) PVT LTD ..... Respondent
Through Mr.Rohit Singh, Adv.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.(ORAL)
1. This petition is filed under Sections 433 and 434 of the Companies
Act, 1956 seeking winding up of the respondent Company. It is contended
by the petitioner that the respondent Company had from time to time placed
purchase orders on the petitioner for purchase of software and for services
related to the software. On 18.06.2010 through two letters, the respondent
placed purchase orders on the petitioner for purchase of the software with
standard support for one year and also for installation and implementation of
the same.
2. The first order dated 18.06.2010 was regarding purchase of software
(SQL anywhere advance edition 25 user) and standard support service for a
period of one year and the total amount of consideration was Rs.6,87,013/-.
3. The second order was regarding installation and implementation of
the software at the respondent's client's site and the total cost for that was
Rs.9,45,226/-.
4. There is no dispute regarding the first purchase order for which the
petitioner has received payments. The dispute centres around the second
purchase order.
5. It is the case of the petitioner that after installation and
implementation, the petitioner procured the required Implementation
Completion Certificate dated 24.08.2010 from the client of the respondent. It
may be noted that the respondent was doing the work on behalf of the Indian
Navy. It is pleaded that the said Certificate was duly signed by the official of
the Indian Navy. Thereafter, it is stated that the petitioner raised an invoice
dated 23.09.2010 for an amount of Rs.9,45,227/-. However, the respondent
failed to honour the said amount. In these circumstances, the petitioner
issued a legal notice on 10.09.2010. A reply was received from the
respondent on 01.10.2012 denying its liability. Hence, the present winding
up petition.
6. The respondent have filed their reply. In the reply, various defences
are taken, namely, that the claim of the petitioner is barred by limitation, the
petitioner failed to get the Implementation Completion Certificate from the
client of the respondent, namely, the Indian Navy and the petitioner failed to
complete the work.
7. I have heard learned counsel for the parties.
8. Learned counsel for the respondent has vehemently submitted as
follows:-
(i) He submits that as per the purchase order which was placed on the
petitioner, the payment was payable 50% on installation and balance 50% on
completion of scope of work. He submits that the cause of action arose when
as per the petitioner the work was completed. He points out that as per the
petitioner, the work was completed on 24.08.2010 whereas the present
winding up petition has been filed on 21.09.2013. It is hence pleaded that
the present debt had become barred by limitation when the present winding
up petition was filed. Reliance is placed on Article 18 of the Schedule to the
Limitation Act.
(ii) He further submits that despite placing the purchase order, the
petitioner failed to complete any work. Hence, it was the respondent
Company which carried out the work and had got the necessary payment
from the client, namely, the Indian Navy. Hence, no amount is due to the
petitioner.
(iii) He further submits that the petitioner is wrongly relying upon the
Implementation Completion Certificate dated 24.08.2010. This, he submits,
has been issued to one M/s. Sybase Professional Services which is an
unknown entity and not known to the respondent. Further, the certificate is
not in the prescribed format of the Implementation Completion Certificate.
Hence, no amount is due to the petitioner.
9. I may point out that this court on 26.02.2018 had noted the
submissions of the respondent and had issued a direction to the respondent
to file an affidavit as to whether the respondent received any payment from
the end user, namely, the Indian Navy. This court had directed as follows:-
"Learned counsel for the respondent has made two broad
submissions. He firstly, submits that the work that was assigned
to the petitioner has not been installed and that the completion
certificate relied upon by the petitioner is not in the correct
format and cannot be called a completion certificate. He in fact
submits that the so called completion certificate relied upon by
the petitioner is a time sheet. He further submits that this
document relied upon by the petitioner was never provided to
the respondent earlier. He secondly submits that the claim is
barred by limitation.
Before I hear the matter further, in my opinion, it would
be appropriate that the respondent files an affidavit of the
Managing Director of the respondent Company who will
confirm as to whether the respondent received any payment
from the end user, namely, the Indian Navy for the above noted
equipment, namely, (SQL anywhere Advanced Edition 25
User). The affidavit will be filed within three weeks from today
with advance copy to the learned counsel for the petitioner. I t is
made clear that if there is any default in filing of the affidavit,
the matter will be disposed of on the next date of hearing."
10. Pursuant to the said order dated 26.02.2018, the respondent has filed
an affidavit of Mr.Rakesh Gupta, Director of the respondent Company. In
the affidavit it is stated that the petitioner did not perform their work as per
the scope of work of the client and hence, the respondent was compelled to
complete the project. It is also stated that after issuing of Implementation
Completion Certificate on completion of the project, the Navy released the
payment in favour of the respondent Company.
11. I may first deal with the contention of the respondent that the work
was never completed and the Implementation Completion Certificate is not
in the prescribed format. The petitioner has filed the Implementation
Completion Certificate dated 24.08.2010 which appears on a letter head of
M/s. Sybase Professional Services. The said certificate provides details of
various functions and the dates when the functions were completed. At the
end of the Certificate a stamp has been put by the Indian Navy which is
signed by Cdr.Vikrant Jairath showing that the work was completed and the
Certificate is dated 24.08.2010. The correct format in which the said
Implementation Completion Certificate was to be issued has not been placed
on record by the respondent. There may perhaps not be a strict technical
compliance of the requirement. However, a perusal of this document would
show that the work in question was completed by the petitioner/Sybase
Professional Services, a sub-contractor of the petitioner. From the above, it
becomes quite clear that the work that was entrusted to the petitioner by the
second purchase order was completed as per Indian Navy.
12. The question that now arises is that was the work completed by the
petitioner or as claimed by the respondent, by the respondent.
13. After perusing the facts, in my opinion, it is quite manifest from the
record that the work was completed by the petitioner and the plea raised by
the respondent that the work was completed by the respondent is a bogus
plea. Reasons for the above conclusions are noted herein below.
13.1 In the affidavit filed pursuant to the last order of this court by the
respondent and now, while hearing submissions, what has been vehemently
argued is that the petitioner never completed the work that was assigned to it
by the purchase order and that it is the respondent who has completed the
work and has thereafter obtained the said completion certificate and also
received the money from the client, namely, the Indian Navy. However, it is
interesting to note that a perusal of the reply dated 01.10.2012 sent by the
respondent to the legal notice issued by the petitioner on 10.09.2012 or the
reply to the present petition would show that there is no averment anywhere
made that the work has been completed by the respondent company. A
perusal of the reply to the present petition shows that essentially what has
been pleaded is that the completion certificate filed by the petitioner is a
time sheet and fabricated document. It is also pleaded that the petitioner did
not perform his work. There is no averment that the work was ever
completed and the respondent received the money from the Indian Navy. It
is now at the time of arguments, the respondent have chosen to come up
with this plea that it was the respondent who performed the work which plea
had never been taken earlier. This is clearly an afterthought which is now
sought to be introduced after pleadings have been completed in the course of
arguments. Clearly, the version now being sought to be introduced by the
respondent cannot be believed.
13.2 Another interesting fact is that the respondent did not even mention in
their reply that they received the consideration from Indian Navy. It is only
pursuant to the order of this court dated 28.02.2018 that in the affidavit filed
it has been revealed that the respondent has received the payment from the
Indian Navy. This act/conduct of the respondent is quite surprising. It is
obvious that the work was completed and the respondent have received
money. They owed a duty to reveal the full facts to the court and inform the
court that they have received the money for the work done. Their failure to
intimate to the court the full facts throws a grave doubt on pleas made today
before this court.
It is clear that the said amount was due and payable to the petitioner
and the respondent are only finding pretexts not to make the payment.
14. As far as the issue of limitation is concerned, learned counsel for the
respondent has relied upon Article 18 of the Schedule to the Limitation Act,
1963. The same reads as follows:-
18. For the price of Three years When the
work done by the work is
plaintiff for the done.
defendant at his
request, where no
time has been
fixed for
payment
15. Relevant portion of the second purchase order dated 18.06.2010 reads
as follows:-
"2) Payment: For Implementation: 50% on installation as balance
50% on completion of scope of work.( Customer PO and Scope
of work is attached)
(We need the implementation completion certificate from the
User)"
16. The case of the petitioner is that after the work was completed, the
petitioner has raised the invoice dated 23.09.2010. I may note that raising an
invoice pursuant to completion of the work is a standard procedure
inasmuch as it is the invoice that brings out the details of service tax and
other statutory requirements. In the absence of any invoice it is not clear
how the respondent would make the payment. Even otherwise, the
completion certificate which has been produced by the petitioner has been
issued by the Indian Navy. It is not addressed to the respondent. The
respondent will receive knowledge of completion of the work only when he
receives this completion certificate. It is only when the respondent receives
the invoices alongwith the completion certificate that he would have a
liability to pay in terms of the contract. Hence, the limitation has to start
from the date of receipt of the invoice along with the completion certificate
and not otherwise. In fact for the first purchase order also the petitioner had
raised an invoice dated 18.06.2010. A perusal of the first purchase order
would show that again there is no requirement stated of raising an invoice
inasmuch as payment was payable within 45 days of delivery of the software
yet an invoice was raised and payment has been effected. In the present case
as the invoice for the second purchase order was raised on 23.09.2010, the
present winding up petition that has now been filed on 21.09.2013 cannot be
said to be barred by limitation.
17. Reference may also be had to the judgment of the Division Bench of
the Allahabad High Court in Devender Kumar v. Nagar Palika Parishad
Shamli & Anr., 2015 SCC OnLine All 5976. The Division Bench while
referring to Article 18 to the Schedule of the Limitation Act, 1963 held as
follows:
"20. A bare reading of aforesaid provision shows, where no
time for payment has been prescribed or fixed in the agreement
between parties or otherwise, limitation would be three years
from the date work has been done by plaintiff. This Article
applies where plaintiff has performed some work at the request
of defendant.
21. All these conditions are satisfied in the present case. The
dispute is confined as to the meaning of the term "work done".
Whether literally it would mean that work is completed or done
when claimed by plaintiff on his own or when it is measured
and found satisfactory by defendants, at whose request work has
been done by plaintiff.
22. In our view work done can only be said when defendant,
who has to make payment and at whose request the work is
done by plaintiff, is satisfied that work has been done. This
satisfaction that work has been done on the part of defendant
would come only when work done by plaintiff is measured by
competent authority of defendant and entered in the
measurement book.
23. If intention of legislature would have been only to
commence limitation as soon as plaintiff has completed some
work according to his own understanding or claim, rest of the
part would not have been necessary to be mentioned in
aforesaid provision. However, when legislature has added
words for the defendant at his request' it means that whatever
work is done by plaintiff, it must be such which has been
requested by defendant and is performed for defendant.
Therefore, ultimate decision to evident that work has been done,
would be that of defendant.
24. In the present case it is not in dispute that work was done by
plaintiff in his own way in 1992. The defendants, however, got
his satisfaction after measurement thereof in 1996. Thus it can
be said that work has been done only in 1996 when Assistant
Engineer submitted his report on 17.6.1996 or when Additional
Chief Officer, Nagar Palika Parishad made recommendation for
payment seeking approval of higher authority vide report dated
26.6.196.
25. Words 'when the work is done' in clause 3 of Article 18,
therefore, will have to be read in consonance with column 1 and
we are of the view that to attract Article 18, limitation would
commence when work done by plaintiff is measured by
defendant and he finds satisfaction that work as requested has
been done by plaintiff for defendant."
18. Similarly, a Bench of the Punjab & Harayana High Court in
Jullundur Improvement Trust, Jullundur v. Kuldip Singh, AIR 1984 P&H
185/(MANU/PH/0159/1984) held that Article 18 of the Limitation Act,
1963 would be attracted in the facts of those case when the work was dully
entered in the measurement book and on the basis of which the final bill was
prepared. Clearly, settled legal position is that it is only when as per the
defendant the work is done that the limitation starts running under Article 18
of the Schedule to the Limitation and not when the plaintiff claims that the
work is completed. In these circumstances, even otherwise it cannot be said
as claimed by the respondent that the limitation will commence from the
date of completion certificate per se.
19. In my opinion, the defence raised by the respondent is not bona fide
or valid. The respondent is liable to pay the petitioner and is refusing to pay.
Accordingly, I admit the present petition
20. The Official Liquidator attached to this court is appointed as the
Provisional Liquidator. He is directed to take over all the assets, books of
accounts and records of the respondent-company forthwith. The citations be
published in the Delhi editions of the newspapers 'Statesman' (English) and
'Veer Arjun' (Hindi), as well as in the Delhi Gazette, at least 14 days prior
to the next date of hearing. The cost of publication is to be borne by the
petitioner who shall deposit a sum Rs75,000/- with the Official Liquidator
within 2 weeks, subject to any further amounts that may be called for by the
liquidator for this purpose, if required. The Official Liquidator shall also
endeavour to prepare a complete inventory of all the assets of the
respondent-company when the same are taken over; and the premises in
which they are kept shall be sealed by him. At the same time, he may also
seek the assistance of a valuer to value all assets to facilitate the process of
winding up. It will also be open to the Official Liquidator to seek police help
in the discharge of his duties, if he considers it appropriate to do so. The
Official Liquidator to take all further steps that may be necessary in this
regard to protect the premises and assets of the respondent-company.
21. In the interest of justice, I suspend this order for a period of one
month only. In case the respondent makes the necessary payment of
Rs.9,45,226/- to the petitioner within one month from today, the aforesaid
order shall stand recalled.
22. List on 08.08.2018.
JAYANT NATH, J
APRIL 06, 2018/rb
