M/S Rmc Ready Mix (India) vs M/S Clarion Projects Pvt. Ltd.
2018 Latest Caselaw 2239 Del

$~CP-17
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                            Date of Decision: 11.04.2018

+     CO.PET. 759/2014 and CA No. 4921/2016, 99/2017

      M/S RMC READY MIX (INDIA)             ..... Petitioner
                   Through   M.V.K.Monga, Adv.

                          versus

      M/S CLARION PROJECTS PVT. LTD.             ..... Respondent
                    Through    Mr.Paritosh Budhiraja and Mr.Vimal
                    Dubey, Advs.

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (Oral)

1. This petition is filed under Sections 433, 434 and 439 of the Companies Act, 1956 seeking to wind up the respondent Company. It has been pleaded that the petitioner supplied to the respondent Ready Mix Concrete against various orders. It is pleaded that a balance of Rs.9,26,252/- is due to the petitioner as on 12.03.2013. Reliance is placed on two balance confirmation letters said to have been executed by the respondent whereby the respondent has confirmed the balance due to be Rs.9,26,252/- as on 28.02.2013 and also on 15.10.2013. It has also been pleaded that the respondent issued three cheques dated 08.03.2013, 15.03.2013 and 21.03.2013 for Rs.3 lakhs, Rs.3 lakhs and Rs.3,26,000/- respectively in favour of the petitioner to clear the outstanding liability of Rs.9,26,252/-. However, when the first cheque which is dated 08.03.2013 for Rs.3 lakhs

was presented, the bankers returned it noting that the payment has been stopped. A statutory notice was served on the respondent on 20.08.2014 under Section 434 of the Companies Act. The respondent did not comply with the said notice and hence, the present winding up petition.

2. The respondent Company filed their reply. In the reply it has been pleaded that the present petition is an abuse of the process of the court. It has been denied that there is any balance due and payable to the petitioner. It has been pleaded that the Ready Mix Concrete was purchased from the petitioner for one of its projects at Faizabad Road, Lucknow. However, the said Ready Mix Concrete when tested for quality and comprehensive strength by way Cube Test/Rebound Hammer Test, did not qualify the requisite standards as prescribed in "IS 13311". In view thereof, the respondent suggested to the petitioner to carry out a Core Test as recommended by the Structural Engineer. However, the petitioner did not take the necessary steps to have the Core Test done. Hence, it is pleaded that the petitioner supplied sub-standard material to the respondent and the respondent is not liable to pay any amount to the petitioner. The balance confirmation letters have been denied stating that they are fabricated and stating that they do not bear the signatures of any authorised person of the respondent Company. Regarding the post dated cheques, it is stated that these were given as a security and were payable once, the Ready Mix Concrete supplied by the petitioner passed the quality test. As the material was not of the right quality, the payment was stopped.

3. I have heard learned counsel for the parties.

4. Learned counsel for the respondent has relied upon e-mails dated 02.12.2013 and 15.12.2013 which are said to have been sent to the petitioner

to contend that despite these communications, the necessary tests were not carried out by the petitioner. He has also pointed out that the post dated cheques were only given as a security and as the material was of poor quality, the respondent was justified in stopping the payment of the cheques.

5. There are few aspects which are noteworthy and which make me to conclude that the defence of the respondent is a sham. Firstly, there is no dispute that the goods have been duly received by the respondent. These goods are Ready Mix Concrete. A question was posed to the learned counsel for the respondent that if the material supplied was not of the desired quality then why the material was not returned to the petitioner. He pleads that the material could not be returned. The respondent had to use the material in construction of the building and it is only after the material has been consumed that the necessary test to ascertain the quality of the material can be carried out. I do not find any merit in the said contention. If the building material was not as per the desired quality, the respondent had to take steps so that the material can be returned to the petitioner. It is not conceivable that the material has to be consumed first before it is tested for quality.

6. Further, there is no purchase order or agreement on record that specifies the quality of the material. I may note that there are two e-mails placed on record by the respondent raising the issue of quality. The first e- mail is dated 02.12.2013 whereby the respondent has stated that after 28 days‟ comprehensive test, the concrete has proved sub-standard after they did Rebound Hammer Test. A suggestion is made that a Core Test be carried out for a final decision. A reminder to this effect was allegedly sent on 16.12.2013.

It is noteworthy that the Rebound Hammer Test which is said to have

been carried out which concludes the alleged poor quality of the material supplied by the petitioner has not been placed on record. It is the ipse dixit of the respondent that the material failed the test. No evidence to the said effect is placed on record.

7. I may further note that the respondent had given three post dated cheques totalling Rs.9,26,252/- which have not been encashed. The only argument is that these were given as security and „stop payment‟ instructions were issued as the quality of the material supplied by the petitioner was found to be sub-standard. The post dated cheques were dated 08.03.2013, 15.03.2013 and 21.03.2013. The e-mail sent by the respondent pointing out that the material of the petitioner has failed the Rebound Hammer Test is dated 02.12.2013. There appears to be no correlation between the so called Test carried out by the respondent to determine the quality of the material supplied by the petitioner and the stop payment instructions issued for the post dated cheques. However, one cannot help coming to a conclusion that the claim about the poor quality of the material is only an afterthought sought to be introduced to justify stop payment instructions given for the cheques.

8. I may now come to the balance confirmation. I may note that there are two balance confirmation letters placed on record by the petitioner. The first one contains the stamp of the respondent where the outstanding balance of Rs.9.26 lakhs as on 28.02.2013 has been confirmed. There is another balance confirmation letter which confirms the balance as on 15.10.2013 where again authorised signatory of the respondent has signed. It is of course true that the respondent have denied their signatures on these documents. Other than a bald denial, there is no attempt to explain as to how

the stamp of the company has been affixed on these documents and who has actually signed these documents representing himself to be a representative of the respondent. The respondent has sought to wish away the balance confirmation letters by a bald submission simply denying the signatures.

9. In my opinion, all the above factors taken together, namely, the admission that the goods were supplied, the tendering of the post dated cheques and the balance confirmation persuade me to come to a conclusion that the defence sought to be raised by the respondent is a sham and moonshine. The respondent are unable to pay their debts.

10. The settled legal position is that the debts claimed should be payable by the respondent company. It is only where the respondent company raises a bona fide dispute then no winding up petition would lie. Reference in this context may be had to the judgement of the Supreme Court in IBA Health (I) Pvt. Ltd. vs. Info-Drive Systems Sdn.Bhd., (2010) (4) CompLJ 481 (SC) where the Supreme Court held as follows:-

"17. The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding-up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of

winding-up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding-up petition as a means of forcing the company to pay a bona fide disputed debt."

11. As noted above, in the facts of the above case the respondent company has failed to show any bona fide dispute.

12. I accordingly admit the present petition. 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.

13. In the interest of justice, I suspend this order for a period of one month only. I grant one month‟s time to the respondent to pay the said stated

amount of Rs.9,26,252/- to the petitioner. In case, such a payment is made, today‟s order appointing the OL shall stand recalled.

13. List on 30.08.2018.

JAYANT NATH, J APRIL 11, 2018 rb