Shree Vinayak Iron Works vs Flowmore Limited
2018 Latest Caselaw 2459 Del

$~CP-49
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                            Date of Decision: 19.04.2018

+     CO.PET. 592/2015

      SHREE VINAYAK IRON WORKS           ..... Petitioner
                   Through    Mr.Debdut Mukherjee and Ms.Aprajit
                   Mukherjee, Advs.

                         versus

      FLOWMORE LIMITED                   ..... Respondent
                  Through    Mr.Abhinav Vashisht, Sr. Adv. with
                  Mr.Abhinav Mukerji and Ms.Purnima Krishna,
                  Advs.

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (Oral)

1. This petition is filed under Section 434 (1) (a) and Section 433 (e) of the Companies Act, 1956 seeking winding up of the respondent Company.

2. It is the case of the petitioner that in compliance of certain orders placed by the respondent, the petitioner delivered goods at the site of Ganga Pollution Control Unit, UP Jal Nigam, Mahawapati Naini at Allahbad. Six invoices were raised from 21.06.2012 to 04.08.2012 for Rs.58,44,954.96/-. It is the contention of the petitioner that a balance of Rs.14,46,113.22/- remains unpaid. As the amount remained unpaid, a statutory notice was sent on 22.05.2015. No reply was received and hence, the present winding up petition.

3. The respondent have entered appearance and have filed their reply. It is the contention of the respondent that U.P. Jal Nigam had entered into a contract for supply of these pipes with Ramky Infrastructure Ltd. The said Ramky Infrastructure Ltd. sub-contracted the contract to Krushi Infras India Pvt. Ltd. who further sub-contracted it to the respondent. Thereafter, the respondent placed the present purchase orders on the petitioner. The delivery of the material took place at the site of U.P.Jal Nigam. The initial materials that were delivered were accepted by U.P. Jal Nigam and payments for the same had been released to the petitioner. Subsequent materials that were supplied, which is the subject matter of the dispute of the present winding up petition, were rejected by U.P. Jal Nigam and the petitioner was told to lift the material. Reliance is placed on various e-mails including e-mails dated 06.04.2013, 23.04.2013 and 28.06.2013 onwards. Reliance is also placed on Section 43 of the Sale of Goods Act to contend that once the goods had been rejected it was the duty of the petitioner to lift the goods. It is pleaded that despite several communications to the petitioner to lift the goods from the site, no steps were taken. Subsequently, as the site was closed, the goods appear to have been lost on account of inaction on the part of the petitioner. Hence, it is pleaded that the winding up petition does not lie.

4. I have heard learned counsel for the parties.

5. Learned counsel for the petitioner stresses on the following facts:

(i) That there is no dispute that the goods were duly delivered to the respondent.

(ii) He submitted that the contract is only between the petitioner and the respondent. The purchase order does not contain any stipulations regarding

the quality of the goods which was allegedly violated by the petitioner to warrant rejection of the goods.

(iii) It is urged that the petitioner is not concerned with U.P. Jal Nigam as there is no privity of contract with the said body. Hence, the dues of the petitioner have been wrongly withheld.

(iv) It is further pleaded that the petitioner was ready and willing to lift the goods as desired by the respondent. However, the respondent never helped the petitioner inasmuch as the petitioner could not lift the goods from the site of U.P. Jal Nigam without the help of the respondent. Reliance is placed on e-mails dated 19.08.2014, 20.08.2014, 21.08.2014 and 27.08.2014 exchanged between the parties to this effect.

Hence, it is pleaded that the debt is clearly due and the respondent has failed to repay the same.

6. Learned senior counsel for the respondent has refuted the said contentions. He has relied upon the e-mails mentioned in the reply to plead that the goods were rejected and that the petitioner never disputed rejection of the goods by UP Jal Nigam. It is submitted that though the petitioner claims to be ready and willing to lift the goods but did not take steps to lift the goods. Reliance is also placed on communication dated 15.01.2015.

7. Some of the e-mails exchanged between the parties may be looked at. On 06.04.2013, the respondent has written an e-mail to the petitioner pointing out that the petitioner has been informed to lift the rejected pipes from Allahabad but no steps have been taken nor the road permit has been sent. It is pointed out that the Department is pressing hard to lift the same. Similarly, an e-mail has been sent on 23.04.2013 where a reminder has been sent to the petitioner. Thereafter another interesting e-mail is dated

03.08.2014 received by the respondent where the petitioner has requested the respondent to sign a letter and send it to the petitioner stating that the goods have been rejected and that if they are not lifted, the material would be auctioned. It is clear from these e-mails including the letter dated 15.01.2015 sent by the respondent that it has been duly communicated to the petitioner that the goods were rejected. The petitioner has not disputed the factum of rejection.

8. It was put to the learned senior counsel for the respondent that an affidavit may be filed stating that the respondent did not receive any payments regarding these goods from its contractor, namely, Krushi Infras India Pvt. Ltd. Learned senior counsel on instructions had agreed that an affidavit to this effect would be filed. However, learned counsel for the petitioner submitted that there is no privity of contract between the petitioner and Krushi Infras India Pvt. Ltd. and hence, whether the respondent received the money from its contractor is immaterial and the petitioner is entitled to its dues. The fact that the respondent was ready to file an affidavit as noted above is a clear indication that the goods have been rejected by U.P.Jal Nigam and the respondent has received no money for the same. The rejection was not challenged at the relevant stage, by the petitioner.

9. It is true that there have been some e-mails exchanged between the petitioner and the respondent whereby the petitioner sought return of the goods. On 21.08.2014, the petitioner sent an e-mail to the respondent that they were informed by the representative of the respondent that the respondent was busy on site from 25.08.2014 to 27.08.2014 and that the petitioner was advised to come between 1st to 3rd September 2014 to lift the goods. Subsequently, on 23.08.2014, an e-mail was sent by the petitioner to

the respondent pointing out that they are not getting a confirmation about the visit of the petitioner to Allahabad.

10. As to whether the respondent co-operated with the petitioner to assist the petitioner in lifting the rejected goods or did not co-operate are the disputed questions of fact and cannot be a subject matter of the adjudication in the present proceedings. In view of this, I am unable to conclude the amount claimed by the petitioner was due and payable to the petitioner.

11. A petitioner is not allowed to use the remedy of winding up as arm twisting method and pressure tactics for enforcing recovery/payment. The Supreme Court in Amalgamated Commercial Traders (P.) Ltd. vs. A.C.K. Krishnaswami and Anr., 1965 (35) Comp. Cas. 456 held as follows:-

"13. It is well-settled that "a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a scandalous abuse of the process of the court. ...."

12. Accordingly, the present petition is dismissed.

13. I may however add that any observations made herein would not in any manner prejudice the parties in the eventuality the petitioner were to initiate any civil proceedings as per law against the respondent. The petitioner would also be entitled to apply under Section 14 of the Limitation Act to seek appropriate condonation of delay to filing such proceedings. Any such application if filed may be adjudicated as per law.

JAYANT NATH, J.

APRIL 19, 2018/rb