Frontline (Ncr) Business ... vs Kewal Ram Gupta And Sons (P) Ltd.
2018 Latest Caselaw 7307 Del

$~CP-23
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                     Date of decision: 12.12.2018
+     CO.PET. 640/2016
      FRONTLINE (NCR) BUSINESS
      SOLUTION (P) LTD.                   ..... Petitioner
                     Through Mr.Nagesh and Ms.Rachna Chilhr,
                             Advs.
                     versus

      KEWAL RAM GUPTA AND SONS (P) LTD. ..... Respondent
                  Through  Mr.Pradeep Kumar Kaushik, Dr.Sunil
                           Kumar,    Mr.S.K.Chaturvedi   and
                           Mr.D.R.Bagga, Advs.

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (ORAL)

1. This petition is filed under section 433(e) and 434 of the Companies Act, 1956 (hereinafter referred to as 'the Act') for winding up of the respondent company.

2. It is the case of the petitioner that the respondent approached the petitioner for providing security services at the various sites of the respondent, namely, corporate office at Noida, Uttar Pradesh, etc. in October, 2013. The petitioner started providing security services from November, 2013 at respondent‟s site at Noida and continued to provide security services till month of December, 2015 and continued to raise invoices on the respondent. The case of the petitioner is that the respondent has not denied/disputed any of the bills/invoices raised by the petitioner

CO.PET.640/2016 Page 1 towards providing the security services but have failed to release the complete bills. It is pleaded that the respondent was habitual in releasing part payment against the bills/invoices raised by the petitioner. The petitioner raised a total of fourteen invoices in question but the respondent failed to make full payment against these bills/invoices. The petitioner raised invoices for a total sum of Rs.2,94,606/- but a payment of only Rs.82,318/- has been made. Hence, an amount of Rs.2,12,288/- remains outstanding. On 02.11.2015 notice was sent to the respondent at its registered office address. The notice came back with the report, „company has closed at the given address.‟ Hence, the present petition.

3. I have heard the learned counsel for the parties.

4. The learned counsel for the petitioner has pointed out that in the reply that has been filed by the respondent the averments are absolutely vague, false, frivolous and mischievous. Hence, he submits that the respondent has raised no worthwhile defence.

5. The learned counsel for the respondent however, has taken me through the reply and strongly contended that the dues have been denied by the respondent. He submits that the winding up process cannot be misused to recover the dues when the same is strongly disputed by the respondent as has been done in the present case.

6. A perusal of the reply filed by the respondent makes interesting reading. Some of the relevant paras are as follows:

Preliminary Submissions "4. That the petitioner has raised false invoices against the respondent company, not even an oral agreement executed between the parties regarding the alleged services rendered by the petitioner to the respondent. The true account of facts is that

CO.PET.640/2016 Page 2 that the respondent had availed security services from the petitioner with regard to other factories of the respondent for which the respondent has never denied its liabilities towards the petitioner.

5. That the petitioner have had been a chronic defaulter in paying the dues/EPF/ESIC of the workmen's, i.e. security guards; due to which they said workmen's had to approach the concerned 'Industrial Tribunal' for realizing their dues. During the relevant time the respondent availed the services of the petitioner for its establishments. Before the concerned 'Industrial Tribunal' the respondent company had also been made a party to the proceedings. Moreover, due to defaults of the petitioner, the respondent had to suffer on account of constant visits of the labor officer/government officials at the site of the respondent and the respondent had to acknowledge those officials about the exact situations and defaults of the petitioner; ending up in an uneasy situations to the respondent.

6. It is further submitted that on account of default in payment of dues of the workmen's/security guards by the petitioner, they remained frustrated and dissatisfied, resulting in disoriented and dis-motivated work performance at the sites including the site of the respondent. About unsatisfactory services the respondent contacted the petitioner at several occasions but with no responsible response on the part of the petitioner.

7. That on account of filing of cases before the concerned 'Industrial Tribunal' by the workmen's/security guards and being impleaded the respondent as a party to the proceedings; the respondent compelled to stop the disbursement of the payment petitioner towards its services. But the scores between the petitioner and the respondent has been finally settled before the Hon'ble Patiala House Court and the 'Lok Adalat. .......

     Reply on Merits




CO.PET.640/2016                                                            Page 3

7. That the contents of the paragraph No.7 of the petition are not admitted and vehemently denied. It is denied that sometimes in the month of October 2013, the respondent approached the petitioner for providing security services at the respondent site i.e. corporate office situated at the NOIDA, Uttar Pradesh. It is also denied that after due negotiations the respondent engaged the petitioner for the purpose of providing security services. It is also denied that the petitioner has been providing security services at respondents site at NOIDA, since November, 2013. It is submitted that the petitioner has never been engaged for providing services at the corporate office site of the respondent.

......

9. That the contents of the paragraph No.9 of the petition are not admitted and vehemently denied. It is denied that the petitioner continued to raise the bills against the services provided by the petitioner in terms of the agreement to the respondent at the respondents site. It is also denied that the respondent never released the monthly payments on time, in this regard, it is submitted that because no services are availed by the respondent, therefore, question of release of monthly payment arises. It is also denied that the respondent used to release only the part payment and never released for payments in respect of the bills/invoices raised by the petitioner. It is also the denied that the petitioner continued to provide the services to the respondent at the respondents site with the hope of getting the payment soon and for the sake of long business relationship. It is submitted that is no such services as claimed by the petitioner has ever been provided by the petitioner to the respondent, therefore, question of payment does not and cannot arise in favor of the petitioner and against the answering respondent.

10. That the contents of the paragraph No. 10 of the petition are not admitted and vehemently denied. It is denied that the petitioner provided the services, i.e. security services in terms of the agreement to the respondent. It is denied that the respondent continued to with the security services at their office at NOIDA,

CO.PET.640/2016 Page 4 Uttar Pradesh, and there was no reason for the respondent to raise any issue about the quality of services provided by the petitioner to the respondent at the respondent's site. It is denied that the services provided by the petitioner were of the specific standard meeting the specification of the service agreement, in this regard, it is submitted that as the respondent has never availed the services with regard to the said site, therefore, the question of payment towards the petitioner could not arise in any claim made by the petitioner is false and fabricated."

7. From the above reply, it is clear that on one hand in the preliminary submission, the respondent admits that security service was provided by the petitioner with regard to the other factories of the respondent. He has submitted that the petitioner have had been a chronic defaulter in paying the dues/EPF/ESIC of the workmen‟ on account of that the workmen approached the Industrial Tribunal. It also admitted that the respondent availed the services of the petitioner for its establishments and before the concerned Industrial Tribunal, the respondent company had also been made a party to the proceedings. Moreover, due to defaults of the petitioner, the respondent had to suffer on account of constant visits of the labour officer/government officials at the site of the respondent. On account of default in payment of dues of the workmen's/security guards by the petitioner, they remained frustrated and dissatisfied, resulting in disoriented and dis-motivated work performance at the sites including the site of the respondent.

8. The above averments are in contrast to the reply on merit where it has been categorically stated that the petitioner has never been engaged for providing security services at the corporate site of the respondent. In the reply on merit, it is also denied that the respondent never released the

CO.PET.640/2016 Page 5 monthly payments on time. It is reiterated that no services are availed by the respondent therefore no question of release of monthly payment arises. It is again reiterated that no services has been provided by the petitioner.

9. It is clear that the averments being made in the preliminary submission and the averments in the reply are mutually contradictory, evasive and only an attempt to wriggle out of the liability to pay the dues of the petitioner.

10. Reference may be had to the judgment of this court in Vijay Mayne vs. Satya Bhushan Kumar, 142 (2007) DLT 483 (DB). This court held as follows:-

"12. ....... The admissions can be in the pleadings or otherwise, namely, in documents, correspondence etc. These can be oral or in writing. The admissions can even be constructive admissions and need not be specific or expressive which can be inferred from the vague and evasive denial in the written statement while answering specific pleas raised by the plaintiff. The admissions can even be inferred from the facts and circumstances of the case. No doubt, for this purpose, the Court has to scrutinize the pleadings in their detail and has to come to the conclusion that the admissions are unequivocal, unqualified and unambiguous. In the process, the Court is also required to ignore vague, evasive and unspecific denials as well as inconsistent pleas taken in the written statement and replies. Even a contrary stand taken while arguing the matter would be required to be ignored.

11. Hence, admissions can be inferred from vague and evasive denials or admissions can even be inferred from the facts and circumstances of the

CO.PET.640/2016 Page 6 case.In view of the above, the defence set up by the respondent is clearly not bonafide. The reply/defence is vague and evasive. The averments are also contradictory.

12. 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."

13. There is clearly no dispute raised in this case by the respondent. Accordingly, I 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-

CO.PET.640/2016 Page 7 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.

14. Petitioner shall deposit a sum Rs.75,000/- towards cost of the publication 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. The OL will also seize all the bank accounts of the respondent.

15. However, the above order appointing the OL as the provisional liquidator is kept in abeyance for six weeks to enable the respondent to pay the said dues of Rs.2,12,288/- to the petitioner. In case, the said amount is paid by the respondent to the petitioner within six weeks, the order appointing the OL as the provisional liquidator stands recalled.

16. List on 11.03.2019.

JAYANT NATH, J.

DECEMBER 12, 2018/v

Corrected and released on 21.12.2018




CO.PET.640/2016                                                          Page 8