Images Consumer Media Pvt. Ltd. vs Horse Shoe Retail Holding Pvt.Ltd
2018 Latest Caselaw 6020 Del

$~CP-12
*    IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                             Date of decision: 04.10.2018


+       CO.PET. 418/2016

        IMAGES CONSUMER MEDIA PVT. LTD.        ..... Petitioner
                    Through  Mr.Kanti Mohan Rustagi, Mr.Shubho
                             Jana and Mr.Arpit Arora, Advs.

                           versus

        HORSE SHOE RETAIL HOLDING PVT.LTD ..... Respondent
                     Through  Mohd. Kamran and Mr.Saurabh
                              Chaturvedi, Advs.

        CORAM:
        HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (ORAL)

1. This petition is filed under Sections 433(e), (f), 434(1)(a) and 439 of the Companies Act, 1956 (hereinafter referred to as the 'Act') seeking winding up of the respondent Company.

2. It is the case of the petitioner that the parties entered into an arrangement whereby the petitioner had to publish advertisements of the products of the respondents company in its publication named "Livingetc" commencing from February, 2010 till April, 2011. It is stated that the petitioner published full page colour ads of the products of the respondent company in the monthly issues of Livingetc and corresponding to each such

Co.Pet.418/2016 Page 1 month sent a bill to the respondent for payment. A total amount of Rs.1,23,500/- was paid by the respondent. However, a sum of Rs.1,72,500/- remained to be unpaid. Reliance is placed on various emails exchanged between the parties including emails dated 14.06.2011, 05.01.2012, 07.03.2012 and 14.08.2014 and the necessary records of TDS deduction which shows that amount of Rs.2,25,000/- remains payable for the period in question.

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

4. The learned counsel for the respondent submits that main defence taken by them is the plea of limitation. He submits that the invoices in question are for the period w.e.f. 2010- 2011 whereas the present winding up petition has been filed in May, 2016. He submits that the claims are totally barred by limitation.

5. The learned counsel for the petitioner submits that there is no dispute about the dues payable by the respondent to the petitioner. He however relies upon the judgment of the Supreme Court in Khan Bahadur Shapoor Fredoom Mazda v. Durga Prosad Chamaria & Ors., AIR 1961 SC 1236 and the judgment of this court in Hansa Industries (P) Ltd. v. MMTC Ltd., (2005) 124 Comp.Cas 314 (Delhi) to contend that communications which have been exchanged between the parties would tantamount to acknowledgement within the four corners of section 18 of the Limitation Act and extend the period of limitation.

6. I may look at some of the communications, which have been placed on record by the petitioner. On 14th June, 2011, the respondent had written as follows:

Co.Pet.418/2016                                                           Page 2
        "Dear Neha,

We have checked our accounts & there seems to be some discrepancy with the bills.

For Rosenthal, we have made the payments for Feb 10, March 10, April 10, May 10, Oct. 10.

Pending from our side is Dec 10, Jan 11, Feb 11. We did not receive bills for Sept. & Nov. amount pending under horseshoe retail holdings Pvt. Ltd. is Rs.73,000/-.

For V&B, we have cleared payments for Feb 10, March 10, May 10. Have not received bills for Sept. & Nov. amount pending under spa luxury lifestyle ltd. is Rs.1,47,000/-.

Kindly rectify the above with your accounts dept. we are working on clearing the outstandings due towards images group & will soon clear the same.

Thanks & regards, Latika."

7. Similarly, on 7th March, 2012, the respondent wrote an email as follows:

"Dear Harjot,

Regret the delay in response and my apologies for not being able to return your calls, as was tied up with some urgent matters.

We shall be clearing your payments soon, shall revert with the timelines.

Appreciate your patience and understanding.

Regards Surjit."

Co.Pet.418/2016 Page 3

8. On 19.10.2013, the learned counsel for the petitioner sent a legal notice claiming a sum of Rs.1,76,000/- as outstanding. Thereafter, a communication was sent to the respondent on 14.08.2014 by the petitioner-

Sh.Amitabh Taneja, which is follows:

"Dear Amar, as discussed, resending the mails. Hope you will respond.

Regards Amitabh Taneja Chairman/Managing Director

In response, the respondent wrote on 14.08.2014 as follows:

Amitabh- I am travelling and am back at the end of the week and will look into this matter, then"

9. The above communications are the bone of contention between the parties. The issue is as to whether these communications fit into the parameters of Section 18 of the Limitation Act.

10. Section 18 of the Limitation Act reads as follows:-

"18. Effect of acknowledgment in writing.--

(1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was

Co.Pet.418/2016 Page 4 signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received."

11. The Supreme Court in Khan Bahadur Shapoor Fredoom Mazda v. Durga Prosad Chamaria & Ors. (supra), held as follows:

"6. It is thus clear that acknowledgment as prescribed by s. 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledge judgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement.

In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly s. excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly G. without intending to admit the existence of jural relationship such intention could' be fastened on the maker of the statement by an involved or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in s. 19, and there is really no

Co.Pet.418/2016 Page 5 substantial difference between the parties as to the true legal position in this matter.

7. It is often said that in deciding the question as to whether any particular writing amounts to an acknowledgment as in construing wills, for instance, it is not very useful to refer to judicial decisions on the point. The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document, and so unless words used in a given document are identical with words used in a document judicially considered it would not, serve any useful purpose to refer to judicial precedents in the matter. However, since decisions have been cited before us both by the learned Attorney-General and Mr. Viswanatha Sastri we propose to refer to them very briefly before turning to the document in question.

8. The question as to what is an acknowledgment has been answered by Fry, L., J., as early as 1884 A. D. in Green v. Humphreys (1). This answer is often quoted with approval. "What if; an acknowledgment", asked Fry, L.J., and he proceeded, "in my view an acknowledgment is an admission by the writer that there is a debt owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt (1) (1884) 26 Ch. D- 474, 481 as being due from somebody. In order to take the case out of the statute there must upon the fair construction of the letter, read by the light of the surrounding circumstances, be an admission that the writer owes the debt". With respect, it may be added, that this statement succinctly and tersely gives the substance of the provisions contained in s. 19 of the Limitation Act."

12. Similarly, this court in Hansa Industries (P) Ltd. v. MMTC Ltd.(supra) held as follows:

"19. We can deduce the following principles from the aforesaid

Co.Pet.418/2016 Page 6 judgments which shall have to be applied in a given case to ascertain as to whether writing constitutes an acknowledgment or not:

(a) Acknowledgment means an admission by the writer that there is a debt owed by him either to the receiver of the letter or to some other person on whose behalf it is received. It is not enough he refers to a debt as being due from somebody. He must admit that he owes the debt.

(b) The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature of the specific character of the said liability may not be indicated in words.

(c) Words used in the acknowledgment indicate the circumstances of jural relationship between the parties such as that of debtor and creditors.

(d) It must appear that statement is made with the intention to admit such jural relationship.

(e) Such intention can be implied and need not be expressed in words. In construing the words used in the statement, surrounding circumstances can be considered although oral evidence is excluded.

(f) Although liberal construction is to be given to such statement but where a statement was made without intending to admit the existence of jural relationship, the court cannot fasten such intention on the maker by an involved or far-fetched process of reasoning.

(g) In deciding the question in a particular case, it is not useful to refer to judicial decision and one has to inevitably depend upon the context in which words are used."

13. One of the important factors noted while construing the words used in

Co.Pet.418/2016 Page 7 the statement for the purpose of section 18 of the Limitation Act is that there appears from the statement a jural relationship of debtor and creditor. The relationship can also be implied and need not be expressed in words. In construing the words used in the statement, surrounding circumstances can be considered.

14. A perusal of the emails exchanged between the parties clearly shows that the respondent has all along admitted jural relationship of debtor and creditor and that dues are payable to the petitioner. In this background one can see the communication dated 14.08.2014 written by the petitioner where the entire original emails demanding payments were sent to the respondent. The respondent sent a reply stating that he will look into this matter. Keeping in view the surrounding circumstances i.e. the earlier e-mails specifically accepting the liabilities by the respondent and the fact that there is no dispute that the debt is payable to the petitioner, these e-mails would amount to an acknowledgement of debt by the respondent.

15. In my opinion, the debt would be within the limitation period in May, 2016 when this winding up petition was filed.

16. Consequently, the petition is admitted and 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 Rs.75,000/- with the Official Liquidator within 2 weeks, subject to any further amounts that may be called for by the liquidator for

Co.Pet.418/2016 Page 8 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.

17. In the interest of justice, I suspend the present order appointing the OL as the Provisional Liquidator for a period of four weeks to enable the respondents to pay its debts to the petitioner. In case, necessary payments of Rs.1,72,500/- is made, the above order appointing the OL as the provisional liquidator shall stand recalled.

18. List on 28.11.2018.

JAYANT NATH, J.

OCTOBER 04, 2018/v




Co.Pet.418/2016                                                            Page 9