M/S Industrial Foams Private ... vs M/S Vardhman Precision Profiles & ...
2019 Latest Caselaw 2096 Del

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*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                           Date of Decision: 22.04.2019

+     CO.PET. 565/2014

      M/S INDUSTRIAL FOAMS PRIVATE LIMITED..... Petitioner
                    Through    Mr.Anand Srivastava, Adv.
                    versus
      M/S VARDHMAN PRECISION PROFILES
      & TUBES PVT. LTD.                           ..... Respondent
                    Through    Mr.Sunil K. Jain, Mr.Punya Garg and
                    Mr. Abhishek Jain, 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 seeking winding up of the respondent Company.

2. It is the case of the petitioner that orders were placed by the respondent Company on the petitioner on 14.07.2012. Additional orders were placed from August to September 2012. Between 20.08.2012 to 15.09.2012 various tax invoices were raised by the Petitioner Company against the aforesaid purchase orders, for an amount aggregating to a sum of Rs.1,11,83,132/-. The respondent company on behalf of its joint venture partially liquidated the dues of the aforesaid sum; leaving an outstanding balance of Rs.21,76,399/- to be payable to the petitioner. Several communications have taken place between the parties. Reliance is placed on an e-mail dated 11.11.2012 sent by the respondent company, whereby the respondent company promised to release the payment. Notice was issued to

the respondent on 26.05.2014. Despite receipt of the same, the payment was not released. Hence, the present winding up petition.

3. The respondent in their detailed reply have essentially taken the plea that the goods supplied by the petitioner were defective. It is claimed that the petitioner failed to supply material as per the specification of the material. It has also been pleaded that in case there is any dispute between the parties, the purchase orders had an arbitration clause and the petitioner as an alternative remedy, has not chosen the same.

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

5. It is a matter of fact that the respondent sent an e-mail on 21.09.2012 to the petitioner stating that the PUF panels supplied by the petitioner were sent to different laboratories for testing. It is pointed out that the results indicate that the Ultimate Tensile Strength (UTS) and Yield Stress (YS) of the panels are much lower than the specified UTS and YS as per the purchase orders raised on the petitioner on 26.06.2012. It is also claimed that visual inspection shows rusting on some of the panels. Other such aspects have been mentioned. In response to this e-mail, the petitioner sent a reply dated 25.09.2012 where it has been pointed out that the work would be completed as per the job requirements.

6. After exchange of these e-mails on 11.11.2012 the respondent had again sent an e-mail to the petitioner, assuring that the payment would be released within 24 hours after getting the approval.

7. In my opinion, one thing strikes out immediately. If the goods supplied by the petitioner remained defective, the respondent ought to have returned the goods back to the petitioner. It cannot continue to retain the goods without making the full the payment thereof. In the present case, one

cannot help but notice that substantial payments have already been made by the respondent to the petitioner. What is left, is a small amount as compared to the original purchase orders. That apart, the communication dated 11.11.2012 clearly shows that the respondent had accepted its liability to pay to the petitioner.

8. I may also note that there was no response to the legal notice dated 26.05.2014 sent by the petitioner.

9. In my opinion, in light of the above, the respondent remains liable to pay to the petitioner, the said sum of Rs. 21,76,399/-. The debt remains due and payable by the respondent.

10. The argument of the learned counsel for the respondent is that because an arbitration clause exists in the agreement, the parties should go for arbitration is a misplaced argument. The petitioner, if the facts so warrant can approach this court for winding up of the respondent company. Merely because an arbitration clause exists, does not mean that the parties cannot approach the court under Sections 433, 434 and 439 of the Companies Act. The Supreme Court in Booz Allen & Hamilton INC v. SBI Homes Finance & Ors., (2011) 5 SCC 532 has held that petitions for winding up are non-arbitral. Relevant para of the said judgment reads as follows:

"36. The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special

statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."

11. In view of the above, the defence set up by respondent is not a bonafide defence. Reference in this context may be had to the judgment of the Supreme Court in the case of IBA Health (I) Pvt. Ltd. vs. Info-Drive Systems Sdn.Bhd., (2010) (4) CompLJ 481 (SC). 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."

12. Admit. 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.

13. Petitioner shall deposit a sum of 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.

14. However, the above order is suspended for four weeks to enable the respondent to make the necessary payment to the petitioner. In case the necessary payment is made, the aforesaid order appointing the Official Liquidator as the Provisional Liquidator shall stand revoked.

15. List on 05.08.2019.

JAYANT NATH, J APRIL 22, 2019 rb