Gujarat High Court
Hiya Overseas Pvt. Ltd.Through ... vs Kamili Packers Pvt. Ltd [Amended ... on 21 April, 2023
Bench: Ashutosh Shastri
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/O.J.APPEAL NO. 1 of 2016
In R/COMPANY PETITION NO. 245 of 2014
With
CIVIL APPLICATION (OJ) (FOR STAY) NO. 1 of 2016
In R/O.J.APPEAL NO. 1 of 2016
With
CIVIL APPLICATION (FOR PRODUCTION OF ADDITIONAL
EVIDENCES) NO. 1 of 2022
In R/O.J.APPEAL NO. 1 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI Sd/-
and
HONOURABLE MR. JUSTICE J. C. DOSHI Sd/-
==================================================
1 Whether Reporters of Local Papers may be allowed to see No
the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
==================================================
HIYA OVERSEAS PVT. LTD.THROUGH ITS DIRECTOR-VIJAY A PATEL
Versus
KAMILI PACKERS PVT. LTD [AMENDED AS PER ORD DTD 20.1.16]
==================================================
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
Appearance:
MR. S.N.SOPARKAR, SENIOR ADVOCATE WITH MR MRUGEN K
==================================================
CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 21/04/2023
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI)
[1] By way of this appeal under Section 483 of the Companies
Act, 1956 a challenge is made to an order dated 06.01.2016
passed by the learned Company Judge in Company Petition
No.245 of 2014 whereby the main Company Petition was
admitted with consequential direction.
[2] The brief facts leading to the rise of present appeal are
that original petitioner i.e. respondent company is incorporated
under the provisions of the laws of Kenya and is carrying on the
business of exporting grains to various countries, including
India. The original respondent Company was incorporated on
18.12.2006, under the provisions of the Companies Act, 1956
(hereinafter referred to as "the Act"). It is the case of appellant
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
that in the course of business of trading and exporting of food-
grains, the orders were placed by appellant company for supply
of goods such as Moong, Cow-peas red, various types of beans
and from time to time, the original petitioner company i.e.
Kamili Packers Pvt. Ltd. exported and shipped the goods from
Nairobi and delivered to the respondent Company i.e. present
appellant. The appellant original respondent had assured the
original petitioner company for payment immediately upon
receipt of the goods since on earlier occasion also, the goods
were supplied and on account of such relations without insisting
on an advance, or even a Letter of Credit in respect of the
orders placed, the goods were loaded in the presence of, and
under the supervision of, one Mr. Vijay Patel, who is
representative of the present appellant Company, the goods
were sold and delivered to the respondent Company i.e. present
appellant and the invoices were raised for an amount of US$
1,079,133=00 which approximately equivalent to
Rs.6,51,79,633=20. According to original petitioner i.e. present
respondent, all the invoices were duly accepted and in response
to this transaction, the amount aggregating to US$
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
3,019,498=50 was due and payable, against which, the present
appellant Company has merely paid to the original petitioner
company, an amount aggregating US$ 1,940,365=50 only and
despite request having been made for balance payment, the
present appellant - original respondent company failed to clear
the said amount and as such an amount to the extent of US$
1,079,133=00, remain outstanding payable to the original
petitioner.
[2.1] It is the case of the original petitioner i.e. respondent
herein that despite repeated request having been made since
the present appellant had neglected to pay the amount, a
statutory notice was served on 01.04.2014, calling upon to clear
the balance amount, as indicated above and a specific time limit
was given of 21 days. It was also indicated that failing to
comply with the notice, the original petitioner would be entitled
to file winding-up proceedings a3gainst the present appellant.
To this statutory notice, a general denial is made by present
appellant by way of a communication dated 05.04.2014, denying
the averments made in the statutory notice and since without
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
any justification and also without any bona fides evasive reply
was filed and a further communication was also written by
original petitioner on 10.04.2014, through the advocate, but no
reply was received by the original petitioner from present
appellant company which has resulted into filing of the winding-
up petition which was numbered as Company Petition No.245 of
2014 before this Court.
[2.2] The said winding-up petition was heard by the learned
Company Court i.e. learned Single Judge and after hearing both
the sides, learned Company Court was pleased to pass
impugned order on 06.01.2016 whereby the Company Petition
for winding-up came to be admitted and consequential process
was also ordered to be carried out. The operative part of the
said order reads as under:-
"29. Hence, the following order:
30. Admit.
31. The Registry is directed to notify the present
petition for final hearing on 10.03.2016. The admission of
the petition shall be advertised in the English daily
newspaper "The Times of India", Ahmedabad Edition and
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
the Gujarati daily newspaper, "Jansatta", Ahmedabad
Edition.
32. The Official Liquidator attached to this Court is
appointed as the Provisional Liquidator of the respondent-
Company and is directed to take over the charge and
possession of the assets of
the respondent-Company inventory of the office and to
prepare premises, books an of accounts and all other
assets of the respondent-Company, as required.
33. At this stage, a request is made by Mr.Niral
Mehta, learned advocate for the respondent-Company that
the petition may not be advertised for a period of two
weeks. The request is granted in the interest of justice."
[2.3] It is this order passed by learned Company Court is made
the subject matter of present O.J. Appeal under Section 483 of
the Act before this Court wherein initially after taking note of
unilateral submissions, the co-ordinate Bench of this Court was
pleased to issue notice on the appeal by taking note of primary
submissions and in Civil Application (for stay) the impugned
order passed by the learned Company Court i.e. learned Single
Judge came to be stayed. Following is the initial order since
relevant to the notice, the Court deems it proper to reproduce
hereunder:-
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
"Order in the Appeal:
Draft Amendment is allowed.
Counsel for the appellant, taking us through the reply
filed by the appellant Company before the Company Judge,
submitted that purchases of foodgrains were made by the
appellant Company through one Unisilk Limited of
Hongkong and to whom various payments totalling to
9,43,590 US $ have already been made. The claim of the
appellant Company is highly exaggerated which, in any
case, lie against the appellant Company. The appellant also
had disputes about quality of the goods supplied. In view
of such disputed questions, learned Company Judge ought
not to have admitted the Company Petition for winding up.
Let there be NOTICE in the appeal returnable on
17.02.2016.
Order in the Civil Application:
RULE returnable on 17.02.2016. There shall be ex-
parte ad-interim stay against operation of the impugned
order dated of the learned single Judge.
In addition to service to the respondent, this order may
also be sent to the Power of Attorney of the respondent
Company through whom the Company Petition has been
presented. This shall be done through Speed post at the
cost of the appellant."
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[3] It is with this background, the present appeal has come up
for consideration before this Court wherein Mr. S. N. Soparkar,
learned senior advocate appearing with Mr. Mrugen K. Purohit,
learned advocate for the appellant and Mr. A. S. Vakil, learned
advocate appearing for the respondent.
[4] Mr. S. N. Soparkar, learned senior advocate appearing
with Mr. Mrugen K. Purohit, learned advocate for the appellant
has vehemently contended that the order passed by the learned
Single Judge is not only unjust and arbitrary but de-hors the
circumstances which were produced and canvassed. It has been
further contended that the defence which has been put-forth by
present appellant before the learned Single Judge raises clear
triable issues and when that we so, such disputed questions of
fact cannot be subject matter of winding-up petition as the civil
remedy is available to the opponent herein. Mr. Soparkar,
learned senior advocate has further submitted that looking to
the arrangement with regard to the transaction and the supply
of goods, the necessary payment towards the invoices generated
have already been made by the present appellant company to
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
M/s. Unisilk Limited through its the transaction took place and
that the learned Single Judge has miserably failed to consider.
It has further been contended that there is no privity of contract
between the present appellant company with respondent
company and the learned Single Judge has failed to properly
appreciate the international business transaction. As per the
business practice, the invoice and packing list itself is contract
for particular purpose and generally the terms and conditions of
the business transaction are stated always in invoice itself and
as such, in view of the fact that there is no written contract is
required between the parties, the learned Company Judge who
raised an inference has erroneously come to the conclusion. In
fact, according to Mr. Soparkar, learned senior advocate, there
is no outstanding amount payable to the respondent company by
present appellant and as such the order passed by the learned
Company Court to admit the petition deserves to be recalled
and set aside.
[4.1] Mr. Soparkar, learned senior advocate has further
submitted that apart from the fact that there is no amount due
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
and payable towards the transaction and as such simply because
in earlier reply to the notice the fact is not specifically pointed
out no inference could have been raised by the learned Single
Judge. In fact there was mutual oral agreement between the
parties and in due compliance of the said oral understanding the
appellant has already made the payment to M/s. Unisilk Limited
and if the M/s. Unisilk Limited has not transmitted money to
present appellant, the appellant cannot be compelled to make
double payment under the threat of winding-up. Mr. Soparkar,
learned senior advocate has submitted that the learned
Company Court has failed to appreciate that respondent
company was merely a consignee and because of the agreement
between petitioner company and M/s. Unisilk Limited, the
original petitioner company delivered the goods to the
respondent. However, there was no privity of contract between
the petitioner company and the respondent company. M/s.
Unisilk Limited and the respondent company i.e. Kamili Packers
Pvt. Ltd. have made such arrangement to save the expenses of
switching BLIT cost and as per notified party the definition
consignee has all right to sell and deliver the cargo and this
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
intricacy has not been properly construed by the learned Single
Judge and thereby has passed an order which has got a far
reaching consequence upon appellant company.
[4.2] According to Mr. Soparkar, learned senior advocate, the
company is a viable company and has not lost its sub-stratum
and as such there is no question of winding-up of company. It
has further been contended that taking of plea in the written
statement is always permissible, even if it is inconsistent and as
such the learned Single Judge ought not to have raised any
inference simply because there might be some inconsistency
and the reply to the notice as well as the written statement filed
opposing the Company Petition. These entire circumstances
which are stated about factum of payment to M/s. Unisilk
Limited requires a detail trial and adjudication and that can be
ascertain only by way of leading evidence. Mr. Soparkar,
learned senior advocate with a view to substantiate his
submissions drawn the attention to the sample invoice reflecting
on page 13 of the appeal compilation and has submitted that
notified party is a M/s Unisilk Limited. Further the statement of
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
account, which has been attached, reflects that the payment has
already been made by the appellant. In fact a comparative
chart with invoice numbers if to be looked into, it clearly depict
that amount of each invoices, seven in numbers, have already
been made and as such since this material aspect having not
been properly construed by the learned Single Judge, the order
impugned deserves to be quashed and set aside as the same is
contrary to material on record.
[4.3] Mr. Soparkar, learned senior advocate has further
submitted that simply because, at length, the statutory notice
has not been dealt with by submitting reply in exhaustive form
but when in the petition adequate material has already been
supplied indicating factum of payment and there is hardly any
justification for the learned Single Judge to pass the impugned
order. Winding-up of a company is a serious consequence upon
a viable unit and if that be allowed, it will have a serious
consequence upon the image and resultant adverse effect on the
business of company. Despite the fact that full payment has
been made the original petitioner company i.e. respondent
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
herein has unilaterally submitted the petition for pressuring
present appellant to make the payment since M/s. Unisilk
Limited might not have remitted the amount to opponent
company but for which cause the present appellant cannot be
pressurized. This armed twisting method which has been
adopted by filing winding-up petition upon the appellant ought
to have been seriously viewed by the learned Single Judge and
having not done so, the order is unsustainable. Mr. Soparkar,
learned senior advocate has also submitted that these issues
which have been raised are seriously in dispute and the usual
remedy which is otherwise available is certainly not the petition
under Sections 433 and 434 of the Act. The element of
neglecting of payment which is the basic foundation when
completely missing there is hardly any justifiable reason to
entertain the petition more particularly when each of the
invoices have been cleared by making payment and so far as
eighth invoice is concerned, the payment was received in the
form of adjustment to the other by making payment to father in
a sum of Rs.50,000 dollars and when that we so, the order
passed by the learned Company Court deserves to be quashed.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[4.4] Mr. Soparkar, learned senior advocate has further
submitted that it is trite law then the disputed version and the
stand cannot formed the subject matter of winding-up petition
and under the threat of winding-up no armed twisting method
be adopted. The element of Sections 433 and 434 of the Act are
required to be established prima facie which circumstance is
completely missing looking to the voluminous record placed
before the Court. Hence, in no case the petition would have
been entertained.
[4.5] To strengthen his submission, Mr. Soparkar, learned
senior advocate appearing for the appellant has made a
reference to few of the decisions to canvass the proposition.
Following are the decisions referred to by the Mr. Soparkar,
learned senior advocate. The said decisions will be considered
at appropriate stage in the present order:-
(i) IBA Health (India) Private Limited versus
INFO-Drive Systems SDN. BHD. reported in
(2010) 10 SCC 553.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
(ii) Excel Generators Private Ltd. versus
Meghamani Organics Ltd. reported in 2013 SCC
OnLine Guj 4982.
(iii) Tata Iron and Steel Company Limited
versus Micro Forge (India) Limited reported in
2000 (0) GLHEL-HC 212951.
(iv) Polyrec Processors Pvt. Ltd. versus
Polyline Limited reported in 2012 SCC OnLine Guj
5189.
[4.6] To make a submission with more emphasis, a chart has
been prepared and presented to indicate that the very same
invoices which were seven in numbers have been met with and
remittance has also been effected and when the appellant
company has made full payment to each of the invoices, there is
hardly any grievance left for opponent company to sustain the
petition for winding-up and by referring to this chart and the
payment details, a submission is reiterated to allow the appeal
by setting aside the impugned order passed by the learned
Single Judge dated 06.01.2016. No further submissions have
been made.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[5] As against this, Mr. A. S. Vakil, learned advocate
appearing for the opponent company has vehemently objected
to the stand taken by learned senior advocate appearing for the
appellant. It has been submitted that a sham and bogus defence
is tried to be generated before the Court and can be culled out
from the defences which have been taken inconsistently time
and again in the present proceedings.
[5.1] Mr. Vakil, learned advocate has further submitted that a
statutory notice was given and served upon the appellant
company on 01.04.2014 reflecting on page 14 and it has been
clearly mentioned in the said notice that goods were duly
shipped from Nairobi and delivered at the destinations as
required by appellant company which is well within the
knowledge of Mr. Vijay Patel happened to be one of the Director
of the appellant company. At this stage, according to Mr. Vakil,
learned advocate there was a first available opportunity for the
appellant company to disclose if genuinely the payment could
have been made to the M/s. Unisilk Limited. A perusal of reply
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
to the said notice dated 05.04.2014, reflecting on page 21 in
which no such clarification is made that payment has already
been made but in fact a general denial is made with regard to
the account supplied along with the notice. Except this brief
dispute, no stand is taken either of quality of goods or payment
to M/s. Unisilk Limited already made nor any such defence
which is right now tried to be projected by learned senior
advocate. So at first available opportunity just evasive reply has
submitted. Further even in a communication dated 10.04.2014,
it was specifically pointed out that all statements made in the
reply are inconsistent general denial and dishonest and
motivated averments to avoid the settlement of legitimate dues
and as such it was clearly conveyed that original petitioner i.e.
original opponent is willing to justify every entry in the account
by supporting documents and as such, 21 days time was given.
Now, at this stage also, in fact no reply is submitted by the
appellant company.
[5.2] Mr. Vakil, learned advocate has further submitted that
thereafter when an affidavit-in-reply has submitted to the
Company Petition yet another opportunity was available to the
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
company to clarify the factum of payment but the assertions
which are made in the reply clearly indicates that defence is
tried to be taken clearly inconsistent with the reply to the notice
and as such, at this stage also, no genuine defence is taken. In
fact, a defence is tried to be raised to the effect that the
statement of account prepared by original petitioner company is
not genuine but in fact there is no material and just a bald
assertion that payment has been made to each of the invoices.
For the first time a defence is tried to be created that numbers
of disputes such as the quality, price, timely shipment, damages,
demurrages etc. are involved in the present case which was
never the case prior in point of time but still by raising this, a
submission is made that proper course is to file a Civil Suit for
recovery at the best. A clear assertion is made in this affidavit
so on 11.03.2015 by submitting that respondent company i.e.
present appellant is running profit making unit and also paying
all other statutory dues, commercial liability etc. without any
default and therefore it may not be said that the company is not
above to pay its dues and as such winding-up proceeding is not
a answer. But this averment, made on oath, is false and
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
frivolous and made with an intent to misguide the Court. In
fact, according to Mr. Vakil, learned advocate, as on that day,
when the affirmation of affidavit took place, the State Bank of
India was already after the appellant company which had
already issued Notice under Section 13(2) of the Securitization
Act on 18.05.2015 not only that but even original application
was also submitted by State Bank of India against present
appellant before the Debt Recovery Tribunal, Ahmedabad which
was numbered as O.A.No.433 of 2015 and as such a clear
misstatement on oath is made by appellant company to misguide
the Court. All these issues have been examined by learned
Single Judge at great length and thereafter the order impugned
came to be passed and as such there is no irregularity, no
perversity, nor manifest error reflecting from an order which
may be interfered with and as such this possible view, which has
been taken by the learned Company Court, may not disturb in
the absence of any distinguishable material.
[5.3] Mr. Vakil, learned advocate has then taken the Court to
yet another assertion of the appellant company that to M/s.
Unisilk Limited the payment has already made somewhere in
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
the months of March and July, 2013 but had that been so when
they received the statutory notice on 01.04.2014, the normal
reaction would be to contend that payment has already been
made but this unnatural behaviour of not disclosing the fact of
payment even if raises serious doubts and as such also, the
learned Single Judge has rightly appreciated and thereby
passed an order. Looking to the invoices and the particulars
contained therein, it is quite clear that the defence tried to be
raised is not a genuine one and there is clearly not only inability
but neglect of payment of the amount which would clearly
attracts the ingredients of Sections 433 and 434 of the Act and
as such a conjoint effect of material on record would indicate
that a futile attempt is made to divert the attention from the
core issue. By filing further affidavit, the opponent company
has also submitted details with regard to the State Bank of India
since that was stand taken by appellant company that no
statutory dues of any authorities are pending but then this is
misguiding in assertion is clearly refuted by the further affidavit
which has been filed on 15.07.2016. So considering overall
material on record and according to Mr. A. S. Vakil, learned
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
advocate, the order is a well reasoned order after due
consideration to the relevant material on record and after
critical analysis of stand of either side only thereafter an order
is passed which in no uncertain term can be said to be either
suffering from vice of perversity or material irregularity in any
manner.
[5.4] From the chart submitted by Mr. S. N. Soparkar, learned
senior advocate appearing for the appellant, it has been pointed
out by Mr. A. S. Vakil, learned advocate for the opponent that
invoices which are reflecting of M/s. Unisilk Limited the
payment consideration was CAD i.e. Cash Against Delivery and
if the date of invoices to be compared with the remittance date
given by the present appellant, it would clearly indicate that
the payment upon delivery has not been made or affected by the
appellant and therefore, this self contradictory factum which is
reflecting would clearly indicate that defence is not appearing
to be genuine and the same will be examined at an appropriate
stage since the main Company Petition is already admitted and
awaiting appropriate adjudication on merit in accordance with
law.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[5.5] Apart from this there is no material except this remittance
date given by the appellant that actual payment has been made
and if the delivery has taken place through M/s. Unisilk Limited
some amount by way of either commission or anything also must
have been paid but that is also completely lacking in the stand
of the appellant and as such the main matter since awaiting
final disposal requires to be considered in its true latter and
spirit. Mr. Vakil, learned advocate with a view to substantiate
his submission has further submitted that there is no iota of
evidence with regard to the mutual arrangement which has
been tried to be projected to avoid the responsibility and there
is no material worth the name about so called mutual
arrangement and the said mutual arrangement is also not
evidently reflecting from material on record or from even
conduct of either party and as such this defence which has been
tried to be projected is a sham and without any substance which
cannot be said to be a genuine defence and therefore, the
learned Company Judge has rightly exercised the discretion and
this possible view on the very same material may not be
substituted since this being an appeal under Section 483 of the Act.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[5.6] Mr. Vakil, learned advocate has further submitted that it is
trite law that while exercising appellant jurisdiction, a possible
view or a batter view may not be substituted and the view taken
by the learned Single Judge deserves no considerations in the
absence of any distinguishable material and as such has
requested that this being an appeal, the stand may not be
entertained as already been examined by the learned Single
Judge. Hence, appeal being meritless, the same deserves to be
dismissed.
[5.7] At this stage, Mr. Vakil, learned advocate has placed
reliance upon few decisions delivered by the various Courts and
the same are as follows and these decisions will be dealt with at
an appropriate stage in the present order:-
(i) Madhur Food Refrigeration versus
Roadmaster Foods Limited reported in 1998 SCC
OnLine P & H 500.
(ii) Calcast Ferrous Limited versus SRC
Steels Pvt. Ltd reported in 2017 SCC OnLine
Calcutta 135.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
(iii) Venkatesh Coke and Power Ltd. versus
Simplex Concrete Pils (India) Ltd. reported in
2004 (78) DRJ 567.
(iv) Nirmala Devi Saraf versus Maheshwary
Ispat Ltd. reported in 2014 SCC OnLine Calcutta
22752.
(v) Bhavana Infra Projects Pvt. Ltd. versus
Bagpet Paper Pvt. Ltd. reported in 2019 SCC
OnLine Gujarat 4342.
(vi) Shital Fibers Ltd. versus Indian Acrylics
Limited reported in 2021 SCC OnLine SC 281.
(vii) J.P.Srivastava and Sons (Rampur) Pvt. Ltd.
versus Gwalior Sugar Company Limited reported
in 2004 (0) AIJEL-SC 12182.
[6] Having heard the learned advocates appearing for the
respective parties and having gone through the material on
record, few circumstances deserve to be noted while coming to
an ultimate conclusion in the present matter.
[7] First of all the transaction with regard to the supply of
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
goods is not in dispute. Further in response to the statutory
notice which has been given by the respondent company to
present appellant except general denial, factum of payment to
M/s. Unisilk Limited is not asserted at all. Even at the stage
when another communication was sent to clarify and to make
the payment vide communication dated 10.04.2014 through the
advocate has not been responded to. So immediate natural
reaction is completely missing in the stand of present appellant
company when they had a clear opportunity to clarify that
payment with respect to seven invoices was already made to M/
s. Unisilk Limited.
[8] Further the invoices if to be looked into which indicates
that one of the terms of delivery and payment is CAD i.e. Cash
Against Delivery and these invoices and the date of remittance
by appellant company to M/s. Unisilk Limited if to be compared,
the same is not matching. These invoices can be seen from
page Nos. 61 and 88 etc. and as such the stand has not been
accepted by the learned Company Court while passing the order
of admission of a Company Petition.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[9] In addition to this, as a part of later defence which is tried
to be projected that there was an oral understanding in the form
of agreement as to in what manner the goods to be supplied.
Now this defence which is tired to be projected about oral
arrangement is not appeared to be genuine enough even by the
Company Court while passing the impugned order and that in
view of the fact that the said stand was not supported by the
documentary evidence or even by attendant circumstances.
[10] Yet another circumstance which was initially mentioned at
the stage when the reply came to be filed as indicating in
paragraph 4, the petitioner failed to supply the items as per the
standard quality but on account of business relation with the
petitioner, the respondent could sell those standard items by
reducing price. In fact, this was never the subject matter of
controversy nor the material substantiating the same and as
such this version which has been tried to be projected was not
found favour with the appellant company even by the learned
Single Judge.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[11] The most material on record is that at the initial stage
appellant company came out with a stand that there is no other
statutory liability or responsibility is outstanding by virtue of
which it can be informed that company has not able to pay its
dues but the said fact if to be perused the company is facing a
rough financial weather. On the contrary, the State Bank of
India has already initiated the proceeding in the form of original
Application No.433 of 2015 against the appellant company and
prior to it not only the notice was issued under Section 13(2) of
the Securitization Act but the possession notice was also issued
on 18.05.2015. Of course, the aspect about this liability of State
Bank of India is tried to be clarified but it is culled out from the
record that the stand that there is no statutory liability is ill-
founded from the record. The original application which has
been attached on page 144 being O.A. No.433 of 2015 the
outstanding amount indicated therein has also got its preface.
The enforceable and equitable mortgage which was created was
that of 30.08.2010 and the liability was already acknowledged
by executing a Revival Letter on 11.09.2013. Be that as it may,
the said circumstance may not relate to the respondent
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
company but nonetheless the stand taken by the appellant
company is quite in conflict with the relevant record and as such
a conjoint effect of this record has led the learned Company
Court to pass an order as defence is not found to be worthy of
acceptance.
[12] In addition to it, in affidavit-in-rejoinder of the original
petitioner there was a clear dispute with regard to the payment
having been made even to M/s. Unisilk Limited in respect of
seven invoices which were mainly the subject matter which led
the original petitioner to submit the petition for winding-up.
The appellant company had only produced copies of invoices
containing the very same description, very same quantity, very
same rate and value of good supplied and by creating such
defence on the contrary he was found to be a fabricated and got
up material an collusion with M/s. Unisilk Limited and this
aspect has also been gone into examined by the learned
Company Court. In fact, in paragraph 4(ii) on page 49, it was
clearly asserted that appellant company has conveniently not
chosen to annex its purported Invoice No.10019 and out of the
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
other six invoices annexed to the reply only one invoice i.e.
Invoice No. 000020 is used by M/s. Unisilk Limited, Hongkong
whereas remaining five invoices, namely, Invoices No.10022,
10021, 10020, 10033 and 10043 are issued by M/s. Unisilk
Limited, Dubai. It appears that M/s. Unisilk Limited, Dubai as
also M/s. Unisilk Limited, Hongkong are said to be associate
companies of present appellant company since original
petitioner was instructed by the appellant respondent company
itself to mention the name of M/s. Unisilk Limited as "Notify
Party" in the shipping document and Notify party is a party,
whom the carrier is supposed to notify regarding the arrival of
the Vessel. The Notify Party is then responsible for arranging
the arrival formalities of the Vessel. As such, a conjoint effect of
such issue has been explained to be prima facie not the invoices
genuine enough on the contrary, fabricated and got up
documents not relevant to the determining the liability of
present appellant company to the original petitioner and then by
explaining each of the invoices, a stand was taken that defence
raised by the appellant company in the original proceeding is
prima facie found not genuine and after considering these
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
issues at great length, the learned Single Judge has found not in
favour of the appellant company and the detail conclusion based
upon critical analysis of material on record is an example of
clear application of mind while taking such a course against the
appellant and as such the Court deems it proper to refer to the
said conclusion arrived at by the learned Single Judge i.e.
Company Court while passing the order impugned:-
"21. From the submissions advanced by learned
counsel and the material on record, there does not appear
to be any dispute regarding the fact that business
transactions did took place between the petitioner and the
respondent-Company for which certain payments had to
be made by the respondent - Company. In that sense, by
the therefore, there is no denial by the respondent-
Company regarding the dues to be paid to the petitioner
in respect of the transactions referred to in the petition.
The stand that is now being adopted by the respondent-
Company is that the payments due to the petitioner were
made by the respondent-Company to M/s.Unisilk Limited
and it was for M/s.Unisilk Limited to have further
transmitted those payments to the petitioner.
22. It may be noted that the petitioner has mentioned
the details of the payments due to it in the statutory
notice by annexing the Statement of Account, detailing the
the relevant invoices. In its reply to the statutory notice
dated 05.04.2014, the respondent-Company has only
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
stated that the allegations against it are not specifically
admitted by it and that the petitioner has not given a
correct version of facts and the notice is vague. It is
further stated that the notice is concocted and fabricated
and is, therefore, disputed and not accepted by the
respondent Company. There is no denial in the said reply,
of the transactions between the parties or the payments
due to the petitioner-Company on account of those
transactions. Nor has it been stated that the respondent-
Company has already made the payments to M/s.Unisilk
Limited, for further onward transmission to the petitioner.
The stand now being taken by the respondent-Company in
the oral submissions and the pleadings before this Court
is, therefore, at divergence with the stand taken in the
statutory notice.
23. The respondent-Company claims to have a
turnover of rupees one hundred crores in the year 2014-
15. Though no balance-sheet or other documents are
produced to substantiate this claim of the respondent-
Company, even if the statement of the respondent-
Company is taken at its face value, one would expect that
a Company with such a huge turnover would, at least, put
into writing any agreement for payment of dues involving
a huge amount between it, the petitioner and M/s.Unisilk
it, Limited, into writing. No such agreement has been
produced before this Court to substantiate the claim of the
respondent-Company, that it was mutually agreed
between it, and the petitioner that the dues for the goods
received directly by the respondent from the petitioner
would be made to M/s.Unisilk Limited, which would, in
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
turn, transmit the payment to the petitioner. Where
commercial transactions of such huge proportions are
involved, it is difficult to believe that there was a mutual
oral agreement to this effect between the parties. Even if
that had been the case, the respondent-Company would
have adverted to this aspect in its reply to the statutory
notice, which has not been done. The entire defence of the
respondent-Company, therefore, rests on the so-called
mutual agreement between it, the petitioner and
M/s.Unisilk Limited. There is no communication or
document of M/s.Unisilk Limited to the effect that such an
agreement took place and that it was acting as a conduit
for payments between the respondent-Company and the
petitioner.
24. Insofar as the genuineness and authenticity of
the invoices produced by the respondent-Company is
concerned, this Court would not, at this stage, advert to
the said issue. However, it does appear from the material
on record that the respondent-Company is indebted to the
State Bank of India and public notices have been issued by
the said Bank to this effect in addition to proceedings
being launched under the SARFAESI Act and RDDB Act.
In this background, the bald assertion on the part of the
petitioner that the respondent-Company is capable of
discharging its liabilities, prima-facie, rings false.
25. The aspect that certain dues of the other
creditors amounting to rupees fifteen to fifty lakhs have
been paid by the respondent-Company would not detract
from the fact that it is unwilling, or unable, to pay the
dues of the petitioner-Company.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
26. One more glaring aspect is that, though the
respondent-Company claims to have a turnover of rupees
one hundred crores in the year 2014-15, it has not
produced any documents to this effect on the record of the
petition. Moreover, there is no material on record to show
that the respondent-Company has filed its annual financial
statements for the financial year 2014-15 on the for portal
of the Ministry of Corporate Affairs, as required.
27. In the above background, on the basis of the
material on record, the petitioner has succeeded, in
prima-facie establishing its case, especially, as the
respondent-Company has not denied that it was liable to
make the payment for the goods supplied by the petitioner
which, according to it, was made to M/s.Unisilk Limited.
28. Considering all the above aspects and as no
material has been produced on record substantiating the
claim of the respondent-Company regarding the mutual
agreement between the parties to make the payment
through M/s.Unisilk Limited, in the view of this Court, the
petition deserves to be admitted."
[13] In view of aforesaid background of fact and the conclusion
arrived at by the learned Company Court and attempt which has
been made substantially would indicate that payment has
already made by the appellant company to M/s. Unisilk Limited
and the original petitioner has to ponder after M/s. Unisilk
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
Limited for reimbursement is a defence, was not acceptable by
the learned Single Judge and as such on the basis of very same
material and in the absence of any distinguishable material, the
appellate court is not in a position to substitute the said possible
view which has been taken by the learned Single Judge. On the
contrary, the conclusion arrived at by the learned Single Judge
is a probable and possible view of the material on record and
the very fact that remittance dates and the delivery of goods are
not matching clearly since the terms of the payment of Cash
Against Delivery, this Court is not in a position to safely
conclude that defence projected by the appellant company in
the Company Petition is genuine and the worthy of acceptance
to drag the original petitioner to an ordinary Civil Suit for the
recovery of money or to ventilate the grievance. Hence, we are
not in a position to interfere with the conclusion arrived at by
the learned Single Judge and the impugned order cannot be said
to be suffering from either material irregularity or patent
illegality or the conclusion is not in a position to be branded as
perverse. Hence, that be so, the appeal lacks merit.
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
[14] In the light of aforesaid situation which is prevailing on
record, the judgments which have been cited by the Mr.
Soparkar, learned senior advocate appearing for the appellant
company on the issue of exercise of jurisdiction in winding-up
proceedings no doubt the principles propounded therein are not
in dispute but in a situation like this, peculiar in nature on
record of the case, we are unable to apply the said principles as
a straitjacket formula. Had there been any substantial genuine
dispute which has not been found by the learned Single Judge
and it is difficult for this Court to disturb the finding based on
material on record and come to a different conclusion. The
conduct, material, invoices and the terms contained therein and
absence of the natural reaction and self contradictory stand
taken by the appellant company right from the stage of reply to
the first notice, it appears that the dispute raised deserves
adjudication as defence is not found to be substantial in nature
with regard to liability and it is said that the defence must be
substantial one and not mere moonshine. Had there been any
bona fide dispute with regard to liability, the court would have
considered the stand but the facts and the material on record
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
are quite clear wherein defence raised is not possible to be
worthy of acceptance and it is also not possible to conclude that
a petition for winding-up is a mode adopted to pressurize to
make the payment. Hence, in the absence of these elements,
the ratio laid down by the decisions cited by learned senior
advocate for the appellant are not of any assistance to the
appellant company.
[15] Mr. Soparkar, learned senior advocate has then made a
valiant attempt to persuade us by yet another decision delivered
by Gujarat High Court in case of Polyrec Processors Pvt. Ltd.
(supra) in which it has been propounded that in a winding-up
proceedings a Company Court cannot be reduced as a debt
collecting agency or as a means of bringing improper pressure
on the company to pay a bona fide disputed debt and for that
purpose, reference is made to paragraph 18 of the said
judgment. But here in view of the inconsistent stand and in
view of uncorroborated defence which is tried to be projected,
we found that the ratio laid down by the said decision is in a
different background of facts which may not be possible to be
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
applied here as straitjacket formula. We are conscious about
the fact that winding-up proceedings cannot be allowed to be
used as a lever to utilize as a recovery proceedings but then we
are unable to come to a definite conclusion when facts are very
peculiar in nature on the case on hand and as such the stand of
the learned senior advocate for the appellant is not possible to
be accepted.
[16] No doubt a litigant can take an alternative plea or
inconsistently as well but then the natural reaction to meet and
response is also a relevant circumstance which cannot be
ignored as has been visible from the present case on hand.
Hence, taking the circumstances prevailing on record on overall
consideration, we are of the view that appeal filed by the
appellant company is not possible to be entertained.
[17] At this stage, while going through each of the decisions
cited by learned senior advocate for the appellant, as narrated
above, few decisions which are also brought to the notice of us
by Mr. A. S. Vakil, learned advocate appearing for the
respondent company are also taken into consideration and
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
having gone through, we found that stand taken by the
appellant company is consistently in consistent and an attempt
is made to divert the attention and as such keeping the said
circumstances on record, we are of the opinion that the
judgments cited by learned senior advocate are of no assistance
to appellant.
[18] Principle is vogue in respect of winding-up issue that the
principles on which the Court acts are firstly that the defence of
the company is in good faith and one of the substance and
secondly the defence is likely to succeed in point of law and
thirdly the company adduces prima facie proof of the facts on
which the defence depends. That principle has been laid down
in case of Madhusudan Gordhandas & Co. versus Madhu
Woollen Industries reported in (1971) 3 SCC 632 which has
been considered by Punjab and Haryana High Court in its
decision reported in (1998) SCC OnLine Punjab and Haryana
page 500 and then the stand was not accepted against the
winding-up.
[19] Further the stand taken by appellant company in its reply
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
to the notice is absolutely vague and in general form whereas
later on the stand which has been tried to be taken is
scrutinized by the learned Single Judge and found to be not
worthy of acceptance and as such the said defence was
appearing to be not bona fide and just with a view to avoid the
liability and in paragraph 8 of the decision delivered by the
Calcutta High Court in case of Nirmala Devi Saraf (supra)
appears to be relevant to the issue.
[20] Yet another decision which has been tried to be pressed
into service by Mr. A. S. Vakil, learned advocate in case of
Bhavana Infra Projects Pvt. Ltd. (supra) wherein also in
paragraphs 15 and 16 various judgments have been considered
and then having found no valid defence, the petition was
admitted. The said observations contained in paragraphs 15
and 16 are reproduced hereunder:-
"15. In view of this above facts, in my opinion, the
judgement relied upon by learned advocate Mr.Mehta in
the case of Oswal Machinery Ltd. (supra) would cover the
present case. Relevant paragraphs of the said judgement,
read as under:
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
"14. The position with reference to the disputed
claim is considered by the Apex Court in case of IBA
Health (India) Private Limited reported in (2010) 10
SCC 553. The Apex Court has, observed thus:
"20. 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."
(emphasis supplied)
14.1. The Apex Court has, in the aforesaid case
of IBA Health (India) Private Limited (supra)
also observed that:
"31. Where the company has a bona fide dispute,
the petitioner cannot be regarded as a creditor of
the company for the purposes of winding up. "Bona
fide dispute" implies the existence of a substantial
ground for the dispute raised. Where the Company
Court is satisfied that a debt upon which a petition is
founded is a hotly contested debt and also doubtful,
the Company Court should not entertain such a
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
petition. The Company Court is expected to go into
the causes of refusal by the company to pay before
coming to that conclusion. The Company Court is
expected to ascertain that the company's refusal is
supported by a reasonable cause or a bona fide
dispute in which the dispute can only be adjudicated
by a trial in a civil court."
(emphasis supplied)
14.2. Thus, the Court is required to decide
whether the grounds of defence are
substantial or not and they do not "consist of
some ingenious mask invented to deprive a
creditor and is not a mere wrangle".
14.3. The company Court is also expected to go
into the causes of refusal by the company and to also
ascertain that the refusal is supported by a
reasonable cause or a bonafide dispute.
15. When the question of examining the defence on
the ground that the claim is disputed arises and it
becomes necessary to determine whether the
dispute is bonafide and substantial or not, then, in
view of this Court, one of the tests is to find out as to
whether the dispute was raised contemporaneously
(i.e. immediately when the ground or cause of
dispute allegedly arose)or not; or the dispute came
to be raised only when the demand for payment
came to be made or the statutory notice came to
be served and whether it is in nature of afterthought?
15.1. If it emerges from the facts that the
grounds on which the defence is raised and the claim
is being disputed were never raised at the relevant
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
point of time and/or until the demand came to be
raised or statutory notice came to be served and then
suddenly the dispute is raised for the first time upon
claim being pressed and upon service of notice,
then such belated dispute may, in the facts of
the case and in light of the conduct of the
parties, lead the Court to the belief that the dispute
and defence which are raised for resisting the
petition and the order of admission are raised
by way of afterthought.
15.2. The grounds of dispute should not, as
observed by the Apex Court, "consist of some
ingenious mask invented to deprive a creditor of a
just and honest entitlement and must not be a mere
wrangle".
16. So far as judgement rendered in the case of Tata
Iron and Steel Company (supra) is concerned, Division
Bench has examined the defence raised by the respondent
company in that case, which suggests that several
correspondences have taken place between the parties
about change of nature of contract and came to the
conclusion that there was valid defence and therefore,
company petition was not entertained. The decision dated
06/11/2017 rendered by Division Bench of this Court in the
case of Vinayak Projects (supra) would not be applicable to
the present case as in that case, the company petition with
regard to poor workmanship was filed. Facts of the case of
Mediquip Systems (P) Ltd. would not be applicable since
there were several suits between the parties and
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
subsequently company petition was filed. Facts of the
present case are different than the facts of aforesaid cases.
Hence, this petition requires consideration. Therefore, this
Court is inclined to admit this petition. However, the Court
considers it appropriate that before making order
admitting the petition and permitting publication of
advertisement it would be in fitness of things and also
appropriate to grant an opportunity to the respondent
company to deposit the remaining amount with regard to
the invoices raised by the petitioner before this Court.
Hence, following order is passed:
"Respondent company is granted time of four weeks
from the receipt/ service of a copy of this order. The
Court will consider the petitioner's request for order
or admission and publication of advertisement on or
before 18/12/2019."
[21] With regard to the quality of goods which was raised as a
stray reference in reply is also not the defence to be taken into
consideration as except bald assertion there is no relevant
circumstance projected which may persuade us to accept the
said stand. Considering thereafter yet another decision of the
Hon'ble Apex Court in case J.P.Srivastava and Sons (Rampur)
Pvt. Ltd. (supra), we are of the opinion that the defence which is
tried to be projected as if full payment is made to meet with the
liability of the respondent company is not digestable even from
chronology of events. Had there been any such circumstance
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
sufficient to corroborate, the oral arrangement which has been
tired to be projected, the Court might have even thought it fit to
examine further but in the absence of any other corroborative
material it is not possible for this Court to dislodge the
conclusion arrived at by the learned Single Judge sitting in an
appeal on the basis of very same circumstance more particularly
when the order does not suffer from any perversity or material
irregularity.
[22] Considering the aforesaid facts situation which are
prevailing on record, we are of the opinion that present appeal
lacks merits does not deserve to be entertained. Accordingly,
same stands dismissed. Notice is discharged. Interim relief,
granted earlier, stands vacated forthwith.
[23] All pending applications stand consigned to records.
Sd/-
(ASHUTOSH SHASTRI, J.)
Sd/-
(J. C. DOSHI, J.)
DHARMENDRA KUMAR
C/OJA/1/2016 CAV JUDGMENT DATED: 21/04/2023
Further order
After pronouncement of judgment, Mr. Amit Thakkar,
learned advocate appearing for Mr. Mrugen Purohit, learned
advocate for the appellant has submitted that interim relief in
the present proceeding is operative since the year 2016 and as
such with a view to avail appropriate remedy before higher
forum, said interim relief may be extended for some reasonable
time. Though, it is formally objected by Mr. A. S. Vakil, learned
advocate appearing for opponent but we deem it proper to
extend interim relief only for a period of FOUR WEEKS since
same is continuing right from the year 2016.
Sd/-
(ASHUTOSH SHASTRI, J.)
Sd/-
(J. C. DOSHI, J.)
DHARMENDRA KUMAR
