Karnataka High Court
Official Liquidator Of M/S Victory ... vs M/S Khoday Breweries & Distilleries Ltd on 13 December, 2023
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR. JUSTICE C.M. POONACHA
COMPANY APPLICATION NO.800 OF 2006
IN
COMPANY PETITION NO.272 OF 2002
BETWEEN
OFFICIAL LIQUIDATOR OF
M/S VICTORY GLASS & INDUSTRIES LIMITED(IN LIQN)
ATTACHED TO HIGH COURT OF KARNATAKA
4TH FLOOR, KENDRIYASADAN,
KORAMANGALA, BANGALORE-34
...APPLICANT
(BY SRI SHRISHAI, NAVALGUND, ADVOCATE FOR OL)
AND
M/S KHODAY BREWERIES & DISTILLERIES LTD
DISTILLERY DIVISION,
UNIT NO.27TH MILE,
KANAKAPURA ROAD, BANGALORE
...RESPONDENT
(BY SRI PIYUSH KUMAR JAIN D, ADVOCATE)
THIS COMPANY APPLICATION IS FILED UNDER SECTION 446(2)
OF THE COMPANIES ACT, 1956 RULE 9 OF THE COMPANIES(COURT )
RULES, 1959 PRAYING TO GRANT A DECREE IN FAVOUR OF THE
APPLICANT AGAINST THE RESPONDENT FOR A SUM OF RS. 29,11,108/-
WITH INTEREST ON THE SUM OF RS. 18,63,477/ AT 6% PER ANNUM
FROM TE DATE OF THE APPLICATION I.E. 7.8.2006 TILL THE DATE OF
JUDGMENT, THE FUTURE INTEREST AND ETC.,
THIS APPLICATION HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON 15.11.2023 COMING ON FOR 'PRONOUNCEMENT OF
ORDER' THIS DAY, THE COURT MADE THE FOLLOWING:-
2
ORDER
The present application is filed under Section 446(2)(b) of
the Companies Act, 1956 (hereinafter referred to as 'the Act') and
Rule 9 of the Companies (Court) Rules, 1959 (hereinafter referred
to as 'Rules') to grant a decree in favour of the applicant against
the Respondent for a sum of `29,11,108/- together with interest
@ 6% interest per annum from the date of the application i.e.,
07.08.2006 till the date of judgment as also for future interest.
2. It is the case of the applicant that the company in
liquidation was ordered to be wound up by order dated
13.06.2003 passed by this Court in Company Petition
No.272/2002 and the Official Liquidator attached to this Court was
appointed as the liquidator of the company by virtue of Section
449 of the Act. That the Respondent was having transactions
with the company in liquidation and as per the statement of affairs
filed by the Ex-Director of the Company with the applicant under
Section 454 of the Act, the Respondent is indebted to the
company in a sum of `18,63,477/- as on the date of winding up.
It is the further case of the Applicant that due/demand notice
was issued to the Respondent on 19.10.2004 calling upon them to
pay the amount due and despite receipt of the same, no amount
has been paid. That the applicant issued one more letter dated
02.05.2005 and despite receipt of the said letter also neither any
amount has been remitted by the Respondent nor has any reply
been furnished.
3. Hence, the applicant has claimed the following
amounts from the Respondent:
i) Amount due as on 13.06.2003 : ` 8,63,477/-
ii) Interest @ 18% p.a. from
13.06.2023 to 07.08.2006 : ` 10,46,631/-
` 29,11,108/-
4. The respondent has entered appearance and filed its
statement of objections. The Respondent has denied the fact that
it has failed to reply to the notice received by the Official
Liquidator and places on record that by reply dated 08.02.2005,
the Respondent has intimated the applicant that all the dues of
the Company in liquidation was cleared by the Respondent and
there were no dues pending and infact, it is the company in
liquidation which was due to the respondent in a sum of
`12,184.64/-. That it had transactions with the company in
liquidation from 01.04.1999 to 25.03.2003, in respect of supply of
bottles by the company in liquidation to the respondent. The
Respondent herein also placed on record a copy of the ledger
extract maintained by the Respondent of the transactions with the
company in liquidation which discloses that the respondent is due
in a sum of `12,183.64 from the applicant. Hence, the Respondent
seeks for dismissal of the application filed by the Applicant.
5. Consequent to the objections filed, evidence has been
adduced. The Company Paid Assistant attached to the office of the
Official Liquidator was examined as PW.1 and he has filed his
affidavit by way of examination- in- chief. The statement of affairs
in respect of the company in liquidation has been marked as Ex.P1
and the relevant entry pertaining to amounts claimed has been
marked as Exs.P1(a). PW.1 has also been cross examined by the
counsel for the Respondent.
6. The Vice President Corporate of the Respondent-
company was examined as RW.1 and he filed his affidavit by way
of examination-in-chief. The reply dated 08.02.2005 and the
acknowledgement card were marked as Exs.R1 and R2. The
ledger extracts for three years maintained by the Respondent has
been marked as Exs.R3 to R5. RW.1 has been cross examined by
the counsel for the applicant.
7. Learned counsel for the Applicant Sri Shrishail
Navalgund contends that the Respondent having taken a defence
that it has already paid the amounts due and payable by the
respondent to the company in liquidation, the burden of proving
the same was on the Respondent which it has failed to discharge.
He further contends that the basis of the claim of the applicant
being the submission of statement of affairs filed by Ex-Director of
the Company, the reliance is required to be placed on the same
and the claim made by the applicant is required to be allowed. In
support of his claim, he relies on a judgment passed by a Co-
ordinate Bench of this Court in the case of Official Liquidator of
M/s. BPL Net Com Limited (in Liquin) Attached to High
Court of Karnataka Vs. M/s. Industrial Packers and
Movers1.
8. Learned counsel for the Respondent Sri Piyush Kumar
Jain submits that no amount is due by the Respondent to the
Applicant and infact, it is the company in liquidation who is
2012 SCC OnLine Kar 7796
required to pay the amounts to the Respondent and that the said
aspect of the matter has been adequately demonstrated by the
Respondent. He further contends that the claim made by the
claimant solely on the basis of the entries made in the statement
of affairs is untenable without the applicant actually proving the
amounts due and payable by the Respondent to the company in
liquidation. In support of he submissions, he relied on the
following judgment/s:
i. Official Liquidator of M/s. Shivamoni
Steel Tubes Limited Vs. Tamilnadu
Electricity Board, Metturdam, Tamilnadu2
ii. Official Liquidator of M/s. Shivamoni
Steel Tubes Limited Vs. Durgapur Steel
Plant3
iii. Official Liquidator of the Mysore
Kirloskar Limited vs M/s. Simson &
Company Limited4
9. In view of the case putforth by the respective parties,
the questions that arise for consideration are:
i) Whether the applicant proves that the
Respondent is liable to pay the company in
liquidation a sum of `18,63,447/- as on date
of winding up?
Order dated 3.4.2006 passed in CA No.699/1997 in Co.P.No.49/1994
Order dated 3.4.2006 passed in CA No.8/1998 in Co.P.Nos.49/1994 & 157/92
Order dated 15.3.2012 passed in CA No.23/2007 in Co.P.No.166/2001 & c/w Co.Ps.
ii) Whether the applicant is entitled to claim
interest @ 18% per annum from 13.06.2003
to 07.08.2006?
iii) Whether the respondent proves that it is
not due to pay any monies to the company in
liquidation?
10. The evidence, both oral and documentary have been
adduced by the parties as noticed above. The contentions putforth
by both the learned counsels have been considered and the
material on record have been perused.
11. Before noticing the relevant fact situation for the
purpose of appreciating the same, it is necessary to notice the
judgments relied on by both the learned counsel.
12. In the case of Official Liquidator of M/s. BPL Net
Com Limited1, relied upon by the counsel for the applicant, a co-
ordinate Bench was considering an application filed under Section
446(2) (b) of the Act in which a claim made for recovery of a sum
of `12,300/- and in view of the fact that no objection was filed by
the Respondent in the said proceedings and in view of the
evidence adduced by PW.1 being unchallenged, allowed the
application and ordered that the official liquidator was entitled to
recover a sum of `12,300/- together with interest @ 6% per
annum.
13. The judgments relied on by the counsel for the
respondent are considered as follows:
i) In the case of M/s.Shivamoni Steel Tubes Ltd.,2 (in
liquidation), a co-ordinate Bench of this Court considering an
application made by the Official Liquidator under Section
446(2)(b) of the Act and having regard to the fact that the
respondent had entered appearance and denied that they were
due in any amount to the applicant and the transactions of the
respondent in the said case to the company in liquidation were
produced by the respondent and marked as Exs.R1 to R6, this
Court held as follows:
"10. .......... It is well settled that when the applicant
makes a claim against the respondent, the same has to be
substantiated by producing the relevant material. Mere
entry in the accounts book submitted by the Ex-Directors of
the Company in liquidation, even without proving the fact
that the same was maintained in the regular course by
examining the person who had maintained the accounts,
would not by itself per se amount to proof of claim made
against the respondent. Apart from examining PW1, who is
working as paid assistant in the office of the Official
Liquidator, the applicant has not chosen to examine any
person on behalf of the Company in liquidation regarding
the accounts maintained by the Company and to prove the
basis of the entry in the account book, Ex. P1 as per Ex.
P1(a) dated 01.10.1989. Therefore, it is clear that the
applicant has miserably failed to prove that he is entitled to
recover a sum of Rs. 3,56,943/- from the respondent as
sought for in the application."
(emphasis supplied)
(ii) In the case of M/s Shivamoni Steel Tubes Limited
(in liquidation),3 a co-ordinate Bench of this Court, considering
an application filed under Section 446(2)(b) of the Act, wherein
the respondent had entered appearance and denied that they
were due any amount to the company in liquidation and noticing
that apart from the paid assistant working in the office of the
Official Liquidator being examined and the entry in the list of
debtors, entry in the register and balance sheet for the year being
marked, no other material in support of the claim having been
produced, held that the entry is not supported by any voucher or
document or purchase orders and the person who maintained the
books of accounts has not been examined and hence, the
applicant has not proved the claim against the respondent.
(iii) In the case of Official Liquidator Mysore Kirloskar
Limited (in liquidation)4, a co-ordinate Bench of this Court
considering that the entries produced by the applicant themselves
had shown various invoices wherein credit has been claimed due
separately and certain debit entries have also been shown has
held that the claim made by the applicant is not proved.
14. The factum of the Respondent having business
transactions with the applicant are undisputed. The only aspect
which is required to be adjudicated is the quantum of money, if
any payable by the Respondent to the applicant and if so, whether
the claim made by the applicant is liable to be granted.
15. The basis of the claim of the applicant is a statement
which has been filed by the Ex-Director of the company
consequent to the requirement under Section 454 of the Act. The
statement has been marked as Ex.P1 and Ex.P1(a) discloses an
entry of `18,63,477/- payable by the Respondent to the applicant.
In the cross examination, PW.1 has stated that he has not verified
any other document except Ex.P1 before making the claim vide
the present application.
16. The Respondent in support of its contention that it has
paid all amounts to the company in liquidation and that it is the
company who is liable to pay a sum of `12,184.64 has examined
its Vice-President - Corporate as RW.1 who has reiterated in his
examination-in-chief, the contentions taken in the statement of
objections. In the cross examination, RW.1 has stated that all the
payments by the respondent to the applicant have been made by
two cheques and Demand Draft which can be verified from the
accounts of the company in liquidation. He has further admitted
that he has not produced any receipts or vouchers to
demonstrate that the amounts have been paid.
17. From the evidence adduced by the applicant, it is
relevant to note that Ex.P1 is the statement of affairs and
Ex.P1(a) is the list of trade debtors and in the said list, as against
the claim of the respondent - company a debit balance of
`18,63,477/- is shown. There are no records produced by the
applicant to support the entry made vide Ex.P1(a). Further,
PW.1, in his cross-examination has categorically stated that he
has not verified any other document except Ex.P1 before filing the
claim application.
18. From the evidence of the Respondent, it is
forthcoming that along with the evidence of RW.1, the ledger
extract maintained by the Respondent in respect of the
transactions with the company in liquidation have been produced
and marked as Exs.R3 to R5. It is forthcoming that Ex.R3
contains the entries of transactions between 13.10.1999 and
31.3.2000. Ex.R4 contains the entries of transactions between
15.6.2000 and 31.3.2001. Ex.R5 contains the entry of a
transaction on 25.3.2003. It is forthcoming from the said exhibits
that detail debit and credit entries are made in respect of the
various transactions and in the final entry as on 5.3.2002 there is
a credit balance of `12,183.64.
19. In the cross-examination of RW.1 he has stated that
they have not produced any receipts or vouchers. However, he
has stated that all payments were made through cheques and
demand drafts, which could be verified from the accounts
pertaining to the company in liquidation. He has denied that the
respondent is liable to pay the company in liquidation the amount
claimed in the present proceedings.
20. It is relevant to note that no receipts or vouchers have
been produced. However, detailed entries with respect to the
transactions of the respondent with the company in liquidation are
forthcoming from Exs.R3 to R5.
21. If the evidence on record is appreciated keeping in
mind the legal position as noticed above, it is clear that the
applicant, apart from producing the statement of affairs and
marking an extract of the same as Ex.P1(a), which merely
contains list of sundry debtors, has not produced any other
document in respect of its claim. The applicant has not even
produced the ledger account extract maintained by the company
in liquidation of its transactions with the respondent - company.
However, the respondent has produced the ledger extract of its
transactions with the company in liquidation. Hence, Exs.R3 to R5
are required to be considered while adjudicating the present
application.
22. The credit balance as is forthcoming from Ex.R3 is
`12,183.64. Hence, it is clear that the company in liquidation was
due to the respondent - company in the said sum of `12,183.64.
23. Having regard to the discussion made above, question
Nos.1 and 2 are answered in the negative and question No.3 in
the affirmative.
24. In view of the aforementioned, the application filed by
the applicant is liable to be dismissed and is accordingly,
dismissed.
Sd/-
JUDGE
nd/BS
