The respondent company is a Private Limited Company, registered under the Companies Act,1956 was incorporated on 10.4.1997 with the following objects:
(a) To trade in any articles, goods, rights possessions of any nature and of any use being industrial, commercial, household, technical and in such process to buy, sell acquire, lease any merchandise, goods or property of any form whatsoever as authorised dealers, stockists, agents, brokers, factors and render all such services in the ordinary course of business to market the goods in a consumable state.
(b) To carry on the business of importers, exporters, buyers, sellers, dealers, stockists, suppliers, wholesalers, retailers, jobbers, contractors, storers, lessors, hirer of goods of every description and goods, components, sub-components, consumables, peripherals or products or articles involved in the goods and to act as agents for any products or articles involved in the goods and to act as agents for any such articles, goods or any services for Indian or overseas principals.
(c) To carry on, in any mode, the business of storekeepers in all its branches and in particular to buy, sell and deal in goods, stores, consumable articles, chattels and effects of all kinds, both wholesale or retail and to transact every kind of agency business and to carry on the other objects as set out in the Memorandum of Association of the company.
2. The petitioner is a company incorporated under the Companies Act is a holding company of M/s.HCL Infinet Limited, which entered into a supply agreement dated 1.4.2007 with the respondent Company, pursuant to which cellular mobile telephone products were sold and supplied to the respondent Company from time to time. By order of the Delhi High Court, the said HCL Infinet Limited was merged with the petitioner company with effect from 1.4.2007. The petitioner Company took over all rights and liabilities of HCL Infinet Ltd. Before the merger, supplies were made to the respondent by HCL Infinet Limited and after merger by the petitioner company. As on 17.7.2008, there was an outstanding amount of Rs.11.14 crores due from the respondent in respect of the supplies made.
3. It is stated that the respondent Company promised to reduce the outstanding to 5.2 crores by August 31, 2008 by way of e-mail dated 22.7.2008 addressed by the Managing Director of the respondent Mr.R.Subramanian to the Chief Financial Officer of the petitioner Company, acknowledging the liability. There was another e-mail given by the petitioner on 8.8.2008 to R.Subramanian, who sent an e-mail on the same day to the petitioner company confirming the outstanding and the arrangement for reducing the outstanding to Rs.5.2 crores by the end of August, 2008. However, by 31.8.2008, there was an amount of Rs.9,32,59,205/- due after the issue of credit notes under marketing incentive schemes introduced by the petitioner company. Since the amounts were not paid, supply was stopped by the petitioner and series of exchange of letters were effected. There was an e-mail dated 12.9.2008 addressed by Mr.N.Sridhar of respondent company to Mr.Hari Baskaran of the petitioner company in respect to which, by e-mail, the petitioner company pointed out that an amount of Rs.9.32 crores was outstanding for more than 60 days. In the reply, by e-mail dated 13.9.2008 addressed to Mr.R.Mahendran of the petitioner company by Mr.R.Subramanian, the respondent company admitted the outstanding of Rs.9.3 crores.
4. It is stated that after series of discussions, it was agreed that the respondent company would give post-dated cheques dated 31.10.2008 by 6.10.2008 to reduce the outstanding to Rs.5.2 crores by 31.10.2008. The said agreement was recorded in writing by Mr.R.Subramanian. The said three cheques issued by the respondent company dated 31.10.2008 for Rs.1 crore each were dishonoured by the bankers of the respondent company viz., Standard Chartered Bank with the endorsement 'insufficient funds'. By letter dated 16.10.2008, the petitioner called upon Mr.R.Subramanian, Managing Director of the respondent Company to pay Rs.9,32,69,205/- together with interest at 18% p.a. by 22.10.2008, but the said amount was not paid. Ultimately, a legal notice was issued on 29.10.2008 as per sections 433 and
434 of the Companies Act,1956. In the reply to the said notice, the respondent has stated that threatening to file petition under
section 433 of the Companies Act for a meagre amount of Rs.9.3 crores is ridiculous. For that, in the letter issued by the counsel for the petitioner to the respondent, it was informed that three cheques issued by the respondent were dishonoured and the business of the respondent Company was conducted with fraudulent intention. In spite of repeated demands, the respondent has not paid the amount due. It is stated by the petitioner that it came to know that the respondent has become commercial insolvent and therefore, the present petition is filed for winding up of the respondent Company.
5. In the counter affidavit filed by the respondent, it is stated that the claim is vexatious, however, it is admitted that the claim of the petitioner to the extent of Rs.9.32,69,205/- is a minimum amount. It is stated that the respondent was the largest retailer of mobile phones and the petitioner was a distributor of a brand of mobile phones and a commercial agreement governing supply was entered into between the parties on 1.4.2007 which was valid up to 31.3.2008. It is stated that the petitioner has suggested that the respondent should adhere to minimum resale prices on mobile phones of NOKIA, which was refused by the respondent as illegal and against the MRTP Act and therefore, the petitioner threatened to stop supply to the respondent and the supply was also stopped.
6. It is stated that the agreement was allowed to cease and thereafter, the supply if any made was only on ad hoc basis and not covered by any agreement. It was decided by the respondent that after 30.6.2008, the business needs to be reduced. It is stated that the documents purporting to be e-mails sent by the respondent's officers are fabricated and have not originated from its servers or the contents are manipulated.
7. It is stated that both the petitioner and the respondent are large companies and the business between the two companies was over Rs.25 to 30 crores per month. It is stated that the respondent asked for statement of accounts from the petitioner with details of purchase orders, invoices and proof of delivery duly acknowledged by the respondent. It is stated that as per the actual supplies received by various units of the respondent Company, the respondent owed a sum of Rs.1,57,80,529/- as on 30.9.2008. The respondent admits that there was a meeting held at Noida Office of the petitioner and discussed about the business continuation post-cessation of the agreement as on 30.3.2008 and there was no discussion about the outstanding. It is the case of the respondent that the petitioner wanted an advance deposit of rs.10 crores rather than payment for supplies. It was, in those circumstances, three cheques were issued for Rs.3 crores against pending orders and as such, no order was placed, the petitioner was asked not to deposit the cheques, but the cheques were deposited. The letter stated to have been written by Mr.R.Subramanian is also denied.
8. In the additional counter affidavit filed by the respondent, it is stated that in the letter dated 3.10.2008, the date '3.10.2008' was written with a different pen and the handwriting is also different and it is an insertion, however, it is admitted that the actual note was made during the end of June, 2008 when there were discussions on the renewal of agreement between the companies which expired in March, 2008. It is specifically stated in the additional counter affidavit that on the basis of supplies and payments planned, as on 30.6.2008 being the fiscal year ending for the petitioner, the dues were expected to be around Rs.9 crores and the actual dues as per the respondent's statement on that date was Rs.9,00,39,827.29 and there are various disputes between the parties regarding the price. It is admitted that the handwritten note was a proposal to reduce Rs.9 crores credit to Rs.5.2 crores by the end of October, 2008 and that was not accepted by the petitioner.
9. Mr.Rahul Balaji, learned counsel appearing for the petitioner would submit that as per the press statement issued in New Delhi, there was vandalism in various stores owned by the respondent Company throughout India and there has been a claim made by the workers and substratum of the respondent Company has been vanished and therefore, on just and equitable grounds, the order of winding up should be passed. It is his submission that under the circumstances, unless the Company Petition is admitted and the Official Liquidator is appointed and statement of affairs as required under
section 454 of the Companies Act is received, it is not possible to put an end to the grave situation which is in existence.
10. On the other hand, Mr.T.V.Ramanujun, learned senior counsel appearing for the respondent Company would submit that the entire claims of the petitioner are disputed as they relate to the goods supplied and the petition is filed only due to animosities. He would also submit that e-mail communications have no authentic status, especially when it is the stand of the respondent that e-mails have been fabricated. He would submit that the note signed by Mr.R.Subramanian on 3.10.2008 cannot be relied upon as acknowledgment of liabilities. It is his contention that three cheques issued dated 31.10.2008 are all continuous cheque leaves as it is seen from the number of cheques signed by Mr.R.Subramanian. It is his contention that unless and until the petitioner produces various invoices and proof of liability of the respondent, there is no debt in existence and as such, it requires factual assertion as to the delivery of goods which can be made through investigation and it cannot be decided in a petition for winding up. It is his case that the company never admitted any liability and the Managing Director cannot admit the liabilities and it can only be done by way of Board's resolution. He would submit that applying the Evidence Act, the contents of e-mails cannot be accepted as such.
11. Mr.Rahul Balaji, learned counsel, by way of reply, would submit that the note dated 3.10.2008 is in the handwriting of Mr.R.Subramanian and in such circumstance, the allegation that the same was fabricated has no meaning. He submits that there are e-mails sent by the respondent by way of reply to the e-mails sent on behalf of the petitioner and therefore, the allegation of fabrication of e-mails is mischievous.
12. In the statutory notice issued by the petitioner on 16.10.2008 and subsequent notices on 29.10.2008 and 6.11.2008, the petitioner has throughout reiterated that in respect of supply, an amount of Rs.9,32,69,205/- was due as per the closing balance as on 15.9.2008 and the said claim was made based on the particulars of various Invoices found in page Nos.135, 136 and 137 of typed-set of papers. In the reply notice given on behalf of the respondent, while the respondent generally denied the liability, the respondent has stated as follows:
1. That you have claimed that an agreement was entered into between M/s.HCL Infinet Ltd and our clients on 1.4.2007 for supply of certain Nokia Cellular Telephone products. Our clients understand that the said agreement expired on 31st March 2008 and is currently not subsisting. You are requested to furnish a copy of the said agreement to prove its subsistence as on date or as on the dates pertaining to your claims in case any claims are arising under the said agreement referred to by you.
2. Furnish any confirmation of balance provided by our clients in any fashion confirming the claimed amount of Rs.9,32,69,205/-.
3. Furnish the statement of account and supporting documents (Purchase Orders and Invoices and documents evidencing acknowledgment of receipt of supply by duly authorised representatives of our clients) to enable us to verify the same and determine the amount by either party to the other if any.
4. Copies of claimed notes of our clients' Managing Director agreeing to furnish post dated cheques for alleged past dues.
13. Of course, the respondent has asked for various vouchers to substantiate the claim of the petitioner. It is thereafter, by notice dated 31.12.2008, the petitioner has brought to the notice of the respondent various e-mail communications and also informed that cheques issued for Rs.3 crores were dishonoured. It is pertinent to note that the respondent who now disputes that three cheques dated 31.10.2008 each for Re.1 crore issued in favour of the petitioner were not signed by Mr.R.Subramanian, it has failed to note that the cheques were signed on behalf of the respondent Company. In fact, in the counter affidavit, the respondent has chosen to state that these three cheques were issued only when the petitioner made a further claim of Rs.10 crores. Now, the submission is that the said cheques do not contain the signature of Mr.R.Subramanian and therefore, the respondent is not bound by the said cheques. Further, the note dated 3.10.2008 admittedly contains the signature of Mr.R.Subramanian and it is stated that it is in the handwriting of the said Mr.R.Subramanian.
14. Even though on the top of the note the words, 'discussion with Mr.R.Subramnian an agreement reached' are found written, but not by Mr.R.Subramanian. In the said note Mr.R.Subramanian clearly admitted about post-dated cheques dated 31.10.2008, and the same were signed by Mr.R.Subramanian. A series of e-mail communications between the representative of the petitioner and Mr.R.Subramanian themselves show that the argument advanced that the contents of e-mails are not evidence is only a contention raised for the purpose of this case.
15. Even according to the learned senior counsel appearing for the respondent, only two e-mails were manipulated as they would have contained some other words and on the other hand, there are series of e-mail communications, in which the petitioner has categorically stated about the outstanding liabilities from the respondent to the extent of Rs.9.32 crores. A reference to the note signed by Mr.R.Subramanian dated 3.10.2008, the original of which has been produced before this Court, shows that Mr.R.Subramanian who has signed himself in his handwriting written its contents. There is no scope to conclude that there has been any insertion at the top of the note since the words, 'Discussion with R.Subramanian and agreement reached' have been written by some other person and that itself is not sufficient to conclude that the note has been fabricated. The contents of the note make it clear that post-dated cheques dated 1.10.2008 were issued and it was agreed to resolve the dispute by October or early November, 2008. On the production of such records, I am of the view that the stand taken now by the respondent viz., fabrication of documents is not acceptable at this stage.
16. It is not the case of the respondent that there was no business dealing with the petitioner at all. When admittedly supplies were made by the petitioner to the respondent, on the basis of certain alleged manipulations of e-mails, it cannot be stated that there is substantial defence raised by the respondent against the liability. In any event, it is true that the winding up petition should not be for the purpose of making recovery either by coercion or by threat, but, on the facts of the present case, I do not see any substantial defence on the side of the respondent.
17. On the other hand, it is the admitted fact that the respondent's financial position is not in a good shape. Not only in newspapers but also in various letters issued on behalf of the respondent it has been admitted that the respondent has really lost control over all its stores throughout India and there has been vandalism and there has been claims made by the employees and therefore, in the absence of concrete assets available with the respondent, I am of the considered view that a grave situation is in existence and it is certainly a prima facie ground in the winding up petition for the purpose of deciding about publication.
18. The judgment relied upon by the learned counsel for the respondent in Amalgamated Commercial Traders (P) Ltd. vs. A.C.K.Krishnaswami and another [35 Com.Cas.456(SC)], is a case where there has been a bona fide dispute regarding the liability for payment. In the present case, the statutory notice has in fact been served on the respondent Company, which is evident from the fact that the respondent Company has issued a reply notice. The other judgments which are relied upon by the learned counsel for the respondent are cases where bona fide dispute is raised. Inasmuch as I find no prima facie dispute raised especially in the circumstance that the Managing Director of the respondent Company himself has written various e-mails, followed by the replies given on behalf of the petitioner, it is not possible to hold that the matter requires a detailed investigation.
19. It is also relevant to point out that copies of various invoices have been furnished by the petitioner which have not been denied by the respondent. Further, the business dealings between the petitioner and the respondent upto the year 2008 is not denied. In the presence of abundant materials to show that the respondent's business went out of control, it is necessary atleast to safeguard the existing assets in the interest of creditors whether secured or unsecured. It is relevant to point out that there are no particulars available in support of the defence taken by the respondent. Further, the genuineness or otherwise of the note dated 3.10.2008 and various anomalies can be agitated during the course of hearing of winding up petition. Considering the fact that in the winding up petition filed by some other creditor, the issue of appointment of Official Liquidator as provisional liquidator for the respondent Company is pending before the Division Bench of this Court, I do not propose to make appointment of provisional liquidator in this case, at this stage.
20. In similar circumstances, having been prima facie satisfied about the claim of the petitioner in Verma Gas Agency vs. Appenzell Petroleum Products Ltd., [(1997) 3 Com.L.J.63 P & H], after referring to the judgment of the Supreme Court, it was held as follows:
4. At this stage, it will be appropriate to make reference to the observations of Hon'ble Supreme Court in the case of S.P.Chengalvaraya Naidu (Dead) by LRs v. Jagannath (Dead) by LRs and others (1995)1 PLR 293 would be appropriate.
.... We have no hesitation to say that a person whose case is based on false-hood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. Non-production and even non-mentioning of the release deed at the trial is tantamount to playing fraud on the Court.
5. This principle was followed by this court and discussed in some elucidation in the case of Gurvinder Singh v. Harjit Kaur and another Civil Revision No.4075 of 1997 decided on 26.3.1998.
.... It is expected from every litigant irrespective of the fact whether he is seeking relief from the court or not that he would state true and correct facts. There is not only implied, but specified obligation upon every party who approaches the court to verify the facts true to the knowledge and belief of the party, specially, in the cases of present kind where the court has to take prima facie view keeping in mind the urgency of the matter regarding grant or refusal of maintenance. Primarily the onus has to be discharged by respective parties in support of the averments made in the application or reply, as the case may be. Concept of heavy burden of proof would be applicable during the trial where the parties have the liberty to lead oral and documentary evidence in support of their case. The court would be well within its jurisdiction to draw adverse inference against a party who actually or (sic) attempts to withhold the best evidence and true facts from the court with intention to frustrate the claim of others at this preliminary stage of proceedings. ....
6. The cheque issued by the respondent company was admittedly dishonoured on presentation. The onus to explain this was on the respondent company. However, no plausible or reasonable explanation has been rendered by the respondent company in that regard. The dispute raised lacks bona fides and is primarily intended to defraud creditors.
21. In Hitechi Jewellery Industries Ltd., vs. Choksi Arvind Jewellers [(2005) 127 Com.Cas.366], the Division Bench of Bombay High Court held that admitting the company petition and directing advertisement is not a decision and it is a petition for worth consideration on further materials. The relevant portion of the judgment is as follows:
10. The issue before the Division Bench in Western India Theatres Ltd.'s case (supra) was whether an order directing advertisement of company petition is appealable. The argument was that even though the order of advertisement of company petition could affect the company and to which the company can be legitimately aggrieved, but for making such order appealable, the order must be a decision and the order advertising the company petition is not a decision. Not accepting this contention, the Division Bench, through Chagla, C.J., held that when the Company Judge orders advertisement, it has decided that the petition should not be dismissed, and that the petition discloses prima facie case and that the case should be tried. When the Division Bench of this Court observed that while admitting the company petition the Company Judge has decided something that the petition should not be dismissed, the expression decision has been used in its widest sense but that does not mean in our view that such decision determines the rights of the parties. As already noted by us above, the company petition if admitted may be a decision in the widest sense but surely it is not determination of the rights of the parties. By admitting winding up petition what follows is that the matter is worth consideration on further material and that it is not liable to be dismissed summarily. We, accordingly, overrule the first contention of the learned counsel for the Appellant.
11. Having considered the available material, we are satisfied that, prima facie, it cannot be said that the company has been able to raise bona fide dispute. It is not in dispute that the seven cheques aggregating sum of Rs.31,36,200 were issued by the Company. It is also not in dispute that the said cheques were dishonoured. It is also a matter of record that Company Petition No.540 of 2000 has been admitted against the Company. We are informed that few other winding up petitions against the company have also been admitted. In the backdrop of these facts, prima facie, it may be inferred that the company is unable to pay its debts. In the circumstances, the admission of the company petition and advertisement thereof cannot be said to suffer from any illegality.
22. In The Committee representing RBF Nidhi Limited and others vs. Vipanchi Investments Pvt. Ltd.,Trichy Road, Coimbatore rep. By its Director [(2009) 2 CTC 1] a Division Bench of this Court, presided over by D.Murugesan,J. has held that the duty of the company Court is to protect the interest of the company in liquidation and to safeguard the company records and to investigate the company's affairs, in the following words:
15.The duties of the Company Court are to (i) protect the assets of the Company in liquidation; (ii) safeguard the Company's records; and (iii) investigating the Company's affairs to discover, protect and recover the assets. In a proceeding for winding-up of a Company in liquidation, the Court acts as a custodian for the interest of the Company and the creditors/investors. The term 'creditors and investors' shall also include the depositors. The assets of the Company become custodia legis. Therefore, the Court is charged with the responsibility of protecting the assets of the Company facing liquidation. In that context, a Provisional Liquidator is appointed pending winding-up petition due to the concern as well that the assets of the Company are not at risk. By such appointment, the assets and the potential creditors are protected until the petition for winding-up is heard and disposed. The liquidator, therefore, holds an important position of responsibility and trust. One of the paramount consideration in appointing a Company and for the said purpose, the Company should realise the maximum amount due to the Company not only for a fair and equitable distribution, but also to the maximum possible. Under these circumstances, in our considered opinion, it would not be in the interest of not only the Company which is facing liquidation, but also the investors to allow the appellants to take back the title deeds on payment of the sum as directed by the learned Single Judge.
23. In such view of the matter, when the defence taken by the respondent prima facie is not worth to be sustained on the face of it and also taking note of the fact that it is always open to the respondent to substantiate its case after publication, I pass the following order:
(a) Admit.
(b) The petitioner is directed to advertise in the Tamil Nadu Government Gazette fixing the date of hearing as 22.9.2009.
(c) The petitioner is directed to publish the company petition in one issue of Tamil daily, 'Daily Thanthi' and one issue of English daily, 'The Times of India' (All India Edition) fixing the date of hearing as 22.9.2009.
(d) The petitioner is directed to publish the company petition in advance giving not less than 14 days clear notice.
(e) Call the company petition on 22.9.2009.
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