1990 (2) TMI 251 - HC - Companies Law

Summary

Issues Involved:
1. Whether the liability of the respondent-company to the petitioner arising on account of short delivery of goods entrusted to it for carriage could be regarded as a debt within the meaning of the word "debt" in clause (e) of section 433 of the Act?
2. Whether the petitioner who had entrusted the goods to the respondent-company for carriage becomes a creditor of the latter for short-delivered goods, within the meaning of the word "creditor" in section 439 of the Act?

Summary:

Issue 1: Definition of "Debt" u/s 433(e)
The petitioner, Kudremukh Iron Ore Co. Ltd., engaged the respondent, Kooky Roadways P. Ltd., for the carriage of steel materials. The respondent failed to deliver 121.790 metric tonnes of steel materials. The petitioner demanded either the delivery of the undelivered materials or payment of Rs. 5,88,724.01, which the respondent did not fulfill. The court examined whether this liability could be regarded as a "debt" u/s 433(e) of the Companies Act, 1956. The court referred to various precedents, including Webb v. Stenton and Kesoram Industries and Cotton Mills Ltd. v. CWT, to define "debt" as a sum of money which is now payable or will become payable in the future by reason of a present obligation. The court concluded that the liability of the respondent-company for short-delivered goods is a "debt" within the meaning of clause (e) of section 433 of the Act.

Issue 2: Definition of "Creditor" u/s 439
The court then considered whether the petitioner qualifies as a "creditor" u/s 439 of the Act. The general meaning of "creditor" is a person to whom a debt is payable. Given that the liability of the respondent-company for short-delivered goods is a "debt," the petitioner is a "creditor" of the respondent-company. Therefore, the petition for winding up presented by the petitioner is maintainable.

Conclusion:
The court disagreed with the learned single judge's view that the liability for short-delivered goods could not be considered a debt unless the amount was ascertained through a suit. The court held that the respondent-company's liability for short-delivered goods is a debt, and the petitioner is a creditor. Consequently, the respondent-company is deemed unable to pay its debts u/s 433(e) and is liable to be wound up. The appeal was allowed, the order of the learned single judge was set aside, and the respondent-company was ordered to be wound up.