2002 (12) TMI 506 - HC - Companies Law

Issues Involved:
1. Allegation of outstanding payments and interest.
2. Respondent's defense of lost cheques.
3. Compliance with court orders regarding financial documents.
4. Allegation of false complaint and police proceedings.
5. Discrepancies in the statement of accounts.
6. Validity of debit notes claimed by the respondent.
7. Time-barred debt contention.
8. Bona fide defense by the respondent.

Detailed Analysis:

1. Allegation of Outstanding Payments and Interest:
The petitioner, engaged in the business of steel pipes, claimed that the respondent, who manufactures rubberized and steel rollers, owed Rs. 27,62,585.03 as principal and Rs. 31,01,934 towards interest, totaling Rs. 58,64,520 as of 30-6-2000. The respondent issued a post-dated cheque for Rs. 25,00,000, which was dishonored with the endorsement "payment stopped by Income-tax authorities." The petitioner alleged commercial insolvency of the respondent.

2. Respondent's Defense of Lost Cheques:
The respondent claimed that five cheques, including the one for Rs. 25,00,000, were lost near its work precincts and reported to the police. The respondent argued that these cheques were stolen by a partner of the petitioner and used fraudulently. The respondent supported this claim with a police report and a pending complaint under section 200 Cr.P.C.

3. Compliance with Court Orders Regarding Financial Documents:
The court had directed the respondent to file audited accounts and a list of sundry creditors for the last eight years. Despite extensions, the respondent failed to comply fully, submitting documents certified by the company but not by auditors. The court noted that the amounts claimed by the petitioner were listed as sundry creditors in the respondent's documents.

4. Allegation of False Complaint and Police Proceedings:
An FIR was lodged by the respondent alleging theft of cheques by the petitioner's partner. However, the police initiated proceedings under section 182 against the respondent for making a false complaint. The court found the respondent's story of lost or stolen cheques inconsistent and unconvincing, particularly since the cheques were presented for encashment months later.

5. Discrepancies in the Statement of Accounts:
The petitioner provided a comparative statement of account showing discrepancies between the amounts claimed by both parties. The respondent claimed that after adjusting debit notes, no payments were outstanding. However, the court found that the respondent's statement of accounts omitted significant transactions, including a payment of Rs. 14,00,000 by the petitioner, which was confirmed by the respondent's bank.

6. Validity of Debit Notes Claimed by the Respondent:
The respondent claimed debit notes totaling Rs. 14,82,322.10, which the petitioner disputed as fraudulent. The court noted that 'C' Forms were issued by the respondent for these transactions, indicating acceptance of the supplies. The court found the respondent's claim of debit notes unconvincing and unsupported by initial pleadings.

7. Time-Barred Debt Contention:
The respondent argued that the petition was based on time-barred debts. The court overruled this objection, noting that a current and running account was maintained, and payments were made on account of several transactions. The court referenced relevant case law to support its decision that the petition was not time-barred.

8. Bona Fide Defense by the Respondent:
The court found that the respondent failed to disclose a bona fide defense. The respondent's reliance on debit notes and general denials were insufficient. The court admitted the petition, directing the respondent to deposit Rs. 25,00,000 within fifteen days, followed by Rs. 2,62,585.03, with the question of interest to be considered later. The court scheduled further proceedings and the potential appointment of a Provisional Liquidator.

Separate Judgment in CP 333 of 2000:
The court noted that the facts in CP 333 of 2000 were similar to those in CP 332 of 2000. Therefore, the same reasoning applied. The respondent was directed to deposit Rs. 35,00,000 within fifteen days, followed by Rs. 4,28,851.55, with the question of interest to be considered later. The court scheduled further proceedings and the potential appointment of a Provisional Liquidator.

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