2009 (12) TMI 512 - HC - Companies Law

Whether the statutory notice attempted to be served on the respondent has been duly served in law in view of the endorsement recorded on the envelope returned unclaimed ? Held that - The respondents have failed to rebut the legal presumption of service even in respect of the statutory notice dated March 6 1998 sent by speed post with acknowledgment due and registered post with acknowledgment due. the grievance of the respondents that the petitioners have not approached the court with clean hands or that the company petition should be dismissed at the threshold on account of suppression of facts is devoid of merits. That contention is founded on conjectures and surmises. On the other hand the stand taken by the petitioners seems to be more plausible and probable. As a matter of fact from the chain of circumstances it would appear that it is the respondents who have been successful in protracting the action of winding up thus far. On the finding that the statutory notice is deemed to have been served on the respondent-company and in spite of such notice the respondent-company having failed to pay the amount demanded as per the said notice the legal presumption that the respondent-company is unable to pay its debts is attracted. As a result the court will have no option but to order winding up of the respondent-company on the ground that the company is unable to pay its debts within the meaning of section 434(e) of the Act.

Summary

Issues Involved:
1. Whether the statutory notice was duly served on the respondent-company.
2. Whether the respondent-company's defense on the merits is plausible and whether the petitioner approached the court with clean hands.

Detailed Analysis:

1. Service of Statutory Notice:
The petitioners claimed to have sent multiple statutory notices to the respondent-company, which were returned with postal endorsements such as "not claimed" and "intimation." The petitioners also sent a statutory notice by telegraphic mode, which the postal authority confirmed as refused by the addressee. The court noted that the statutory notice can be sent by registered post or otherwise, and the term "otherwise" includes lawful modes such as telegraphic notices. The court held that the telegraphic notice was a valid mode of service, and the refusal to accept it raised a legal presumption of service.

The respondent's affidavit, denying receipt of the notices, was deemed insufficient to rebut the legal presumption of service. The court emphasized that the managing director's affidavit lacked personal knowledge and did not include statements from other officials responsible for receiving communications. The court concluded that the statutory notice sent by telegraphic mode was duly served on the respondent-company, and the legal presumption of service was not rebutted.

2. Merits of the Respondent's Defense:
The respondent-company argued that the amount paid in January 1998 was in full and final settlement and raised issues about the quality and quantity of goods supplied. The court found these defenses to be raised belatedly and not substantiated by contemporaneous records. The court noted that the respondent's inward goods received notes were unilateral entries and not communicated to the petitioner at the relevant time.

The court also found discrepancies in the documents produced by the respondent to support their claim of poor-quality goods. The petitioners successfully demonstrated that these documents were questionable and likely fabricated to create a false dispute. The court concluded that the respondent's defense was not plausible and was merely an attempt to delay the winding-up proceedings.

Conclusion:
The court held that the statutory notice was duly served on the respondent-company, and the respondent failed to rebut the legal presumption of service. Additionally, the respondent's defense on the merits was found to be implausible and an attempt to protract the proceedings. Consequently, the court ordered the winding up of the respondent-company on the ground that it was unable to pay its debts within the meaning of section 434(e) of the Companies Act, 1956. The petition was allowed in terms of the prayer clauses (a) and (b), and the official liquidator was appointed to proceed in accordance with the law.