2016 (3) TMI 1246 - HC - Companies Law

Service of the statutory notice - medium of delivery of notice - Held that - All that we have is two alphabets I.P. and these, as told to assume without proof, man Intimation Posted . Even if this is true, this is not refusal of delivery. This is not sufficient proof that the packet was returned unclaimed . This is only indication that intimation was posted. It is no better than saying that a letter was sent by registered post. It does satisfy the requirement of Section 434(1)(a) of having a letter by registered post (or other means; clearly hand-delivery is good enough) actually delivered. Something further would be required to be shown to establish that delivery was refused though attempted. Matters might have been different if the Petitioners would have been able to establish that they had tried again to send that notice by registered post or hand-delivery and that the fresh notice had once again met the same fate. Even this material is not on record. In any case, there are the words or other means . This presumably allows for delivery by hand; none was attempted. There is also the matter of correctness of this endorsement on the packets and the curious question of why the Petitioner did not attempt hand-delivery. Mr. Purohit shows me an Inward Register (though the printing is to the contrary) maintained between January 2013 and going on well into 2016. There are entries through February 2013, including around the time of the date of the statutory notice. Mr. Purohit points out that in the regular course there are entries showing correspondence received even from this particular Petitioner. That is the entry at Serial No. 154 of 4th April 2013. There is another entry of 15th April 2013 and yet another of 21st October 2013. The endorsement on the packet at page 141 is dated 25th February 2013. I find this extremely strange because in this register there are at least eight entries of that very date of letters received by the Respondent from various other parties. There are several too over the next few days. In other words, Mr. Purohit says, the registered office was open and functioning. Letters were being received and all were entered in various modes. There are later letters received from this very Petitioner. The Respondent had no cause to refuse delivery, and it did not in fact refuse delivery. None was attempted, that is all; and that is what the material shows. Therefore, even on the ground of want of service of the statutory notice, would have been moved to dismiss this Petition, reserving, however, liberty to the Petitioner to file a fresh Petition after issuance of a fresh notice. Unable to find any merit in the distinctions that asked to draw, viz., that the contract in question was a different contract from that before the Court on 7th December 2015; that the Petitioner was a different Petitioner; and that the machines involved and the underlying contracts were different. The same defence was taken in Company Petition No. 340 of 2013 against another guarantor as is taken here. That Petition was dismissed. So must this.

Summary

Issues Involved
1. Service of statutory notice as required by law.
2. Liability of the guarantor in the context of the principal borrower's dispute with the supplier.
3. Distinction between petitions brought against the principal borrower and those against the guarantor.

Detailed Analysis

1. Service of Statutory Notice
The primary issue was whether the statutory notice was served on the Respondent as required by law. The Petitioner argued that the endorsement "I.P." (Intimation Posted) on the returned registered post was sufficient compliance with Section 434(1)(a) of the Companies Act, 1956. The Court, however, disagreed, stating that the requirement under Section 434(1)(a) is for the notice to be "delivered at its registered office," which necessitates actual delivery of the notice. The Court cited several precedents, including *Vysya Bank Limited v. Randhir Steel and Alloys (P) Limited* and *Kold-Hold Industries (P) Limited v. Arabian Exports Limited*, emphasizing that substantial compliance is not sufficient for statutory notices under Section 434. The Court found no evidence of attempted hand-delivery or multiple attempts to serve the notice, further weakening the Petitioner's case.

2. Liability of the Guarantor
The Petitioner sought to wind up the Respondent Company based on a loan agreement where the Respondent was a guarantor for the principal borrower, S.K. Agrotech Ltd. The Respondent argued that the machinery supplied by Kiefel GmbH to S.K. Agrotech Ltd. was defective, raising a bona fide dispute. The Court referenced a previous order dated 7th December 2015, where a similar defence was considered substantial, leading to the dismissal of Company Petition No. 340 of 2013 against another guarantor. The Court held that the Respondent's liability as a guarantor could not be separated from the principal borrower's liability, thus recognizing the defence as bona fide.

3. Distinction Between Petitions Against Principal Borrower and Guarantor
The Court noted that while it would have preferred to distinguish between petitions brought against the principal borrower and those against the guarantor, it was bound by the previous order of 7th December 2015. This order dealt with a similar situation where the Respondent-guarantor's defence was deemed substantial. The Court emphasized that it could not sit in appeal over this order and was bound by it, leading to the dismissal of the present Petition.

Conclusion
The Petition was dismissed on two primary grounds: the failure to serve the statutory notice as required by law and the substantial defence raised by the Respondent-guarantor concerning the defective machinery supplied to the principal borrower. The Court was bound by a previous order which had already addressed a similar defence, leading to the dismissal of a petition against another guarantor. Consequently, the present Petition was dismissed with no order as to costs.