2013 (1) TMI 332 - HC - Companies Law

Claim of the petitioning creditor on account of dues from its distribution agent - dues accepted in emails - Held that - There is no doubt that the correspondence between the parties in April, 2009 gives the impression that the company admitted and acknowledged that the company owed money to the petitioner. Yet, on the basis of the mail exchanged at the relevant time, the exact quantum of the company s indebtedness to the petitioner cannot be assessed. The company did not agree to the final counter proposal made by the petitioner on April 24, 2009 nor is any sentence in the company s mail at 12 34 pm on April 24, 2009 capable of being understood to have, in any manner, acceded to the petitioner s counter proposal or admitted the amount claimed by the petitioner. For a petition to be admitted in this jurisdiction, the petitioner has ordinarily to, not only show that a sum in excess of Rs. 500 is due and owing to it from the company, but also demonstrate the quantum of the debt due. At the very least, on the basis of documents contained in the petition which have been relied upon in course of the hearing, it cannot be said that the petitioner has been able to establish the amount which is due and owing from the company.It does not appear that the defence is altogether moonshine or without basis. Though the company has not been called upon in course of the hearing, the communication exchanged between the parties in April, 2009 and the company s reply to the statutory notice indicate sufficient defence for this petition not to be admitted - petition permanently stayed.

Summary

Issues: Claim of dues based on email communication; Interpretation of correspondence for debt acknowledgment; Assessment of company's indebtedness; Quantum of debt due; Admissibility of petition based on debt quantum; Company's defense based on communication and statutory notice.

In this case, the petitioner, a creditor, claimed dues from its distribution agent based on email correspondence exchanged in April 2009. The petitioner relied on the company's emails proposing phased payments as an acknowledgment of the debt. The company had suggested payment in tranches, but later raised claims of loss and damages, disputing the debt amount. The petitioner argued that the company's subsequent inflated claims were an attempt to avoid paying legitimate dues and concealed its inability to pay. The court noted that while the company's emails implied indebtedness, the exact quantum of debt was not clearly admitted. The court highlighted the need for the petitioner to establish the precise amount due, which was not conclusively proven based on the documents presented.

The court emphasized that for a petition to be admitted, the petitioner must demonstrate the amount owed with clarity, especially in excess of a specified sum. The court found that the petitioner had not definitively proven the debt amount, creating uncertainty regarding the company's liability. Despite the company's broad claims post receiving a statutory notice, the court observed that the petitioner had not sufficiently established the debt quantum. The court raised concerns about both the total amount owed by the company and the potential adjustments the company could claim, indicating a lack of clarity in the petitioner's case.

Ultimately, the court concluded that the company's defense, as evidenced by the communication and response to the statutory notice, presented a valid argument against admitting the petition. The court decided to permanently stay the petition but allowed the petitioner to pursue the claim through the appropriate legal channels. The judgment highlighted the importance of establishing the precise debt amount and addressing any potential defenses raised by the debtor to ensure a strong case for debt recovery.