2018 (10) TMI 713 - HC - Companies Law

Winding up seeked - non payment of detention charges - bonafide default - Held that - On perusing the pleadings and materials on record it appears that the conduct of the company is not bona fide inasmuch as the said company after paying detention charges for a particular period has avoided payment by attempting to shift the liability on the consignee and M/s. M.A. Badani with whom the petitioner had no dealings. The said company has only initiated criminal proceedings against the consignee and M/s. M.A. Badani but, it has not initiated any civil proceedings to recover any money from them though it urges in its letters that the detention charges are payable to the petitioner thereby demanding money from the consignee. The defence of the company with regard to the payment of detention charges for the subsequent period is, therefore, linked with its volition to return the containers to be accepted unconditionally. The petitioner could have accepted the return of the containers had there been no condition appended to it and could still maintain its claim for the balance sum. The petitioner could not do so for the stand taken by the said company. The company has also sought to make out a case that the containers having not taken back the same are occupying space for which the said company is entitled to damages. This contention of the company though does not sound good at the first instance but there appear to be some element for which enquiry is required in this regard which cannot be done by the company Court while adjudicating an winding up proceedings. It may so occur that in the trial the company s defence may not succeed but this cannot be said at this stage without a trial. The company is, therefore, afforded an opportunity to defend itself upon securing the entire claim for the balance period from 29th November, 2015 till 7th June, 2016 at the rate of 75 US per day converted to INR at the prevailing rate as on the date of the judgment. Since the claim between 29th November, 2015 till 7th June,2016 is not barred by limitation as it is still within three years, the petitioner may file a suit within 28th November,2018. The company is given time till 25th November, 2018 to deposit the said sum for the period between 29th November, 2015 to 7th June, 2016.

Summary

Issues:
1. Winding up petition under Sections 433, 434, and 439 of the Companies Act.
2. Dispute over detention charges and outstanding debt for shipping containers.
3. Company's defense regarding liability for detention charges and return of containers.
4. Evaluation of company's conduct and bona fides in the matter.
5. Determination of liability for outstanding detention charges and future course of action.

Analysis:
1. The petitioner, Ocean Empire Lines Limited, filed a winding up petition against Eastern Clearing and Forwarding Agency Private Limited seeking payment of hire charges and detention charges for shipping containers used for cargo transportation. The petitioner claimed an outstanding debt of &8377; 24,87,984 based on bills raised for detention charges and service tax.

2. The company, in response, disputed the liability for detention charges, citing its role as a customs house agent and the consignee's responsibility for payment. The company alleged that it had returned the empty containers but faced challenges due to border disturbances, leading to delayed return. The company also initiated criminal proceedings against the consignee and another party.

3. The court found that an implied contract existed between the petitioner and the company for payment of detention charges based on past payments made by the company. The company's argument regarding the agent-principal relationship was dismissed, and it was held liable for detention charges from a specific period.

4. The court criticized the company's conduct, noting its attempt to shift liability to third parties and avoid payment. The company's offer to return the containers unconditionally for full settlement was rejected, and it was directed to pay the admitted sum for the specified period. The court allowed the company an opportunity to defend itself for the remaining period and directed the petitioner to file a suit if necessary.

5. The judgment outlined the procedure for payment and security arrangements, specifying deadlines for depositing the outstanding amount and filing a suit if required. The company was given a timeline to comply, failing which the winding up petition could proceed. The judgment emphasized fairness in resolving the dispute and provided a structured approach for further legal actions.