2018 (10) TMI 773 - HC - Companies Law

Winding up petition - dishonour of cheques - Held that - So far as ₹ 5,00,000/- against the dishonour of cheque is concerned, it was incumbent upon the said company to pay the same to the petitioner. Even though held that the alleged repayment by encashment of blank cheques requires to go to trial, we are inclined to grant the petitioner the benefit of the amount of ₹ 5,00,000/- against dishonour of cheques. If the company succeeds in proving that the blank cheques which they made over to the petitioner were filled in as self cheques and encashed, the said company will be at liberty to realise such sum from the petitioner in the suit. The argument as to the application of Section 269 T and 271 E of the Income Tax Act, 1961 is a matter of consideration in the suit wherein the balance claim of the petitioner aggregating to ₹ 20,00,000/- and the counter claim, if any, of the said company is relegated. The said company has no defence far less bona fide defence in respect of the petitioner s claim for ₹ 12,00,000, that is, ₹ 5,00,000 for the dishonoured cheques and ₹ 7,00,000 being the balance which admittedly remains unpaid. The winding up petition is, therefore, admitted for the sum of ₹ 12,00,000/-. On the sum of ₹ 5,00,000/-, the petitioner is entitled to interest at the rate of eighteen per cent as per the provisions Section 80 of the Negotiable Instrument Act, 1882 as applicable for the dishonour of cheque being a negotiable instrument. The interest will be payable on the said sum of ₹ 5,00,000/- from the date of dishonour of the cheque, that is, 1st March, 2013. So far as ₹ 7,00,000/- is concerned, the petitioner is entitled to interest at the rate of ten per cent from the date of the winding up notice, that is, 11th January, 2014. Both the interest will be payable from the respective dates as above until realization. So far as the balance 20,00,000 is concerned the petitioner s claim is relegated to suit. It will be open to the petitioner to file a suit in respect of the said sum and in the event such suit is filed within 25th November, 2018, the petitioner will have the benefit of the period from 5th May, 2014 (the date on which the winding up petition was presented) till the date of the judgment with regard to the limitation of its claim. The said company will also get such benefit as to limitation in the event they institute a suit or counter claim for ₹ 5,00,000/- on account of the amount covered under the dishonoured cheques. The company, if pays the said sum of ₹ 12,00,000/- with accrued interest by four monthly instalments starting from November15, 2018, the first three of which will be of ₹ 3,00,000 each and the fourth and the final instalment for the balance sum, the winding up petition shall remain permanently stayed. The payment are to be made by 15th of each successive month starting from 15th November, 2018.

Issues Involved:
1. Allegation of financial accommodation by the petitioner.
2. Encashment of cheques by the company.
3. Absence of loan agreement or contemporaneous documents.
4. Dishonour of the repayment cheque.
5. Statutory notice and reply by the company.
6. Alleged repayment by the company and counterclaims.
7. Dispute over blank cheques and their encashment.
8. Admissibility of the company's defense.
9. Application of Section 269 T and 271 E of the Income Tax Act, 1961.
10. Consideration of cited judgments.
11. Admission of winding up petition and interest on unpaid amounts.
12. Relegation of balance claim to a suit.

Detailed Analysis:

1. Allegation of Financial Accommodation by the Petitioner:
The petitioner, Saraf Engineers Private Limited, alleged that Zonal Electroplast Private Limited (the company) was provided financial accommodation aggregating to ?32,00,000 during the Financial Year 2011-2012, paid through four account payee cheques.

2. Encashment of Cheques by the Company:
The records confirmed that all four cheques were duly encashed, and the money was appropriated by the company.

3. Absence of Loan Agreement or Contemporaneous Documents:
The petitioner claimed the loan was repayable with interest at 18% per annum but failed to produce any loan agreement or contemporaneous documents to establish the terms and conditions of the financial accommodation.

4. Dishonour of the Repayment Cheque:
The company issued a cheque for ?5,00,000 dated 3rd December 2012, which was dishonoured due to insufficient funds. The petitioner provided photocopies of the documents showing the reasons for dishonour.

5. Statutory Notice and Reply by the Company:
The petitioner issued a statutory notice on 11th January 2014, demanding ?51,17,584, comprising the principal loan amount and interest. The company, in its reply dated 6th February 2014, acknowledged receiving ?32,00,000 but claimed to have repaid ?25,00,000 through blank cheques and an account payee cheque of ?5,00,000.

6. Alleged Repayment by the Company and Counterclaims:
The company alleged that Balaji Enterprises and Balaji Engineering Company, both associated with the petitioner's principal shareholder, had placed orders for transformers. The company claimed it was agreed that repayment cheques would be presented upon receiving payments from these entities. The company stated it received ?25,00,000 from these entities and claimed additional dues of ?7,82,324 from them.

7. Dispute Over Blank Cheques and Their Encashment:
The company alleged that five blank cheques were filled as self-cheques and encashed by the petitioner's representatives. The petitioner denied receiving any repayment and disputed the alleged agreement and encashment of blank cheques.

8. Admissibility of the Company's Defense:
The court noted the absence of any contemporaneous documents supporting the company's alleged agreement. The petitioner's failure to specifically deny the company's allegations regarding the blank cheques and representatives left this issue unresolved, requiring a trial to ascertain the facts.

9. Application of Section 269 T and 271 E of the Income Tax Act, 1961:
The court deferred the consideration of the application of these sections to the suit where the balance claim of ?20,00,000 and any counterclaim by the company would be addressed.

10. Consideration of Cited Judgments:
The court acknowledged the judgments cited by both parties but emphasized that their application depends on the specific facts of the case. The court concluded that the company had no bona fide defense against the petitioner's claim for ?12,00,000.

11. Admission of Winding Up Petition and Interest on Unpaid Amounts:
The winding up petition was admitted for ?12,00,000. The petitioner was entitled to 18% interest on ?5,00,000 from the date of dishonour and 10% interest on ?7,00,000 from the date of the winding up notice until realization.

12. Relegation of Balance Claim to a Suit:
The petitioner's claim for the remaining ?20,00,000 was relegated to a suit. The petitioner was granted the benefit of the limitation period from the date of the winding up petition to the date of judgment. The company was also granted similar benefits if it filed a suit or counterclaim for ?5,00,000.

Conclusion:
The winding up petition was admitted for ?12,00,000 with interest. The company was ordered to pay this amount in four monthly installments starting from 15th November 2018. Failure to pay would result in the petition being advertised and further proceedings. The balance claim of ?20,00,000 was relegated to a separate suit.

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