2014 (4) TMI 868 - HC - Companies Law

Winding up of company - Breach of contract - Non payment of material supplied - Respondent contends that no amount is due and payable to the petitioner and alleges that all payments have been made to the petitioner except for the material which was found to be defective - whether the defence raised by the respondent is bona fide or a sham defence - Held that - The statement of account of the petitioner as appearing in the books of the respondent, i.e. the ledger account filed by the respondent, also does not indicate any debit on account of defective material. On the contrary, the books of accounts of the respondent clearly indicate that a sum of Rs. 17,23,236/- was, admittedly, due and payable by the respondent to the petitioner as on 03.07.2012. The debit note which is annexed to the reply is dated 13.09.2011. This debit note does not find any mention in the ledger account as provided by the respondent and is obviously a self-serving document which has been created subsequently, for the purposes of the present petition. It is common accounting knowledge that debit notes are primary documents on the basis of which entries are posted in the ledger. The fact that no entry for the alleged debit note appears in the ledger account furnished by the respondent itself indicates that no such debit note was issued at the material time. Neither the debit note nor the statement of defective material is accepted by the petitioner. There is also no evidence to indicate that the said debit note or any communication as to defective material was ever issued by the respondent to the petitioner. It is thus obvious that the contention that is now raised that the goods supplied by the petitioner were defective has been raised for the first time after the petition has been filed and is, apparently, a sham defence which is liable to be rejected at the threshold - in view of the fact that the respondent has been unable to discharge its debt due to the petitioner, I deem it appropriate that the Official Liquidator be appointed as a Provisional Liquidator to take charge of the assets and books of account of the respondent company - Decided in favour of appellant.

Summary

Issues:
Petition for winding up under section 433(e) of the Companies Act, 1956 based on alleged non-payment for supplied goods. Controversy over the bona fide nature of the defense raised by the respondent. Dispute regarding defective goods, issuance of debit note, and receipt of statutory notice under Section 434(1)(a) of the Companies Act, 1956.

Analysis:
The petitioner filed a winding-up petition against the respondent company for non-payment of Rs. 22,73,236 for supplied goods. The respondent disputed the claim, alleging the goods were defective and issuing a debit note of Rs. 17,23,180. However, the petitioner argued that no written communication regarding defective goods was provided, and the ledger account showed the amount due. The court found the defense of defective goods raised by the respondent to be a sham defense, as it was introduced after the petition was filed, lacking supporting evidence or communication to the petitioner.

The respondent also disputed receiving the statutory notice under Section 434(1)(a) of the Companies Act, 1956. The court dismissed this claim, noting that evidence proved the notice was dispatched by courier and speed post, and the address mentioned was sufficient for delivery. Additionally, the court highlighted that the respondent's delay tactics in responding to the petition, including failure to file required documents and pay imposed costs, demonstrated an attempt to prolong the proceedings unjustly.

Consequently, the court appointed the Official Liquidator as a Provisional Liquidator to take charge of the respondent's assets and books of account. The directors were instructed to file a Statement of Affairs within 21 days and provide details of the company's records and offices. A two-week period was granted for the respondent to settle its dues, during which the appointment of the Official Liquidator was put on hold. Failure to comply within this timeframe would result in the Official Liquidator proceeding with the liquidation process. The court disposed of the case, with a provision for relisting on a specified date for further proceedings.