2014 (6) TMI 711 - HC - Companies Law

Winding up of company - Inability to pay debts - Held that - The facts of this case clearly indicate that there is no dispute that the petitioner had paid a sum of Rs. 2,97,000/- to the respondent. There is also no dispute that the project Eastern Home in respect of which the said sum had been accepted by the respondent, had not progressed as scheduled. Even according to the respondent, the said project had not taken off. This is clearly indicated in the letter dated 04.08.2009 sent by the respondent, which states that the project could not take off because of Government policy - It is also not disputed that the petitioner had sought a refund, of the amounts paid by him, from the respondent. The respondent had clearly accepted its liability to refund the amount and had also forwarded an application form, which the respondent required the petitioner to sign for processing the refund. Letters sent by the respondent, subsequently, also unequivocally indicate that the respondent had admitted its liability to pay the amount as claimed by the petitioner. In the given facts, it is indisputable that the amount demanded by the petitioner was due and payable by the respondent to the petitioner. The project for which the money had been collected from the petitioner had, admittedly, not taken off. And, the agreement between the parties had unequivocally provided that the amounts collected would be refunded with interest @ 9% per annum, in such eventuality. In the given circumstances, the contention that the terms and conditions as agreed were limited to only provisional booking cannot be accepted. It is difficult to appreciate the contention that even though the respondent had received funds on account of a contract which it did not perform, yet it could retain the same. - There is no document on record that indicates that such an agreement had taken place between the parties. It is also relevant to note that by a letter dated 12.12.2009, the respondent had attempted to suggest that the settlement between the parties was limited to the respondent repaying only Rs. 50,000/-. This had been refuted by the petitioner in no uncertain terms by its letter dated 18.12.2009 and the petitioner had called upon the respondent to pay the balance sum of Rs. 2,47,000/-. It is only, thereafter, that the respondent had made further payments. It is apparent from the above that this was not the first time that the respondent had attempted to raise such a false plea. The defence that there was a mutual settlement under which the respondent had to pay only a sum of Rs. 1,25,000/- is not borne out by the records or supported by any credible evidence. It is clear that that this defense is a concocted defense with no element of truth in it. It is apparent that the respondent is unable to pay its admitted debt. - Decided in favour of appellants.

Summary

Issues Involved:
1. Maintainability of the petition due to limitation.
2. Liability of the respondent to pay the claimed amount.
3. Alleged mutual settlement between the parties.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition Due to Limitation:

The respondent argued that the petition was barred by limitation, asserting that the booking was made in 2007 and no subsequent acknowledgment of debt was made by the respondent. They contended that the letter dated 30.01.2010 could not be considered an acknowledgment of debt as it did not specify the amount payable. However, the court found that the petitioner had been pursuing the respondent for payments, and the respondent had admitted its liability through various correspondences. The court cited the Supreme Court's decision in Food Corpn. of India v. Assam State Co-operative Marketing & Consumer Federation Ltd., stating that an acknowledgment of liability need not specify the exact amount and can imply the intention to admit a debtor-creditor relationship. Thus, the court rejected the respondent's contention and held that the petition was not time-barred.

2. Liability of the Respondent to Pay the Claimed Amount:

The court noted that there was no dispute regarding the petitioner having paid Rs. 2,97,000 to the respondent and that the project "Eastern Homes" had not progressed as scheduled. The respondent had acknowledged its liability to refund the amount through various letters and had partially refunded Rs. 1,25,000. The court found the respondent's contention that the petitioner's claim was limited to the provisional amount and not the subsequent payments to be dishonest. The agreement clearly stipulated a refund with interest if the project did not take off, which was the case here. The court also dismissed the respondent's claim that the petitioner failed to make balance payments, leading to the cancellation of the booking, as the project itself had not progressed.

3. Alleged Mutual Settlement Between the Parties:

The respondent claimed there was a mutual settlement under which Rs. 1,25,000 was to be paid in full and final settlement. However, the court found no document supporting this claim. The petitioner had refuted this alleged settlement in response to the respondent's letter dated 12.12.2009. The court noted that the respondent had continued to make further payments even after this date, indicating that the alleged settlement was a false plea. The court concluded that the defense of a mutual settlement was concocted and not supported by credible evidence.

Conclusion:

The court admitted the petition for winding up the respondent company, appointed the Official Liquidator as the Provisional Liquidator to take charge of the respondent's assets and books of accounts, and directed the publication of the petition in specified newspapers. The respondent was restrained from selling or transferring any assets and from operating its bank accounts without the consent of the Official Liquidator. The case was listed for further hearing on 29.05.2014.