2017 (12) TMI 636 - HC - Companies Law

Deposit of the amounts contained in the statutory notice - Held that - Merely because the Petitioner did not enter into correspondence though breach was committed by the Respondent would not dent the case of the Petitioner in so far as their claim based on Soyabean Meal contracts is concerned. Since the parties had a running business relationship, it may be possible that the parties were trying to work out and in the said process time might have elapsed. In the said context it is required to be noted that even in respect of the Guar Seed contracts the delivery date as per the said contracts was 27/07/2012. The Respondent did not address any correspondence for almost a year before addressing the letter dated 15/06/2013. Hence the aforesaid fact suggests that the parties being in continuous business relationship did not desire to precipitate the matter and were trying to resolve the same. Respondent i.e. the Appellant herein has not raised any substantial or genuine grounds to avoid the payment and the defences raised on behalf of the Respondent are therefore not bonafide. In our view, the learned Single Judge has in the facts and circumstances rightly issued the directions which are contained in the operative part of the impugned order.

Issues Involved:
1. Whether the learned Single Judge erred in directing the Respondent to deposit the amounts claimed in the statutory notices.
2. Whether the Respondent's defense that the contracts were for Guar Seeds and not Soyabean Meal is bona fide and plausible.
3. Whether the Respondent's failure to produce the alleged Guar Seeds contracts impacts the case.
4. The relevance and evidentiary value of the DG CCI report.
5. The impact of commercial solvency on the winding-up petition.
6. Whether the appellate court should interfere with the exercise of discretion by the learned Single Judge.

Detailed Analysis:

1. Direction to Deposit Amounts:
The learned Single Judge directed the Respondent to deposit the amounts claimed in the statutory notices due to the Respondent's failure to provide a bona fide and plausible defense. The Respondent's primary defense was that the contracts were for Guar Seeds, not Soyabean Meal, but they failed to produce any Guar Seeds contracts. The Petitioner, on the other hand, provided emails and bank statements evidencing the payment of ?51,00,00,000 as an advance for Soyabean Meal. The learned Single Judge found the Respondent's defense lacking in substance and shifted the burden of proof to the Respondent, which they failed to discharge.

2. Defense of Guar Seeds Contracts:
The Respondent claimed that the advances were for Guar Seeds, not Soyabean Meal. However, they did not produce the alleged Guar Seeds contracts before the learned Single Judge or in the Review Petition or the instant Appeal. The Petitioner provided emails with attached Soyabean Meal contracts bearing the Respondent's signature and rubber stamp. The learned Single Judge found the Respondent's denial of the authenticity of these emails and contracts to be bare and without particulars. The Respondent's failure to produce any evidence of Guar Seeds contracts significantly weakened their defense.

3. Failure to Produce Guar Seeds Contracts:
The Respondent's inability to produce the alleged Guar Seeds contracts was a critical factor. The Petitioner had discharged their initial burden by providing evidence of the Soyabean Meal contracts and payments. The Respondent's failure to produce the Guar Seeds contracts or any correspondence related to them further undermined their defense. The learned Single Judge noted that the amounts paid by the Petitioners were shown as advances in the Respondent's accounts, contradicting the Respondent's claim that these were for Guar Seeds.

4. DG CCI Report:
The Respondent relied heavily on the DG CCI report, which suggested that the advances were for Guar Seeds. However, the court found that the DG CCI's investigation was a preliminary fact-finding inquiry and not a quasi-judicial proceeding. The DG CCI's findings were based solely on bank statements and did not consider the material facts necessary to determine the inter se disputes between the parties. The court held that the DG CCI report had no evidentiary value in this context, citing the Supreme Court's judgment in Raymond Woollen Mills Ltd. v. Director General (Investigation and Registration).

5. Commercial Solvency:
The Respondent argued that their commercial solvency should prevent the winding-up petition. However, the court referred to the Supreme Court's judgments in M/s. Madhusudan Gordhandas & Co. v. Madhu Woollen Industries Pvt. Ltd. and IBA Health (I) Pvt. Ltd. v. InforDrive Systems SDN, BHD, which held that mere ability to pay is not a defense if the debt is undisputed. The court found that the Respondent's solvency did not constitute a stand-alone ground to avoid the statutory demand.

6. Appellate Court's Interference:
The appellate court emphasized that it would not interfere with the exercise of discretion by the learned Single Judge unless it was shown to be arbitrary, capricious, or perverse. The court found that the learned Single Judge's view was a possible and reasonable one based on the material facts and circumstances. Therefore, the appellate court upheld the learned Single Judge's order, dismissing the appeals and related motions for stay.

Conclusion:
The appellate court dismissed the appeals, finding that the Respondent's defenses were not bona fide and lacked substance. The court upheld the learned Single Judge's direction for the Respondent to deposit the amounts claimed in the statutory notices, emphasizing that the Respondent failed to produce any evidence to support their defense of Guar Seeds contracts. The DG CCI report was deemed to have no evidentiary value, and the Respondent's commercial solvency did not constitute a sufficient ground to avoid the statutory demand. The appellate court affirmed the learned Single Judge's exercise of discretion as reasonable and justified.

← Previous Next →