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TMI Blog1990 (2) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ts debts may be put thus: The petitioner, Kudremukh Iron Ore Co. Ltd., is a Government of India enterprise, which had to carry its goods comprising steel materials from Bangalore to Mangalore. The respondent-company, a public carrier, was engaged by the petitioner for carriage of certain quantities of the said steel materials from Bangalore to Mangalore from October, 1982, to January, 1983. The respondent-company did not deliver at Mangalore all the steel materials which it had collected at Bangalore for carriage. Short delivery discovered was in the order of 131.630 metric tonnes. When that short delivery was brought to the notice of the respondent-company, a letter dated January 17, 1983, written on its behalf came to be received by the petitioner. The respondent-company, while acknowledging the short delivery in that letter, sought therein grant of time up to January 31, 1983, for making good the short delivery. Thereafter, the respondent-company hardly delivered 9.840 metric tonnes of steel materials leaving a net shortage of steel materials at 121.790 metric tonnes. The said situation made the petitioner write to the respondent-company a letter dated April 26, 1983, calling u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise for our decision in this appeal admit of the following formulations: (i)Whether the liability of the respondent-company to the petitioner arising on account of short delivery of goods entrusted to it for carriage could be regarded as a debt within the meaning of the word "debt" in clause (e) of section 433 of the Act? (ii)Whether the petitioner who had entrusted the goods to the respondent-company for carriage becomes a creditor of the latter for short delivered goods, within the meaning of the word "creditor" in section 439 of the Act? We shall now proceed to consider and decide the said points. Re. Point (i ).-The petitioner entrusted steel materials to the respondent-company for their carriage from Bangalore to Mangalore. The petitioner, as the owner of those materials, was entitled to obtain their delivery at Mangalore from the respondent-company. When short delivery of the said materials by the respondent-company was brought to the notice of its managing director, the same was acknowledged by the latter, yet was not made good/The liability of the common carrier arising under section 8 of the Carriers Act, 1865 (for short "the Carriers Act"), to the owner of the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance committee. Therefore, there was a "debt" at the material date, though it was not presently payable and the amount was not ascertained". Phillimore L.J. dealing with the contention that the sums sought to be attached not being ascertained at the time, cannot be attached, observed (at page 515): "No doubt, these debts were not presently payable, and the amounts were not, on April 9, 1914, ascertained in the sense that no one could say what the result of the calculations would be, but it was certain on that date that a payment would become due from the committee to the doctors out of the balance of the moneys in the hands of the committee for 1913 ...". Then, Bankes L.J. observed (at page 517): "Dr. Sweeny fulfilled that condition, and a debt arose though the amount of it was not ascertained on April 9, 1914, and was not then pay able". In Seabrook Estate Co. Ltd. v. Ford [1949] 2 All ER 94 (KB), while dealing with the question whether the money in the hands of a receiver for debenture-holders was not a "debt" owing or accruing as would make it not liable to attachment, Hallett J. endorsed the proposition laid down by Rowlatt J. in O'Driscoll v. Manchester Insurance Commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la was that since the liability to pay tax arose by virtue of the charging section, that is, section 3 of the Income-tax Act, not later than the close of the previous year (valuation date), though the quantification of tax payable was postponed till the Finance Act was passed, it was a tax liability in praesenti existing on the valuation date and hence it was a debt owed by the assessee on the said date. The argument of Mr. A.V. Viswanatha Sastri, learned counsel for the Revenue, on the other hand, was that the expression "debt" owed being an obligation to pay an ascertained amount, such obligation involving the payment of income tax arose only on the passing of the Finance Act and that, therefore, on the valuation date, no debt was owed by the assessee to the Department. In resolving the said controversy, the Supreme Court, after referring to various decisions of courts adverted to hereinbefore dealing with the meaning of the word "debt" found under various statutes, has elucidated the meaning of the word "debt" in general and the meaning of the word "debt" in section 2(m ) of the Wealth-tax Act in paragraph 24 of its judgment, thus (at page 780): "We have briefly noticed the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt since the "debt" takes within its ambit the existing liability of a person to pay a sum of money to be ascertained or determined or quantified subsequently as held by the Supreme Court in Kesoram's case [1966] 59 ITR 767. From this, it follows that the liability of the respondent-company to the petitioner arising on account of short delivery of goods entrusted to it for carriage could be regarded as a "debt" within the meaning of clause (e) of section 433 of the Act. As the meaning we have ascribed to the word "debt" in clause (e) of section 433 of the Act takes within its ambit the existing liability of a company, though the amount of such liability has yet to be ascertained, determined or quantified, we find it difficult to subscribe to the view expressed by the learned single judge in his order under appeal that the liability of the respondent-company to the petitioner for short-delivered goods cannot become a debt unless the amount of such liability is ascertained in a suit to be filed by the petitioner in that regard. Re. Point (ii ).-An application to the court for winding up of a company shall be by a petition presented under sub-section (1) of section 439 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then due, has served a notice of demand on the company, by causing it to be delivered at its registered office by registered post or otherwise, requiring the company to pay the sum so due and the company has, for three weeks thereafter, neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor. Sub-section (2) thereof provides that the demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his behalf. As has been pointed out earlier while dealing with the facts of the present case, the petitioner wrote to the respondent-company a letter dated April 26, 1983, calling upon the latter either to deliver immediately the undelivered steel materials or to pay their value (cost) being Rs. 5,88,724.01. As the respondent-company did not respond to that letter, the petitioner, by its letter dated May 26, 1983, called upon the respondent-company to remit the value of the undelivered steel materials, as mentioned in its earlier letter. Ultimately, the petitioner got issued to the respondent-company a lawyer's notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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