9911796707
TMI Blog1995 (11) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... n the shoe-making industry. Between April, 1988 and July, 1991, the appellant agreed to supply adhesives and chemicals to the respondent-company [Sports Equipment (P.) Ltd., New Delhi] and these adhesives and chemicals were accepted by the respondent, consumed by them in the manufacture of shoes without any demur. The appellant contended that when it raised several bills on the respondent-company for payment in respect of the goods sold and delivered to the respondent, they were accepted without any demur and in fact part-payments were also made from time to time. After giving due credit for the payments made against these bills, there remained a sum of Rs. 1,34,146 as on 24-8-1992. The said amount was reflected in the appellant s account books, balance-sheet and also books of account of the respondent-company. It appears that the respondent issued a cheque for Rs. 16,599 by way of part payment on 2-7-1991, and upon presentation the cheque was returned by the bank. Another cheque for Rs. 36,925 was issued by the respondent to the appellant and was presented on 20-7-1991. It was returned by the bank with the endorsement "refer to drawer". After the appellant took up the matter with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also prior in point of time to the filing of the winding up petition. The learned Company Judge observed that no winding up order could be passed if there existed a bona fide dispute of fact between the parties though in cases where the dues were admitted or there was no bona fide dispute in existence, an application for winding up could be admitted. He referred to the decision of the Supreme Court in Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 Comp. Cas. 456. He also observed that it was not open to use the provisions of winding up as a procedure for recovery of money. In such cases recourse must be had to civil action. The learned Judge then noticed that the dishonour of the cheque in the instant case was not because of insufficiency of funds, but because the respondent had directed the bank to stop payment. In the light of this, the learned Judge observed that he was satisfied that there was a bona fide dispute between the parties. He, therefore, dismissed the company petition without prejudice to the right of the appellant to file a regular suit. 5. In this appeal, it is contended by the appellant that the supply of adhesives st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent and monies were being paid without any demur. 7. The dispute arose on 18-7-1991, when the cheque for Rs. 16,599 dated 2-7-1991, was returned by the bankers. It was represented on 29-7-1991, and it was again returned on 2-8-1991, and was again represented on 2-8-1991, when it was encashed. It was at that stage that the appellant-company got some doubts about the financial stability of the respondent. 8. The trouble arose thereafter when the cheque dated 20-7-1991, for Rs. 36,925 was returned by the bankers on 7-8-1991, on the ground that the respondent directed stoppage of payment . From this stage, the disputes intensified. By that date, this sum of Rs. 1,34,146 was due from the respondent. 9. The respondent wrote on 5-8-1991, for the first time alleging that a large number of customers who purchased the shoes manufactured by the respondent with the adhesive supplied by the appellant, were putting in claims for bond failure. The respondent stated that it had brought the problem to the notice of the appellant on 5-8-1991, and wanted to discuss with the appellant about the quality of the adhesives supplied by the appellant resulting in bond failure. The letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhesive. But, so far, there had been no word from the respondent. The appellant, therefore, demanded payment of the amounts that were due. 11. In reply thereto, the respondent informed the appellant that the appellant had admitted supplying sub-standard PU adhesive, and that was the reason why the shoes manufactured by the respondent were not in keeping with the required specification. The respondent stated that it received complaints from customers in India and abroad, particularly, in respect of bond failure resulting in substantial claims. The appellant was requested to supply replacement of PU adhesive Chemstik 201 with solid content of 18 per cent as per industrial standards, and that the balance sub-standard PU adhesive would be returned. The respondent also stated that it was calculating damages as of now, and that they would be submitted to the appellant for payment. 12. It will be noticed from the aforesaid reply that the respondent construed the appellant s letter dated 7-9-1991, as one containing admission in regard to supply of sub-standard adhesive. We do not find any such admission in that letter. In the letter dated 7-9-1991, the appellant promised to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant for the last several years and that the initial supplies were found to be satisfactory, but last year complaints began to pour in from its customers about bond failure, and that it was because of the poor quality of the adhesives supplied. The appellant was requested to pay the amount of damages of Rs. 8,25,791.20. 16. It was at this juncture that the appellant gave a notice to the respondent under section 433( e ) claiming Rs. 1,34,146 with interest. It was also pointed out that the amount was not disputed by the respondent and the dispute was raised for the first time in October, 1991. The allegation that the adhesives supplied were of poor quality was only an afterthought and having accepted the goods and used it in the business, it was too late in the day to deny liability to pay. It was also pointed out that the appellant was not liable to pay the amount demanded, vide the respondent s letter dated 23-5-1992. The allegation that the bond failure in the footwear was on account of inferior quality of adhesives supplied by the appellant was denied. 17. On 24-8-1992, a lawyer s notice was issued by the appellant to the respondent under sections 433, 434 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied by the appellant had solid content of 16 per cent and 12 per cent, respectively. It is true that the goods supplied to Liberty were having 19 per cent solid content because of the higher price of Rs. 110 per litre by way of immediate payment and because of the guarantee for bond failure which they had given to the Liberty. As pointed out by the appellant in their letter dated 25-10-1991, there was no test report that the appellant s adhesive either at the appellant s end before the goods left the factory premises, or at the time of receipt of the goods by the respondent, being of inferior quality, or at any time before the adhesives were used by the respondent for the manufacture of shoes. Over a period of three years and four months, the adhesives were supplied, received without objection as to the quality, utilised, goods produced, sold to retailers, who in their turn, sold to the customers. The matter relates to the sale of goods. There is no contract that the quality was to be of the same level as that supplied to Liberty nor that any test was to be conducted either at the appellant s premises before the goods were despatched nor at the respondent s premises when the good ..... X X X X Extracts X X X X X X X X Extracts X X X X
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