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TMI Blog1999 (4) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 29-3-1997, for the sum of Rs. 3,37,65,064 drawn in favour of the petitioners to the company s account with the Punjab National Bank, Bhosari Branch, Pune, with instructions to adjust the amount of the cheque towards the overdue export bills purchased payments due and payable to the petitioners. The petitioners accepted the above cheque towards the payment of their dues in pursuance of the company s letter dated 27-3-1997. The aforesaid cheque was dishonoured due to insufficient funds . The petitioners stated that they had accepted the above cheque for value and the borrower has defaulted to make payment to the petitioner in respect of their dues. By advocate s letter dated 9-4-1997, the petitioners called upon the company to pay the dues. In this letter it was also stated that the dishonour of a cheque is a criminal offence and that both the company as well as the authorised signatory/director would be liable for prosecution under section 138 of the Negotiable Instruments Act, 1881, ( the Act ). Statutory notice as required under sections 433 and 434 of the Companies Act was served on the company dated 23-4-1997. Another notice was sent on 16-6-1997, to the company. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thecated to the petitioners. It is further stated that the Export Credit and Guarantee Corporation (ECGC) guarantees export incentive or assistance facilities granted by them such as the said packing credit facility. Thus, the petitioners ought to have lodged a claim with the ECGC. It is stated that the petition has been filed with a view to pressurise the respondents to make payment of amounts not due and payable by them and to bypass the normal remedy stipulated by law. It is also the case of the company that the cheque was given by way of security and was not intended to be encashed since the bills of exchange were made directly in favour of the petitioners. The petitioners have filed a further affidavit in which it is stated that the petitioners purchased six export related bills of exchange aggregating to U.S. $ 9,78,130.50 (equivalent to Indian rupees 3,49,48,602.76). In respect of the aforesaid bills the petitioners have received the following payments : "( a )Part payment of US dollars 79,975 (equivalent to Indian rupees 28,57,506.75) has been received on April 15, 1997 in respect of Bill No. 784/P/F2/02719, dated April 16, 1996. ( b )Payment of US dollars 1,49,875.37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cheque. It is also a matter of record that packing credit facility was granted and the money was disbursed to the company from 20-11-1995 to 5-12-1995. Immediately, the account of the company was debited. The company had agreed to make the payment. Even guarantee had been given by the sister concern. The bills of exchange have been discounted/purchased. The company has been given credit for the payments made by Neptune. It is submitted that by virtue of the packing export facility, the exporter gets the money immediately to carry out its export obligations. The foreign buyer also gets a period of six months to make the payment. However, in this case, the foreign buyer failed to live up to its obligations. Knowing fully well that the payments have not been made by Neptune as required under the packing credit facility, the company issued the cheque. This cheque has been dishonoured. Thus, the company is unable to pay its debts and deserves to be wound up. 8. Mr. Mody, the learned counsel appearing for the company, has, however, submitted that the petitioners have suppressed material facts about the transaction. In the rejoinder, only partial admissions are made. He submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party. In any event it would be open to the company to give a third party notice to Neptune in order to substantiate its claim. On the other hand, Mr. Madon has submitted that by virtue of section 98 of clauses ( c ) and ( g ), notice of dishonour was not required at all. He submits that the goods were exported in April, 1996. Dishonour of the cheque was in September, 1997. By virtue of clause ( g ) of section 98 no notice of dishonour is required, if no prejudice is caused to the company. In the present case, the company was well aware of the fact that the bills of exchange which had been purchased by the bank have been dishonoured by Neptune. It is for this reason that the company sent a cheque on 27-3-1997, which was dishonoured. The aforesaid cheque was sent almost a year after the bills of exchange have been purchased. The company knew very well, according to Mr. Madon, that the bills of exchange have to be honoured within 180 days. It is further submitted that the conduct of the company also clearly goes to show that they were aware of the liability. Even if the cheque was given by way of security, it would clearly indicate that the company had accepted the fact that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Trading, thereby discharging the respondents of any initial liability." 10. I do not find much merit in the submission of Mr. Mody that the cheque was given as security. If the debt of the petitioner was fully secured, there was no question of giving any further security. The cheque was clearly given for the purpose mentioned in the letter dated 27-3-1997, viz., "towards adjustment of overdue export bills purchased". In my view, the petitioner is fully justified in filing the petition on dishonour of the cheque. Thus, the arguments of Mr. Mody based on bills of exchange are really of no relevance in the present case. However, since the point on insufficient notice has been raised by Mr. Mody, it merits due consideration. Having considered the argument of Mr. Mody, I find no merit in the same. The case put forward by Mr. Mody is squarely covered by section 98. This section clearly provides that no notice of dishonour is necessary when the party charged could not suffer damage for want of notice. The Lahore High Court in the case of Bahadur Chand Prabh Dial ( supra ) has laid down that section 106 is subject to the provisions of section 98, which culls out exceptions to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancially sound. On the other hand, it is pleading that the company has been unable to realise the amounts of money which are due from its debtors. Thus, it is pleaded that there has been delay in making the necessary payment. 12. In view of the above, the petition is made absolute in terms of prayer clauses ( a ), ( b ) except the bracketed portion and ( e ). Prayer clauses ( a ), ( b ) and ( e ) read as under: "( a )Sunmick Export Private Limited be wound up by and under the orders and directions of this Court : ( b )the official liquidator attached to this Hon ble Court (or some other fit and proper person) be appointed as liquidator of Sunmick Export Private Limited, with all powers under the Companies Act, 1956, including the power to take charge of all the assets of Sunmick Export Private Limited, to conduct its affairs in the course of winding up and to distribute its assets in accordance with law. ( c )the costs of this petition be provided." 13. The petitioner is directed to publish the winding up order in the Free Press Journal and Janmabhoomi within a period of four weeks from today. 14. Drawn up order is dispensed with. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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