9911796707
TMI Blog2005 (2) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive distributor for distribution of Veuve Clicquot Ponsardin Krug Champagne and other wines from the Clicquot Asia Portfolio on various terms and conditions as set out in the said agreement. 4. The said arrangement was arrived at in 2001 and pursuant thereto the petitioner supplied wine from time to time including through Clicquot Hongkong Limited who was wholly owned subsidiary of the petitioner herein. Invoices were raised by the said company and the respondent made payments from time to time. It is the case of the petitioner that in respect of one such invoices bearing No. OA/12-20/01B dated 20-12-2001 for the sum of Rs. 236,751.33 Euros raised by the said Clicquot Hongkong Limited, the respondent-company failed to make payment though the goods were duly supplied. It is the case of the petitioner that in respect of the said supply, the necessary invoice was raised and even bill of exchange was accepted by the respondent-company being dated 2-1-2002. The said bill of exchange was drawn by Clicquot Hongkong Limited for the sum of 236,751.33 Euros. The said goods were duly supplied and duly received by the respondent-company. On 3-6-2002, the petitioner made a request t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the respondent-company against the petitioner. 7. In view of the aforesaid issues, the present company petition was filed after giving statutory notice on 24-7-2003 under sections 433 and 434 of the Companies Act, 1956 seeking to wind up the respondent-company on the ground that it is unable to pay its debt. 8. I have heard the parties at considerable length. Before me there is no dispute that the goods, which are subject-matter of the said notice had been supplied and delivered by the petitioner to the respondent-company. It is also not in dispute that the price of the said goods amounting to 220,273 Euros has not been paid by the respondent-company to the petitioner herein. Thus, on merits, substantial liability to make payment has been accepted by the respondent-company. However, what is contended by the learned counsel for the respondent-company is that they are entitled to adjustment and/or set off against the so-called claim of compensation and/or breach of agreement. It is well settled that the claim of compensation for damages has to be proved and till the same is proved, the amount cannot be treated as crystallised and/or payable by the petitioner to the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y when deemed unable to pay its debts. (1) A company shall be deemed to be unable to pay its debts ( a )if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one lakh rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand 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. ( b )if execution or other process issued on a decree or order of any Court or Tribunal in favour of a creditor of the company is returned unsatisfied in whole or in part; or, ( c )if it is proved to the satisfaction of the Tribunal that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the Tribunal shall take into account the contingent and prospective liabilities of the company. (2) 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 au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at an application for winding up may be moved by a prospective creditor. When a petition for winding up can be moved by a prospective creditor in a company court, notice of demand can also be served by him. Moreover, it has not been shown by the respondent-company as to how it has been prejudiced by the said notice. The respondent-company states in its reply dated 13-8-1991 (Annexure I) given through its advocates Mrs. Kitty Kumaramangalam as under: (1) Your client M/s. Dawn Communications (P) Ltd., through Mrs. Vandana Agrawal approached Ms. R.P.S.L. for various types of work as mentioned in the bills submitted by your client. (2) Your client executed the job after approval of the matter by my client, but as regards the rates of the order, it was never confirmed by my client........." Thus there is no force in the said preliminary objection. I am in complete agreement with the view expressed by the Rajasthan High Court for the simple reason that section 434 does not contemplate that there should be a fresh notice under section 434 if the debt is assigned by the company. What it requires is only that as on the date of the notice a person should be creditor and before filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Summons for Judgment No. 1030 of 1999 in Suit No. 3462 of 1999 in the case of Phenoweled Polymer (P.) Ltd. v. Cauvery Ceramics Marketing Corpn. dated 21-1-2002, more particularly the following portion of the said judgment : "Dhanalaxmi Bank Limited has not re-endorsed the hundies in favour of the Bank of India or the plaintiff. The plaintiff is not shown to be a holder in respect of the hundies and therefore, a triable issue arises whether the plaintiff is entitled to sue." 15. The learned counsel for the respondent-company thereafter relied upon an order and judgment of the same learned Judge in Review Petition No. 19 of 2002 in Summons for Judgment No. 1030 of 1999 in Summary Suit No. 3462 of 1999 in the case of Phenoweled Polymer (P.) Ltd. ( supra ) which arose from the review of the judgment and order dated 21-1-2002 aforesaid. The learned counsel has contended on the basis of the aforesaid orders passed by the learned Single Judge that re-endorsement is necessary for the purpose of maintaining a suit. According to the learned counsel for the respondent-company because of non-re-endorsement in the said matter the learned Single Judge had granted unconditional lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of a maker and acceptance of a bill. In my opinion, the provisions of section 32 has no application to the facts of the present case. 18. Thereafter the learned counsel for the petitioner has relied upon the judgment of the Calcutta High Court in the cases of Brojo Lal Saha Banikya v. Budh Nath-Pyari Lal Das AIR 1928 Cal. 148. By relying upon the aforesaid judgment it has been contended that the petitioners are entitled to maintain a proceedings on the basis of the original cause of action and re-endorsement is not necessary. The learned counsel has relied upon the following portion of the judgment:- "...In my judgment the effect of section 78 of the Act is this that it is not open to the defendant to plead that the holder of the instrument is not entitled to recover the money. If any third person sues the maker or acceptor of the promissory note, it would be a very good defence for him to say that he has been discharged by the holder of the instrument. Further, it would also be a very good defence to say that, unless the plaintiff in the suit gets him a discharge from the holder of the instrument, he is not bound to pay. But it would be going too far to say that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Narayan Rajaram Joshi v. Prabhakar Keshav 1950 Bom. LR. (52) 830 has considered the issue about maintaining of a suit on the original cause of action by the person without re-endorsement in his favour. Though the said judgment arose solely in the context of an enquiry whether the endorsee of the bill of exchange can maintain a suit on the original cause of action or not. The Court after following the Supreme Court Judgment and the Madras High Court judgment has held as under :- "It is a suit by an endorsee. Now, the effect of an endorsement is set out in section 50 of the Negotiable Instruments Act and the effect is that the property in the promissory note is transferred to the endorsee with the right to further negotiation. It is to be noted that the original debt in respect of which the promissory note was passed is not assigned to the endorsee. The endorsee has no title to the debt. No privity is established with regard to the debt between the endorsee and the maker of the promissory note. All that the endorsee gets by the endorsement is the right to sue on the promissory note and to recover the amount due under it. It, therefore, follows form this that an endorsee of a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of exchange and sue on it. 13. The Court relied upon an earlier decision of that Court in the case of ( Muthar Sahib Maraikayar v. Kadir Sahib Maraikayar ), reported in I.L.R. 28 Mad. 544. The Division Bench of the Madras High Court in that case had observed that negotiable instruments are chooses in action and the rules in regard to them prior to the passing of the Negotiable Instruments Act continue to apply to them, to the extent that they are not expressly or impliedly affected by any provisions of the Act. In that case the endorser of promissory note had paid off his immediate endorsee and obtained possession of the note. There was however no re-endorsement in favour of the endorser. The Court held that the endorser was entitled to sue and recover on the note. The Court observed in that case : "... when a prior endorser, in the technical language of the law, takes up a note (see Ellsworth v. Brower), on payment to his immediate endorsee and discharges his liability under the contract arising by the endorsement, there is no provision either in the Negotiable Instruments Act or elsewhere prescribing the mode in which such taking up of the notes is to be established." T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable Instruments Act the holder of a bill of exchange means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. The section goes on to say that where the bill is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction. So actual physical possession is not essential to constitute a person a holder. He must be entitled to possession. At the date when the suit was filed, the appellant-Bank was entitled to possession of the Bills of Exchange in its own right and to recover the amounts due thereon. The appellant-Bank, therefore, was holder of these Bills of Exchange at all material times." 24. While considering the said issue the Court has come to the conclusion that re-endorsement is not necessary if a bill of exchange is dishonoured and the person is holding the said bill of exchange thus, he is holder of the same and entitled to maintain the suit. 25. In the present case the bill of exchange is admittedly dishonoured by the respondent-company. The petitioners herein are the original creditors of the respondent-company and, thus, entitled to maintain th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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