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TMI Blog2006 (12) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... was held between the officers of the petitioner and the respondent company and it was agreed that in view of extra work done, the order value of the three contracts stood increased to Rs. 245 lakhs from Rs. 235 lakhs. The parties also agreed that Rs. 206.77 lakhs had already been paid by the respondent company to the petitioner as per the reconciled statement of accounts including adjustment of Rs. 3,29,298 as claimed by the respondent company. Deductions/debit notes of Rs. 14,95,009 issued by the respondent company were withdrawn. The petitioner agreed to make payment of Rs. 7,00,000 to a third party and thus it was considered that total payment of Rs. 213.77 lakhs had been made, leaving a balance of Rs. 31,86,009.77, to be paid to the petitioner by the respondent company. The minutes of the said meeting are duly signed by the officers of the petitioner and the respondent company and are not denied. 3. The aforesaid minutes dated 3-5-1999 state that the payment schedule for releasing the aforesaid payment of Rs. 31,86,009.77 would be discussed within one or two days. 4. Thereafter, the respondent company made payment of Rs. 5,00,000 each (total Rs. 10 lakhs) by two cheques dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iminal complaint was dismissed as withdrawn. 7. Section 19 of the Limitation Act states that when payment on account of debt or interest or a legacy is made before expiration of the prescribed period, by the person liable to pay the debt or by an agent duly authorised on his behalf, a fresh period of limitation shall be computed from the time when the payment is made. This Court in the case of Rajesh Kumari v. Prem Chand Jain AIR 1998 Delhi 80 examined the expression "payment" used in section 19 of the Limitation Act and relying upon decisions of the Supreme Court and High Courts held that issuance of a cheque by a debtor is "payment on account of a debt or interest" and extends the period of limitation by further period of three years from the date of issue of cheque, even if the said cheque on presentation is dishonoured. Dishonour of the cheque, it has been held does not result in extinguishing the liability of the debtor and constitutes effective "payment" for the purpose of section 19 of the Limitation Act. Once "payment by cheque" is accepted by the creditor, he is entitled to extend period of limitation under section 19 of the Limitation Act and the said advantage cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total amount receivable by TEL from NWL = 2,45,63,447.17 Based on the above, the balance outstanding amount to be paid to TEL by NWL shall be as follows:- Amount (Rs.) Total value receivable by TEL from NWL 2,45,63,447.17 Amount already received till date by TEL from NWL 2,13,77,437.40 Balance amount payable by NWL to TEL for the jobs mentioned in this IOM 31,86,009.77" 9. Learned counsel for the respondent has relied upon paragraph 3 of the minutes of the meeting dated 3-5-1999, which reads as under :- "TEL & NWL have reconciled the total receipts by TEL from NWL against this job and the amount comes to Rs. 2,06,77,437.40 including Rs. 3,29,928 which has been adjusted, on behalf of TTIL. However, the final figure shall be established jointly by TEL and NWL, for which Mr. R.K. Sethi from TEL shall sit with Mr. Rajiv Behl of NWL at NWL office on 4-5-1999 and confirm the figure." (TEL and NWL stand for the petitioner and the respondent company respectively). 10. He has also referred to judgment of this Court in the case of Hansa Industries (P.) Ltd. v. MMTC Limited 2004 VI AD (Delhi) 222. 11. Paragraph 3 of the minutes of the meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r written letters, even if the petition is within limitation period. I may mention here that criminal proceedings were initiated pursuant to dishonour of two cheques dated 15-10-1999 and 28-10-1999. These proceedings under section 138 of the Negotiable Instruments Act were compromised and settled on 15-7-2002. Section 433(e ) of the Act can be invoked when a debt is due. Section 434 incorporates deeming provisions. The said provisions do not compel a party to initiate immediate legal proceedings. Legal action under the provisions of the Act is valid if it is initiated within the limitation period. A person cannot be non-suited on the ground of delay or laches so long as the petition is within the limitation period prescribed by law. Litigation is expensive, tedious and many law abiding citizens want to avoid courts, and initiating litigation as far as possible. It is not the first but the last choice. 13. Learned counsel for the respondent had also drawn my attention to the letters written with effect from 10-1-2000 stating that there were various defects in the workmanship, which was faulty and defective material had been supplied and used. He also relied upon letter dated 15-3-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mediquip Systems (P.) Ltd. v . Proxima Medical System GMBH [2005] 7 SCC 421 and Madhya Pradesh Iron & Steel Co. v. Sikands Ltd. [2005] 64 SCL 162 (Delhi). In both judgments, it has been reiterated that for winding up petition under section 433(e) there must be a debt due and the company must be unable to pay the same and the debt due must be a determined or a definite sum of money payable immediately or at a future date. It is also well-settled that winding up petition is not a legitimate method for seeking enforcement for payment of a debt, which is bona fidely disputed by the company. The Supreme Court and Delhi High Court have referred to the earlier judgment of the Supreme Court in the case of Madhusudan Govardhandas & Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 , in which it has been held that if the respondent company raises a bona fide dispute and the defence is substantial one, the Court cannot wind up the company. The defence, however, should be one which is likely to succeed on the point of law and company is required to adduce material and prima facie establish all the facts on which the defence is based. These judgments do not in any man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. The respondent had also argued that payment of Rs. 11,63,917 made in July, 2002 was in full and final settlement and therefore no debt is due and payable. As stated above, the respondent had given two cheques of Rs. 5 lakhs each which were dishonoured and thereafter criminal complaint under section 138 of the Negotiable Instruments Act was filed before the Metropolitan Magistrate. The complaint was settled vide order dated 15-7-2002 before the Metropolitan Magistrate which reads as under:- "Both the parties submits that they arrived a compromise and settled the matter and accused has agreed to pay a sum of Rs. 11,63,917 in satisfaction of the entire claim of the complainants out of this said amount the cheque of Rs. 55,741 of the bank ICICI Bank bearing No. 509832 dated 15-7-2002 and the said cheque will be replaced by the accused person by way of DD on 16-7-2002. The settled amount agreed to be given by the accused included the cheque in the complaint and compensation of Rs. 1,63,917. In view of the above settlement, the complainant wants to withdraw this complaint subject to replacement of the cheque dated 15-7-2002 by the demand draft of the said cheque." 20. Subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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