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TMI Blog2009 (4) TMI 437X X X X Extracts X X X X X X X X Extracts X X X X ..... . Company petition is allowed. - C.P. NO. 143 OF 2002 - - - Dated:- 2-4-2009 - NOOTY RAMAMOHANA RAO, J. G. Anandam for the Petitioner. V. Hari Haran for the Respondent. JUDGMENT 1. This company petition has been moved by a registered partnership firm seeking winding up of the respondent-company in terms of sections 433( e ), 434(1)( a ) and 439(1)( b ) of the Companies Act, 1956. The respondent is a company incorporated under the provisions of the Indian Companies Act, 1913 for producing yarn and cloth and for selling the same and for allied objects. The petitioner-firm is engaged in the business of ready cotton bales, yarn and other related goods, conversion of cotton into yarn, etc. The petitioner-firm kept on supplying cotton bales to the respondent under various contracts between the periods 11-4-1997 to 14-6-1997. It is asserted that when the account has been struck as of 30-11-1997, the respondent-company was due in a sum of Rs. 5,89,157. It is asserted that an agreement has been reached on 16-12-1997, wherein the respondent- company has confirmed the outstanding dues payable to the petitioner-firm as well as its sister concern, another firm, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s court on 6-9-2002. 2. The respondent has contested this petition. The respondent would submit that the cotton bales which were supplied by the petitioner-firm have been converted into yarn and they were also paid for their value completely. Even if the petitioner-firm has not been paid any sum in that regard, such liability has been completely time-barred and cannot be agitated or made basis for the above proceedings. However, it was admitted that due to the labour problem, the respondent-company declared a lockout. At that stage, the petitioner-firm filed W.P. No. 18599 of 1998 and pursuant to the order passed by this court retrieved the cotton bales supplied by it from the premises of the respondent-company. Thus, the complete liability of the respondent-company towards the petitioner-firm has been extinguished to the extent of supplies of cotton made by it. It is admitted by the respondent that an agreement has been entered into by and between the petitioner-firm and the respondent-company on 19-1-2000, pursuant to which the petitioner-firm was required to supply certain assured quantity and quality of cotton and also engage a fixed number of spindles on job work, for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20-4-2005 [ Jumgo Cotton Enterprises v. Rayalaseema Mills Ltd. [2005] 127 Comp. Cas. 199 1 (AP)]. The learned Company Judge has arrived at a finding that there was no ascertained or determined debt and, hence, it was difficult to precisely point out as to how much of money is due and payable by the respondent-company to the petitioner-firm. Secondly, learned Judge also held that the amounts, which have been held as due and payable by the respondent-company, are all barred by time and, hence, the company petition is barred by limitation. On those two grounds, essentially, the above company petition came to be dismissed. The petitioner carried the matter by way of appeal by instituting O.S.A. No. 29 of 2005 - Jumgo Cotton Enterprises v. Rayalaseema Mills Ltd. [2007] 138 Comp. Cas. 920 1 (AP). A Division Bench, incidentally to which I am a party, has come to the conclusion that the company petition could not have been dismissed as barred by limitation inasmuch as the company petition has been instituted on 6-9-2002 and if the respondent-company has entered into an agreement with the petitioner-firm on 21-3-2002, then the period of limitation of three years could not be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the second party to the said agreement certain amount which was required to be determined after due reconciliation of the books of account. The respondent-company, therefore, cannot disown totally that it does not owe any money to the petitioner-firm by 19-1-2000. This recital in the agreement dated 19-1-2000, clearly amounts to acknowledgement of debt by the respondent to the petitioner, the only feature being that the amount has not been determined as reconciliation is to be taken up. In this context, clauses 7 and 9 of the said agreement also need a closer look. They read as under : "7. Since the party of the second part is evincing interest in the scheme to recover the outstanding amount from the mill , the amount as determined as due shall be adjusted in the conversion charges after three months from the start of the agreement and spread over the balance nine months till such amount is fully recovered . . . (9) The party of the second part shall keep and make the supply of cotton so as to fully engage the 20,000 spindles allotted on it and shall compensate the party of the first part for the loss incurred on account of non-supply of cotton and the quantum of loss sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement dated 16-12-1997, both the parties have been confirmed outstanding as under : Rs. M/s. Jumgo Cotton Enterprises - 5,89,157 M/s. Navyug Cotton Company - 11,30,509 Thereafter, the first party confirms that outstanding principal amount due on 30-7-1998, is Rs. 24,80,592 as per the statement given by the second party, subject to due reconciliation with the books of the Rayalaseema Mills Ltd. It is mutually agreed that the second party will adjust out of the conversion charges, after meeting all the running expenditure of the mill maximum permissible amount subject to a maximum of Rs. 4 lakhs every month from the third month after restarting the mill till the above amount is totally cleared. After the recovery of the principal amount party of first and second part shall meet mutually to discuss the matter concerning the interest payment." 11. Thus, the agreement dated 21-3-2001, exhibit A-59, is yet another acknowledgement of debt by the respondent-company. It will be profitable, at this stage to notice, as to how the Supreme Court deduced the principal relating to acknowledgement of debt in Food Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is intended and understood to be adjusted in the job works that were to be carried out by the respondent-company for the petitioner in the forthcoming months, which facility the petitioner-company failed to avail and consequently the said amount remained unadjusted. The respondent tried to shift the entire blame for this on to the petitioner s shoulders. But, what is important to be noticed from paragraph 14 of the counter-affidavit is the fact that the respondent has admitted that this sum of Rs. 7 lakhs "remained unadjusted". At the same time, there is no material brought on record to show that the petitioner-firm has fallen in arrears of payment of conversion charges, when such an arrangement has been devised. As was already noticed, exhibit A-57 statement clearly reflected and accounted for the payment of conversion charges at regular intervals. Hence, the theory sought to be set up in paragraph 13 of the counter-affidavit does not have any basis. 13. Far from that, from exhibit A-60, it becomes clear that the petitioner-firm has paid Rs. 7 lakhs to the electricity supply company, by obtaining a demand draft in favour of the Senior Accounts Officer of APCPDCL, Kurnool. Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement. Various invoices exhibited as exhibits A-1 to A-8, A-15 to A-30 and A-44 to A-49 are also admitted. Most importantly, RW-1 admitted that exhibit A-59 agreement dated 21-3-2001, was signed by him. Hence, there is no dispute whatsoever with regard to execution of the agreement exhibit A-59 or its contents. He has also admitted that exhibit A-61 which was signed by one of the directors of the respondent-company shows that an amount of Rs. 32,69,673 as balance lying in the account of the petitioner-firm. Therefore, RW-1 has not explained as to how the debts of the petitioner-firm is liquidated. Nor did he establish the breach of the conversion agreement exhibit A-59 by the petitioner-firm, which could have possibly resulted in liquidation of the liability of the petitioner-firm. Similarly, RW-2 did not also dispute the fact that the respondent-company has never put the petitioner on any notice of breach of agreement exhibit A-59. On the contrary, it is the petitioner who has issued a notice for terminating the agreement by tendering one month s advance notice through exhibit A-55. 15. Learned counsel for the respondent has tried to place reliance upon the following ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2001, when exhibit A-59 was entered into, there was clear acknowledgement of the past debt. Since the company petition is lodged on 6-9-2002, which is within the three year period from both exhibits A-54 and A-59, the claim of the petitioner firm cannot be said to be barred by limitation. This answers the first question : "RW-1 has also admitted that the respondent-company owes money to several other companies apart from the petitioner-firm and that these monies remain unpaid so far. RW-1 has also admitted that the bank has initiated recovery proceedings before the Debts Recovery Tribunal. He has also admitted that the respondent-company has closed down its mill on three different occasions." 19. All this apart, exhibit A-60, letter dated 10-4-2001, clearly brings out the fact that the petitioner-firm has paid a sum of Rs. 7 lakhs to the electricity authorities. In the counter-affidavit filed by the respondent, it was not disputed that the petitioner-firm paid Rs. 7 lakhs. However, it was varyingly contended setting out that this amount was towards the con-version charges, which the petitioner-firm failed to pay earlier. Whereas subsequently, it was asserted that this paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for winding up of the debtor company. The learned Judge examined the right of a creditor to seek payment of interest in the absence of a contract between the parties regulating it and came to the conclusion that no such right can be culled out in favour of the creditor automatically and, hence, for the inability of the respondent-company to pay any such undetermined and unascertained sums of money representing the interest component, the respondent-company cannot be ordered to be wound up. In contrast, in the instant case, definite sums of money are found due and payable by the respondent-company. It had admitted its debts more than once, in that regard. Huge sums of money remained "unadjusted" even going by the theory of the respondent. Therefore, the ratio in the above case does not apply to the present case. 21. As was noticed supra , by virtue of exhibits A-54 and A-59, the claims of the petitioner cannot be said to be barred by limitation. Even otherwise, the payment of Rs. 7 lakhs which has been made by way of a demand draft drawn on 23-3-2001, being not in dispute, which amount has been admitted by the respondent as still remaining as unadjusted and unpaid, it is suf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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