TMI Blog2009 (3) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment Gazette. The Petitioner to deposit an amount of ₹ 10,000 with Prothonotary and Senior Master of this Court within four weeks from the date of default. - COMPANY PETITION NO. 803 OF 2008 - - - Dated:- 16-3-2009 - S.J. VAZIFDAR, J. F.D. Devitre, Vivek Menon and Rafeeq Peer Mohiddin for the Petitioner. Janak Dwarkadas, Chirag Balsara and Amit Yadkikar for the Respondent. JUDGMENT 1. The petitioner has sought an order winding up the Respondent-company inter alia on the ground that the company is unable to pay its debts. According to the Petitioner the company is indebted to it in the sum of Rs. 4,21,00,000. 2. The company does not dispute the fact that a sum of Rs. 4 crores was paid by the Petitioner to it and that the said sum has not been repaid. It is contended that the said sum was paid as a security deposit and that the company has several claims against the Petitioner far in excess of the said amount of Rs. 4 crores. 3. Though the payment by the Petitioner to the company of the said sum of Rs. 4 crores is not disputed, it is necessary to see the circumstances and the manner in which it was paid by the Petitioner to the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above letters addressed by the company itself belie the Defendants contention that the amounts were deposited as a security deposit and not as a trade deposit. There is no explanation for what is stated in these letters which clearly are contrary to the companies case now sought to be made out that the amounts were to be deposited by the petitioner by way of security. It is not the company s case that what is stated therein was only for purpose of convenience or for some other reason. Considering the fact that it is the company that had written these letters it was for the company to establish any case contrary to what is stated therein. In the circumstances, the Petitioner s case that the said amounts were advanced by way of a trade deposit is clearly established. 8. The doubt, if any, is set at rest by reference to a letter dated 20-6-2006 addressed by the company to the Petitioner wherein, the company undertook to refund the interest-free deposit of Rs. 4 crores to be deposited with it in 48 equal monthly instalments commencing twelve months from the date of full disbursement. 9. It is not necessary to refer to the advices forwarded by the Petitioner to the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a grievance regarding the said termination by the public notice dated 24-8-2007 and stated that it is entitled to claim damages from the company as it had engaged more than 125 sales representatives and office staff to carry on the business of the company for the past twenty years. This answers the contention that the termination had never been questioned by the Petitioner. 12. The company by its advocates reply dated 12-10-2007 alleged that it had come to its knowledge that the Petitioner had duped it by overcharging on various accounts namely freight/insurance, finance and promotions, marketing, a trainee schemes, promoters margin in collusion and connivance with its erstwhile employees and had been successful in duping the company to the tune of Rs. 26,30,03,436. Mr. Dwarkadas relied upon paragraphs 2( iii ) and ( v ) which read as under : "2( iii ) With reference to para 5 of your notice, our clients, vehemently deny that our clients were paying the commission and that your clients were incurring expenses for sales promotion activities of every nature and freight, insurance charges and other expenses out of commission paid to your clients as alleged. In fact, from the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reason for delay in making payments is your clients own misconduct. Our clients deny that, they are liable to pay to your clients, towards arrears of the excise duty and additional excise duty to the tune of Rs. 3,04,07,514 as alleged by your clients. In fact, our clients are entitled to recover an amount to exceeding Rs. 86.30 crore from your clients." 13. Mr. Dwarkadas submitted that there are serious allegations and in view thereof a petition for winding up ought not to be entertained. 14. There is nothing on record which substantiates or even indicates the possibility of the above allegations. I am not inclined to accept Mr. Dwarkadas s contention that the allegations being serious in nature ought not to be ignored merely because there are no supporting documents relied upon at this stage in support thereof. If this contention were to be accepted all that would be required of any company in such a petition is to make allegations and thereafter contend that they would be substantiated in appropriate proceedings. This would render the provisions of sections 433 and 434 of the Companies Act nugatory. It is important to note that in paragraph 1 of this letter it is alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. Further as the report itself states, it is based on very limited details and the records made available to the chartered accountants. It states that the possibility of collusion between the former employees of the company and the Petitioner cannot be ruled out. It states that the fraud appears to have been committed by the Petitioner by possibly claiming amounts in excess and the possibility of interest being charged twice for excise duty funding. It states that based on the limited documentation made available they are of the opinion that payments have been made without applying satisfactory checks that the claims of the petitioner were correct and due. The observations are general, hypothetical and vague. 18. The mere fact that the rates of commission had been reduced after the new management i.e., the present management had taken over does not indicate fraud. Further, merely because the Petitioner did not respond to the auditors queries cannot be held against the Petitioner. The Petitioner was not bound to attend to the auditors appointed by the company. Curiously the report even refers to statements made by a former employee of the company against the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner during the conference towards strengthening its product portfolio and the growth in its business in the State of Karnataka. 21. There is nothing to indicate as to when the company discovered the alleged fraudulent acts on the part of the Petitioner. There is nothing to indicate how the company acquired knowledge about the alleged fraudu-lent acts on the part of the Petitioner. The allegations against the Petitioner were raised by the company for the first time admittedly only after the receipt of the statutory notice dated 21-9-2007. This, if not by itself when considered with the other facts and circumstances of the case, is a strong indication that the allegations have been made only with a view to raising a false defence. 22. On 26-10-2007, the Petitioner filed a suit in the Karnataka High Court against the company and the other parties for recovery of a sum of Rs. 7,31,10,153 together with interest at 18 per cent per annum against the company. It is pertinent to note that the other parties had been impleaded only as necessary and proper parties and no relief had been claimed against them. On 1-1-2008 the company filed a written statement and counterclaim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was limited to the claim in respect of the said trade deposit of Rs. 4 crores and did not include the claims which were mentioned in the previous statutory notice dated 21-9-2007. The company by its advocates letter dated 15-5-2008 replied to the second statutory notice dated 15-4-2008. The company reiterated the allegations made by it earlier. 27. The fact that the second statutory notice referred only to the said trade deposit and not to the other claims referred to in the earlier statutory notice cannot be held against the Petitioner. In fact, this approach is entirely understandable. This is for the obvious reason that whatever the disputes regarding the other amounts there is no dispute regarding the fact that the said sum of Rs. 4 crores was advanced by the Petitioner to the company and that the same remains to be returned by the company to the Petitioner. The company has admitted receipt of the said sum as well as the fact that it has not repaid the same. It claims to be entitled to retain the said sum on account of its alleged claims. 28. In the circumstances, I do not find there to be a bona fide dispute regarding the said sum of Rs. 4 crores. Interest at 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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