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TMI Blog2009 (12) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the action of winding up thus far. On the finding that the statutory notice is deemed to have been served on the respondent-company and in spite of such notice, the respondent-company having failed to pay the amount demanded as per the said notice, the legal presumption that the respondent-company is unable to pay its debts is attracted. As a result, the court will have no option but to order winding up of the respondent-company on the ground that the company is unable to pay its debts within the meaning of section 434(e) of the Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriation, by four separate payments of Rs. 5,00,000 each on January 20, 1998, January 23, 1998, January 27, 1998 and January 29, 1998. The original petitioner appropriated the said amount towards Invoice Nos. 15 to 37, and the balance amount of Rs. 89,577 towards Invoice No. 38 thereby leaving the balance amount of Rs. 10,05,385 due and payable by the respondent-company. It is stated by the original petitioner that in spite of repeated reminders, the respondent-company failed and neglected to remit the balance amount of Rs. 10,05,385 or part thereof. Therefore, a legal notice through an advocate was issued on March 6, 1998, to be treated as statutory notice under section 434 of the Act calling upon the respondent to pay the balance amount of Rs. 10,05,385 together with interest at the rate of 30 per cent. per annum within 21 days from the receipt of the notice failing which action of winding up will be initiated against the company. The said legal notice was sent by speed post acknowledgment due on the registered office of the respondent-company which was returned with the postal endorsement "intimation". Further, copy of the statutory notice was sent by registered acknowledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovember 30, 1998, no appearance was made on behalf of the respondent-company. On the other hand, the petitioner tendered the affidavit of service stating that the notice sent to the respondent-company was refused by the company. On that basis, the court proceeded to admit the petition and ordered advertisement of admission of the petition in two local newspapers. It is noticed that the direction given by the court for advertisement was complied with. During the pendency of this petition, the original petitioner expired on April 26, 2005, as a result, his heirs and legal representatives were brought on record to continue the action against the respondent-company in respect of the outstanding amount payable by the respondent-company. The petition eventually reached final hearing on February 14, 2007, till then no efforts were made by the respondent-company to enter appearance in the company petition. No one appeared for the respondent-company before the court. However, before proceeding to pass any drastic order, the court deferred the hearing of the petition to February 28, 2007, as it noticed that one advocate Navinchomal had appeared for the company on March 30, 1999. The advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent-company, only a balance amount of Rs. 13,524 remained to be paid by the company. Besides, the respondent has asserted that the settlement was reached keeping in mind the quality and quantity of goods supplied by the original petitioner. Accordingly, the respondent claimed that the action of winding up against the respondent-company was devoid of merit. The petition came up for arguments on October 18, 2008. After considering the submissions, the court had an occasion to record tentative opinion in the context of the issue of service of statutory notice on the respondent-company. The following order was passed while deferring the hearing to enable the petitioner to seek instructions : "P.C. The moot question that needs to be answered in this petition is whether the statutory notice attempted to be served on the respondent has been duly served in law, in view of the endorsement recorded on the envelope 'returned unclaimed'. This court in the case of Lalmani Ramnath Tiwari v. Bhimrao Govind Pawar reported in [2001] 3 Bom. CR 21, has taken the view that endorsement of 'not claimed' cannot be treated as refusal as such, so as to draw adverse interference. Relying on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners have neither produced the acknowledgment nor endorsement on the envelope which has been returned to the petitioners. In the absence thereof, it is difficult to accept the case of the petitioners that the petitioners have substantiated the fact that the statutory notice was forwarded to the respondent-company on the correct postal address of the registered office and more so, the postal authority did made an attempt to effect service on that address of the respondent-company. The latter fact could have been established by the petitioners either by producing the endorsement on the envelope which has been returned to the petitioners as unserved with the remark 'not claimed'. However, that is not forthcoming nor any certificate from the postal authority in that behalf has been produced by the petitioners. 3. It is in this context, the petitioners rely on the fact that the statutory notice dated June 26, 1998, was sent by telegram. The petitioners have produced certificate issued by the Department of Telecommunications at exhibit U which records that the subject telegram No. N163/ 27-6 handed in on June 27, 1998, addressed to M/s. Jai Prakash Strips Ltd., at 17 Debhanoo Commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If no such application is filed or no steps are taken by the petitioners on or before December 15, 2008, the petition to stand dismissed for non-prosecution without further reference to the court. 8. If steps are taken in time, petition be listed along with pro posed application on December 18, 2008, under caption 'directions'." 6. Pursuant to the liberty, the petitioners filed Company Application No. 1681 of 2008 which was listed along with the company petition on December 18, 2008. After hearing the parties the court proceeded to pass the following order : "P. C. 1. Prima facie, I am in agreement with the argument canvassed on behalf of the respondents that no fruitful purpose would be served to straightaway issue summons to the officials of the concerned post office, unless there is some material to indicate that the concerned post office is expected or obliged to maintain register which will contain the entry relating to movement of the concerned records dated July 22, 1998. This is so because the communication sent by the Sub-Divisional Engineer, G-II, C.T.O., Mumbai dated October 23, 2008, clearly records that relevant records dated July 22, 1998, are not available and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to be maintained up to maximum period of 18 months. The registered letter pertaining to this case is stated to be of the year 1998. No register for that period is available in the office as the same is destroyed. In the circumstances, I am not able to produce any register concerning the case. No cross-examination. Witness is discharged." 8. In view of the position stated by the said official, notice issued to other two officials was discharged. The matter was then proceeded further for hearing. 9. According to the petitioners, the fact that goods were sold, delivered and supplied to the respondent-company under the stated invoices was not in dispute at all. No grievance about the quality or quantity of goods was ever made by the respondent-company at any stage. The grievance about the quality and quantity for the first time has been mentioned in the affidavit filed before this court in support of the application for setting aside the order dated February 28, 2007. That the statutory notices were sent to the respondent-company from time to time by different modes. From the postal endorsement it was amply clear that the respondent-company was avoiding to receive the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory notices were never served on the respondent-company nor the respondent-company has refused to accept the same at any point of time. The stand of the respondent-company is that the respondent-company was not aware about any such notices. According to the respondent, the decisions pressed into service on behalf of the petitioners are essentially relevant in the context of the provisions of the Negotiable Instruments Act, 1881 and, therefore, distinguishable. Inasmuch as, in terms of section 434 of the Act, the demand notice should necessarily be delivered and/or served on the company's registered office so as to ignite the cause of action for maintaining the petition for winding up of the company. Therefore, the court will proceed on the basis that the statutory notice under section 434 has not been served on the company. Hence, the petition should be dismissed at the threshold. Besides, it is contended that the petitioners have made misleading statements and are responsible for suppression of material fact for which reason also the petition deserves to be dismissed at the threshold. The respondents have relied on the extract from their inward goods register and other documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained on the basis of such successive statutory notices. Be that as it may, the original petitioner claimed to have issued the first statutory notice on October 25, 1997, which was sent by registered acknowledgment due. However, it was returned with postal endorsement "not claimed". The same statutory notice was once again sent on November 25, 1997, by registered acknowledgment due which was also received back with an endorsement "not claimed". The petitioner then sent the said statutory notice under postal certificate which presumably was delivered to the respondent-company. The respondent-company thereafter paid a sum total of Rs. 20,00,000 by four separate cheques against the demand of Rs. 30,05,387 in the said statutory notice. I would proceed on the basis that consequent to part payment of the said outstanding dues, the above said statutory notice had worked out and more so because the petitioner did not pursue his remedy of winding up action on the basis of that notice. Instead, the original petitioner caused to issue another statutory notice on March 6, 1998, which was sent by speed post acknowledgment due on the registered address of the respondent-company but was retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice dispatched by the creditor by telegraphic mode through post to be delivered at the registered office of the company was permissible, the court would then be called upon to consider the efficacy of the postal endorsement of refusal. 15. In the first place, I have no difficulty in accepting the stand that demand notice sent by telegraphic mode through post to be delivered to the respondent-company at its registered office would be a valid mode of service for the purpose of section 434 of the Act. If so, the postal endorsement of "refusal" would attract the legal presumption about service thereof on the addressee. For, by now it is well established that if it is a case of refusal to accept notice, it can be presumed that the addressee has been duly served. Indeed, that presumption is rebuttable. The question is, whether the respondent has successfully rebutted the said legal presumption. In the first place, the grievance of the respondent is that the postal proof of dispatch of statutory notice have not been produced by the petitioners. The petitioners, on the other hand, have specifically stated in the petition that they would crave leave to refer to and rely upon the returned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epting the claim of the petitioners that the original documents which are referred to in the petition were available with the petitioners all along till recently when the same have been destroyed or lost in the office of brother of petitioner No. 1. There is no reason to doubt the correctness of the said stand. As a matter of fact, it is not disputed that the petitioners were willing to give inspection of the original documents to the respondent-company as stated in their advocate's letter dated November 28, 2007. Had the respondent taken inspection of the said documents on December 3, 2007, the grievance which is now made by the respondents would not have survived--as the petitioners were then in a position to give inspection of the original documents. Significantly, the assertion of the affiants in the affidavits filed in support of the petitioners' case has not been challenged. Taking overall view of the matter, the request of the petitioners to allow them to produce secondary evidence of the said documents, copy whereof was already filed along with the petition as back as in 1998, deserves acceptance in the fact situation of the present case. 16. On this finding, the court can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be a figment of imagination and guess work of the affiant. 18. The real question is whether the plea taken in the affidavit of the managing director of the respondent, it can be said that the legal presumption of service stands rebutted. It is well established position that there can be no straight jacket formula in deciding such plea. The three judges Bench of the apex court in the recent decision in the case of C.C. Alavi Haji v. Palapetty Muhammed reported in [2007] 137 Comp. Cas. 692 ; [2007] 6 SCC 555, had occasion to consider the question referred to the larger Bench noted in paragraph 2 of the judgment which reads thus (page 695) : "Whether in the absence of any averments in the complaint to the effect that the accused had a role to play in the matter of non-receipt of legal notice ; or that the accused deliberately avoided service of notice, the same could have been entertained keeping in view the decision of this court in D. Vinod Shivappa's case [2006] 131 Comp. Cas. 663; [2006] 6 SCC 456 ?" 19. The apex court reviewed the legal position expounded in its earlier decisions and noted that (page 699 of 131 Comp. Cas.) : "It is, thus, trite to say that where the payee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise responsible to receive letters addressed to the company in the registered office of the company at the relevant time has come forward to make that statement. In other words, the affidavit filed on behalf of the respondent is not only vague both on account of denial as well as specific case made out therein, but fails to rebut the legal presumption about service of the telegraphic notice which according to the postal authority was refused. 23. As observed by the apex court in the case of Madan and Co. v. Wazir Jaivir Chand reported in AIR 1989 SC 630, the postal official when is unable to deliver the communication on his first visit, the general practice followed is to attempt to deliver it on the next one or two days before returning it to the sender. The postal official has neither the power nor the time to make enquiries regarding the whereabouts of the addressee. He is not expected to detain the letter until the addressee chooses to return and accept it and he is not authorised to affix the letter on the premises because of the assessee's absence. 24. Suffice it to observe that there is no tangible basis to doubt the veracity of the fact stated in the communication e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of notice can be treated as sufficient rebuttal of the presumption of service. Reliance placed on this decision to buttress the wider proposition canvassed on behalf of the respondents cannot be countenanced. The learned judge while deciding the case of K. N. David [2003] 4 Bom. CR 612, has rightly analysed this decision that the opinion in that case was peculiar to the facts of that case as the fact of refusal was denied on oath by the tenant and that plea of the tenant went unchallenged as there was no cross-examination on that point. The wider issue, however, has been answered in the decisions of the apex court which have been adverted to by the petitioners, including the case of Basant Singh, AIR 2002 SC 3557, which has noted that out of the two occupants only one occupant appeared in the proceedings and except making bald statement that the registered letter was not tendered to him, led no evidence whatsoever to rebut the presumption. The apex court noticed that the two occupants were residing in the disputed premises and every occupant neither appeared nor denied the factum of service. The apex court observed that the tenants could also have examined the postman who would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned with the endorsement "intimation", "not claimed". Once again, the respondents have denied having knowledge of such service or about the existence of the said notice and more so refusal thereof. It was strenuously argued on behalf of the respondents that in the case of postal endorsement of "intimation" and "not claimed", the legal presumption of service cannot be invoked. This argument cannot be countenanced keeping in mind the exposition of the apex court in the case of K. Bhaskaran, AIR 1999 SC 3762 ; [2000] 99 Comp. Cas. 268. The court specifically considered the question as to whether the notice returned as "unclaimed" and not as "refused", the legal presumption under section 27 can be invoked. In paragraph 24 of the said decision the court has plainly opined that the principle incorporated under section 27 of the General Clauses Act can profitably be imported in a case where the sender has dispatched the notice by post with the correct address written on it and the legal presumption that the said notice is deemed to have been served on the addressee would be attracted, unless the addressee proves that it was not really served and that he was not responsible for such n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter addressed to him without specifically refusing to receive it. He can so manipulate matters that it gets returned to the sender with vague endorsements such as 'not found' 'not in station', 'addressee has left' and so on. It is suggested that a landlord, knowing that the tenant is away from station for some reasons, could go through the motions of posting a letter to him which he knows will not be served. Such a possibility cannot be excluded. But, as against this, if a registered letter addressed to a person at his residential address does not get served in the normal course and is returned, it can only be attributed to the addressee's own conduct. If he is staying in the premises, there is no reason why it should not be served on him. If he is compelled to be away for some time, all that he has to do is to leave necessary instructions with the postal authorities either to detain the letters addressed to him for some time until he returns or to forward them to the address where he has gone, or to deliver them to some other person authorised by him. In this situation, we have to chose the more reasonable, effective, equitable and practical interpretation and that would be to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the latter plea, the respondents have placed reliance on the inward goods received note of different dates. Petitioner No. 1 has made a statement on affidavit on the basis of her personal knowledge. She has asserted that during the relevant period she was associated in the business of her husband and had personally handled the transactions which took place with the company. She has stated that she had taken inspection of GRNs received by the respondent-company. All the said GRNs are on loose papers. The same are not in a bound book. The serial numbers are not printed but are handwritten. Further, the inspection of GRNs given to her by the respondent's advocate was of carbon copies thereof. Moreover, from the said carbon copies, several columns were filled in which would clearly establish that the same was written fraudulently and are not copied from the original by carbon paper. 30. In the first place, the documents so relied are unilateral entries made by the respondents. There is nothing to indicate that the position mentioned in the said notes was ever brought to the notice of the original petitioner at the relevant time. The respondents have also relied on the documents exhibi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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