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TMI Blog2014 (2) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ’s extraordinary delay in making its claim, despite its contention that its invoices were payable no later than within 120 days. The failure of this petition is inevitable. But it must be accompanied by consequences that are both real and palpable. Received wisdom tells us that Court should be gentle in the award of costs. Indeed they should, when a party earns that clemency. It is not in every case that costs are awarded, and fewer still where the costs imposed are significant. But where the amounts are as high as they are here, where mendacity is writ large in the petition itself, there is no room for leniency - Decided against Petitioner with costs. - Company Petition No. 21 of 2012, Company Application No. 535 of 2012, Company Petition No. 21 of 2012 - - - Dated:- 7-2-2014 - G. S. Patel,JJ. For the Petitioner : Mr. Kamal Khata a/w Mr. Tushar Dahibawkar and Manish Vora i/b M/s. Dahibawkar Co. For the Respondent : Mr. M. I. Sethna, Senior Advocate a/w A. M. Sethna i/b M/s. Udaipuri Co. JUDGMENT (Per G.S. Patel, J.) 1. The petitioner claims that the respondent company, M/s. K A Malle Pharmaceuticals Limited. ( the Company ), is indebted to it the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Company received the notice. On 31st October 2011, the Company s advocates replied to the petitioners advocates. In this letter, the Company denied its liability. The petitioner describes the contents of the Company s reply as frivolous and frivolous. The petitioner s advocates responded, but the Company failed to pay the petitioner s demand. The Company has, the petitioners claim, without just cause, failed and neglected to pay that demand, and the Company is therefore indebted to the petitioner. Having failed to comply with the demand made in the statutory notice without just cause, the Company must be deemed to be unable to pay its debts. It should be ordered to be wound up. 6. Mr. Sethna s response presents a much more complex, and perhaps even sinister, picture of the petitioner s dealing. The response is based on three affidavits. The first is an affidavit in reply dated 4th July 2012. Then there is a voluminous sur-rejoinder dated 3rd December 2012 and, finally, is a further affidavit dated 29th July 2013. The Company claims that it is the victim of systematic fraud perpetrated by a director of the petitioner, one Jayesh Desai, in collusion with some officers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no claim till 2011 or even later. 9. The Company s allegations of collusion also cannot be said to be without substance. The circuitous movement and transfer of money and jewellery is ex-facie suspicious. It is under investigation by the CBI. It seems apparent that Jayesh Desai as a consignee never delivered the exported goods to any buyers abroad. The Company contends that Jayesh Desai in fact melted down the gold and sold it in the local markets in Dubai. The allegation is that Jayesh Desai received the proceeds of this illicit sale. The Company s case is that the money due to MSTC and therefore to the Company has thus been diverted to Jayesh Desai or his group, including the petitioner. 10. The petitioner s affidavit in rejoinder, made by very same Jayesh Desai, far from supporting the deceptive simplicity with which the petition is cast, only muddies the waters even further. There is, as I have noted, Jayesh Desai s admission that he was a MSTC s consignee through RKM. General Trading FZE. However, Jayesh Desai claims that it was the Company that had identified the foreign buyers. He claims to have delivered the goods to these buyers. There is, however, no answer to the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y s defence shows that its alleged liability to the petitioner is very seriously disputed. It claims to have been made the victim of a vast conspiracy and fraud. There is, in my view, considerable merit in this. The petitioner itself is, through one of its principal officers ( Jayesh Desai), involved in these murky and illicit transactions. This is not a simple case of goods sold and delivered, their price unpaid without just cause. This is a story yet unravelling of tangled webs of fraud, deceit, illegality, diversion of funds and exports. Government officials are involved. Criminal investigations continue. It is impossible to hold that the Company has neglected to pay the petitioner s claim without just cause. If the Company is correct in its submission, then it is very clearly the victim of a very well thought out fraud and conspiracy. 14. Indeed, this is a petition that ought never to have been filed. What it reveals is merely interesting; what it conceals is vital. It is only in affidavits filed much later that the petitioner accepts, while attempting a further concealment, some of what the Company says in its reply. This includes the material factor of the petitioner s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court found that the High Court did not notice the clear findings of the trial court, but arrived at a conclusion against the 4th defendant in that case only on a reading of the plaint. The present case is very different, and very different considerations apply. This is not a civil suit. It is not a case where there is no material on record other than the invoices. There are admissions by the petitioner itself regarding the involvement of its director, Jayesh Desai. There is material to show that criminal investigations have been launched into the very same transactions. This is a case where the contention of the Company is that it has, from the start, been systematically defrauded. 16. Mr. Khata contended that the filing of a civil suit and the pendency of arbitral proceedings are matters wholly irrelevant to this petition. Where the company has not complied with a demand made in the statutory notice, it must be deemed to be unable to pay its debts. That is a submission that is only partly correct. Where the Company has a bona fide defence and denies its liability, it cannot be said to be indebted to the petitioner at all, and no question of its neglect to pay arises. Mr. Sethna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptance of Mr. Khata s case. Where there is a bona fide dispute, there cannot be a neglect to pay within the meaning of Section 434(1)(a) read with Section 433(e). A winding up on the ground that the company is unable to pay its debts is, in such cases, unjustified. 18. It is not accident that Mr. Sethna has, too, relied on the decision in IBA Health India. Whether the defence of the Company is prima-facie bona fide, substantial and cannot be said to be specious or spurious, nor intended to deceive genuine creditor, a winding up petition ought not to be entertained. Mr. Sethna is also, in my view, justified in relying on the recent decision of Gupte J, in Summons for Judgment No.314 of 2012 in Summary Suit No. 1201 of 2012. That is a very recent decision of 21st January 2014 between the petitioner and one Ushma Jewellery Private Limited. Ushma Jewellery was yet another of MSTC s associates. In that order Gupte, J. categorically held that serious triable issues arise, and granted unconditional leave to defend. 19. Mr. Sethna also relied on the Supreme Court decision in Mediquip. He is justified in his contention that jurisdiction of Company Court under Section 433 is discretion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter. They have concealed the fact that Jayesh Desai was personally involved at different stages in the transactions in question, raising serious doubts about the petitioners bona fides. It seems to me clear that this petition is an example of a party taking its chances with the Court. That should never be permitted. This is not a case of a defence being found to be specious, illusory, spurious or speculative. Those are descriptions apt of the petition, not the defence. The Company Court should not be allowed to be misled in an action that, in its inception, lacks any semblance of bona fides and carries with it only the fetidness of mala fides, deceit and duplicity. In such a case, the petition must meet its nemesis not only in a mere dismissal. That would be to permit such a petitioner to leave without suffering any consequences for having brought such an action in the first place. That cannot be permitted. The failure of this petition is inevitable. But it must be accompanied by consequences that are both real and palpable. Received wisdom tells us that Court should be gentle in the award of costs. Indeed they should, when a party earns that clemency. It is not in every case tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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