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TMI Blog2015 (10) TMI 2670X X X X Extracts X X X X X X X X Extracts X X X X ..... he price. There is also strong evidence produced by the company to show that each of the companies of the Concast Group was a part of one entity and carried on business as one entity. Shipment of goods by the petitioning creditor in 2011 was sufficient to extinguish its liability for the goods that it received in 2009. The argument regarding equitable set off is premature, in my opinion. It has to be seen, upon scrutiny of the evidence at the trial whether the arrangement between the parties was such that the setting off took place at the time of the transaction or was it pleaded for the first time in the affidavits in opposition. That would determine whether the set off was legal or equitable and whether it could be claimed. Having advanced a substantial defence there is no question of a winding up order being passed. The defence is so substantial that I am not even inclined to ask the company to provide security. This winding up applications are disposed of, by refusing to admit the same and relegating the petitioning creditor to a civil remedy as available to it. The period during which these winding up applications have been pending in this Court may be excluded to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Affidavit in Opposition of the Company affirmed on 24th July, 2014 it admitted the transaction. If one considers the nature and weight of evidence brought on record by the petitioning creditor, regarding the sale and delivery of these goods, one would immediately tend to form an opinion that the petitioning creditor is entitled to summary judgement. Points in defence have been taken in the Affidavit in Opposition of the Company, as follows. It is a part of a group of eight Companies. The seven other Companies are Concast Ispat Ltd., Concast Bengal Industries Ltd., Dankuni Steel Ltd., Concast Steel and Power Ltd., Concast Vyapar Ltd., Sureka Exports Ltd. and Concast Global Ltd. These Companies are engaged in trading in iron and steel materials. One Sanjay Sureka controls these Companies. He is the Director of the respondent Company and of Concast Bengal Industries Ltd. He is also the Chairman of the group. All the members of the group are to be taken as one entity. The petitioning creditor is also a member of a group of industries, the other Companies being Ram Swarup Vyapar Ltd. and Ram Swarup Industries Ltd. They are controlled by the Jhunjhunwala family. The grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate from those between the petitioning creditor and other companies with Concast Bengal Industries Ltd. Both should not be clubbed together for the purpose setting up the defence in this winding up application. The alleged transactions which according to learned Counsel for the petitioning creditor had with Concast Bengal Industries Ltd. were between January, 2009 and March, 2009. It was most astonishing that no proceedings were taken to realise the price of goods sold and delivered by Concast Bengal Industries Ltd. to the petitioning creditor Concast had to wait till the winding up petition was filed in 2014, and claim a set off in respect of transactions which took place between the petitioning creditor and Concast Exim Ltd, learned counsel submitted. Learned Counsel also argued that since Concast Exim Ltd. and Concast Bengal Industries Ltd. were different juristic entities the petitioning creditor could maintain this winding application for non- payment of the price of goods sold and delivered them to Concast Exim Ltd. irrespective of whether Concast Exim Ltd. have received payment for the goods allegedly goods sold and delivered by them to the petitioning creditor. Furthermo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956, namely, Section 370 (1) (B) does not really answer the controversy. The said Section refers to the circumstances when two companies might be treated to be under the same management. Now, two Companies may be under the same management and yet be completely different business entities or it may be under the same management and be one company in all respects, because a single Shareholder or Director controls the affairs of each of these companies. We are familiar with the expression Lifting of the Corporate Veil . Sometimes it is necessary to pierce the exterior of the Company and examine what is inside or lift the veil and see who is the real person behind it. The Corporate veil is removed to identify the person who controls the company wearing the corporate cloak. This is necessary to find out who is the person behind the actions of the company, the fault of the company and also to locate the real seat of the company. Lifting the corporate veil is necessary to detect fraud and crime. The doctrine of lifting of the corporate veil is being increasingly used in modern times to scrutinize corporate action. This concept was beautifully analysed by Mr. Justice S.C.Agrawal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very relevant. What are the circumstances in which the Court trying a summary suit grants a decree or grants leave to defend or grants leave to defend subject to certain terms and conditions to the defendant are elucidated in this judgement. In fact, this judgement follows an ancient decision of this Court Smt. Kiranmoyee Dasi v. Dr. J. Chatterjee reported in (1945) 49 CWN 246. The principles are these:- 8.(a) If the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgement and the defendant is entitled to unconditional leave to defend. (b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. ( c ) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e SRC Steel Pvt. Ltd. Vs. Bharat Industrial Corporation Ltd. reported in 2005(4) CHN 343). The company must be in a completely defenceless position. It would suffice if the company raised a triable issue, for relegation of the winding up application to a civil forum. From the discussion of the facts above, it is absolutely clear that the company has been able to prima facie establish a strong case that the goods that the petitioning creditor shipped were in fact in lieu of payment for the goods shipped to them by Concast Bengal in 2009. Both the shipments have been proved by invoices, delivery, payment of VAT and so on. But there is no evidence of either party making payment of the price. There is also strong evidence produced by the company to show that each of the companies of the Concast Group was a part of one entity and carried on business as one entity. Shipment of goods by the petitioning creditor in 2011 was sufficient to extinguish its liability for the goods that it received in 2009. The argument regarding equitable set off is premature, in my opinion. It has to be seen, upon scrutiny of the evidence at the trial whether the arrangement between the parties was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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