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TMI Blog2017 (12) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... t even in respect of the Guar Seed contracts the delivery date as per the said contracts was 27/07/2012. The Respondent did not address any correspondence for almost a year before addressing the letter dated 15/06/2013. Hence the aforesaid fact suggests that the parties being in continuous business relationship did not desire to precipitate the matter and were trying to resolve the same. Respondent i.e. the Appellant herein has not raised any substantial or genuine grounds to avoid the payment and the defences raised on behalf of the Respondent are therefore not bonafide. In our view, the learned Single Judge has in the facts and circumstances rightly issued the directions which are contained in the operative part of the impugned order. X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 10,000/with the Prothonotary and Senior Master of this Court towards publication charges, within two weeks from the date of default, with intimation to the Company Registrar failing which the Petition shall stand dismissed for non prosecution. (vi) All the petitions are disposed of in the above terms. (vii) There will be no orders as to costs." 3 Since the above Appeals involve common questions of fact and law, they are heard together. 4 By consent of the learned counsel for the parties, Appeal No.131 of 2017 (Vision Millennium Exports Pvt. Ltd. v/s. M/s. Stride Multitrade Pvt. Ltd.) is treated as the lead matter as the facts in the Company Petition No.281 of 2015 filed by M/s. Stride Multitrade Pvt. Ltd. are referred to in the impugned order. 5 The facts giving rise to the filing of the above Appeals can in a nutshell be stated thus : The Appellant and the Respondents in each of the Appeals are all bodies Corporate engaged in the business interalia of high quality edible oils, soyabean meal and other agricultural commodities. The facts in all the above Company Petitions are identical, save and except the dates of the Sales Confirmation Notes, Contracts, quantity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,96,86,951 It is the case of the Petitioner that the Respondent failed to deliver the Soyabean Meal within six months period from the date of the respective contracts and consequent upon such failure, the Petitioner had approached the Respondent to refund the advances paid which was not given heed to by the Respondent. The Petitioner persuaded the matter for refund, however, the Respondent declined to refund the said sum. It was the case of the Petitioner in the Petition that the receipt of the amount was not disputed by the Respondent, however, the Respondent did not deliver the Soyabean Meal to the Petitioners in each of the above Petitions. It appears that the Respondent vide letter dated 15/06/2016 addressed to the Petitioner complained of the fact that the Petitioner had placed a Sales Contract dated 17/09/2011 for supply by the Respondent to the Petitioner of 5500 Metric Tonnes (MT) of Guar Seeds against an advance of 90% of the value to be calculated with reference to the price of Guar Seeds prevailing as on 27/04/2012 being the agreed "settlement date". It was further mentioned in the said letter that the Petitioner had made certain advance payments in installments but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 105,62,90,000/would be payable by the Petitioner on taking delivery of the entire quantity of Guar Seeds. It was further contended that the last date for taking delivery of the Guar Seeds was 26/07/2012 i.e. the 90th day from the settlement date. It was contended that the Petitioner's failure to make balance payment and take delivery has resulted in a loss of ₹ 1,04,780/per MT to the Respondent. The difference accordingly was worked out at ₹ 57,62,90,000/and after adjusting the amount of ₹ 51,00,00,000/the balance remaining to be paid by the Petitioner to the Respondent was ₹ 6,62,90,000/. The Respondent accordingly called upon the Petitioner to pay the said amount. 6 It is in the background of the said statutory notice/notices that the above Company Petition along with the companion Company Petitions came to be filed by the Petitioners. In the said Company Petition the Appellant herein i.e. the original Respondent filed the affidavit of one Mr.Manish Bothra - Director of the Respondent opposing the above Company Petition interalia on various grounds. In the said reply affidavit the defence taken is that there was never any contract for purchase of Soya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2016 has disposed of the Company Petition as also the companion Company Petitions by issuing directions which are contained in the operative part amongst which as indicated above is the direction for the Respondent to deposit the advances paid by the Petitioner and the other Petitioners in the companion Company Petitions to the Respondent in this Court within 12 weeks. A further direction came to be issued that in the event the deposit is made and a suit is filed by the Petitioner and other Petitioners, the amounts so deposited will be transferred to the suit account to be invested in a Nationalized Bank initially for a period of one year and further periods of one year each if necessary. It was clarified that if the deposit is not made, the Petition shall stand admitted, returnable within six weeks from the date of default and be advertised in two local newspapers i.e. Free Press Journal (in English) and Navshakti (in Marathi) and in the Maharashtra Government Gazette. The gist of the reasoning of the learned Single Judge as can be culled out from the impugned order is that though there is merit in the contention raised on behalf of the Respondent that the circumstances mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Chartered Accountants of the Company were directed to remain present along with the Director of the Respondent Company. Accordingly Mr. D Narsimhan the Director of the Respondent Company and Mr. P Bhargava of the Chartered Accountants of the Respondent Company appeared before the Court and stated that the amounts paid by the Petitioners in the said Company Petitions were shown as advances received in their account as on that date i.e. on 26/02/2015. The learned Single Judge therefore held that if the amounts paid by the Petitioners were appropriated by the Respondent towards the price of Guar Seeds ordered by the Petitioners, the amounts would not have been shown as advance as on 26/02/2015. The learned Single Judge has also observed that the Respondent has not filed any proceedings against any of the Petitioners to recover the loss alleged to have been caused on account of they being allegedly induced to purchase large quantities of Guar Seeds at the instance of the Petitioners. The learned Single Judge having regard to all the aforesaid facts prima facie found that the defence set up by the Respondent does not appear to be bonafide. The learned Single Judge has observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .76 of 2012 wherein a finding has been recorded that the amounts advanced by the Petitioners to the Respondent towards the purchase of Guar Seeds. G] That the learned Single Judge failed to take into consideration the very pertinent aspect viz that the Respondent had supplied Guar Seeds to 4 of the group companies of the Petitioners viz. M/s. Vishal Victory Oiltech Pvt. Ltd; M/s. Addax Trading Pvt. Ltd; M/s. Utility Impex Pvt. Ltd. and M/s. Nova Trading Pvt. Ltd. which fact has been accepted by the said entities in their respective Petitions, hence the case of the Respondent was a plausible one. H] That the learned Single Judge failed to take note of the fact that it was the Respondent who was the first to initiate correspondence vide its letter dated 15/06/2013 whereas the Petitioner had not entered into the correspondence almost for a period of one year though it was the case of the Petitioner that it had not been supplied the Soyabean Meal under the said 5 contracts; I] That the learned Single Judge failed to appreciate that the Petitioners could not have continued to enter into new contracts for purchase of Soyabean Meal and paid advance despite consistent default in earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered by the Respondent has been produced; viii] That the Director of the Respondent Mr. D Narsimhan and the representative from the Chartered Accountants of the Respondent Mr. P Bhargava have admitted before this Court that the amounts paid by the Petitioner are shown as advances received in the account of the Respondent; ix] That the case of the Respondent that the Petitioner failed to make balance payment on account of sharp fall in price of Guar Seeds cannot be accepted in the teeth of the fact that the Petitioners would not have made payment of ₹ 6,00,00,000/on 26/07/2011 i.e. the day prior to the delivery date. x] That the reliance placed on the findings contained in the preliminary report of the DG CCI is misplaced. xi] That having regard to the nature of the inquiry by the DG CCI, the same is a preliminary fact finding inquiry and not in itself a quasijudicial order. At that stage there is no opportunity given to the concerned parties to make submission, but only statements are recorded and materials considered. Hence the said preliminary fact finding statements in that report have no evidentiary value and is not determinative of the issues that arise inter se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That though it is the case of the Respondent that the Soyabean Meal contracts were received by Respondent from the Petitioners by emails, there is not a whisper as to how the Respondent sent the alleged Guar Seeds contract to the Petitioners or vice versa. xviii] No correspondence was entered into by the Petitioner with the Respondent in view of the fact that the talks between the Petitioners and the Respondent were in person and that the Respondent kept on giving false assurances to the Petitioners. xix] Assuming that the case of the Respondent of the contract being for purchase of Guar Seeds is believed to be true, the delivery date mentioned therein being 27/07/2012, the Respondent also did not address any correspondence for almost a year before addressing the said letter dated 15/06/2013. xx] That it is well settled that the commercial solvency does not constitute a stand alone ground to avoid winding up. In the event the company refused to pay on no genuine and substantial grounds, there is a presumption that the company is unable to pay its debts and thus the company ought to be wound up. Reliance is placed on the judgment of the Apex Court reported in (1971) 3 SCC 632 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow been made to bring on record the said Guar Seeds contracts by way of an application filed under Order XLI Rule 27 of the Code of Civil Procedure being Notice of Motion (L) No.1548 of 2017 which is filed in the instant Appeal. Hence the defence which was sought to be taken by the Respondent admittedly has not been buttressed by producing any cogent material in that regard. In so far as the Petitioners i.e. the Respondents herein are concerned, they have produced emails which according to them have been received from the Respondent comprising 5 contracts for purchase of Soyabean Meal. The Petitioner has also produced the bank statements evidencing the payment of advances of ₹ 51,00,00,000/to the Respondent by RTGS. Hence the Petitioner has discharged the burden which was initially lying on it. However, on the burden shifting to the Respondent, the Respondent has not discharged the said burden by producing material which was the fulcrum of its defence. 13 The Appellant herein i.e. the original Respondent has filed an Application to produce additional evidence being Notice of Motion (L) No.1548 of 2017. The additional evidence which is sought to be produced interalia contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been recorded in the order dated 23/02/2015 and 27/02/2015 passed in one of the connected Company Petition being No.16 of 2014. The case of the Respondent that the Petitioners failed to make payment on account of sharp fall in price of Guar Seeds between the settlement date and the delivery date also appears to be unacceptable in view of the fact that the Petitioners made payment of ₹ 6,00,00,000/on 26/07/2011 a day prior to the delivery date. 17 In so far as email dated 15/02/2012 addressed by Mr. Rajkumar Goyal to the Respondent is concerned, it is required to be noted that the said email is dated 14/02/2012 whereas the alleged Guar Seeds contracts are also dated prior in point of time. A reading of the said email indicates that the said email is in the nature of the proposal to the Respondent that the advances can be adjusted against the Gaur Seeds. The alleged Guar Seeds contracts are all prior in point of time to the email. Hence there would be no question of Mr. Rajkumar Goyal making a proposal for purchase of Guar Seeds to be adjusted with the advances provided by the Petitioner. The said email therefore does not in any manner support the case of the Respondent that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the amount paid by the Petitioner was shown as advance in the account of the Respondent. The DG CCI cannot be said to be conducting any inquiry as regards the inter se disputes between the Petitioner and the Respondent but was only conducting the inquiry into whether there was any monopolistic activities being carried out in the sale of Guar Seeds. 19 In our view, though the learned Single Judge has not expressed any opinion one way or the other as regards the efficacy of any of the findings recorded by the DG CCI, no evidentiary value could be attached to the said report of the DG CCI. Reliance placed on the judgment of Raymond Woollen Mills Ltd.'s case (supra) seems to be apposite. In the said case the Apex Court was concerned with the investigation report under the provisions of Section 11 of the Monopolies Restrictive Trade Practices Act, 1969 which provisions can be said to be almost paramateria to Section 26 of the present Competition Act, 2002. The Apex Court held that any reference to the contents of the said report which have not been put in evidence and subjected to cross examination cannot be looked into. Paragraph 36 of the said report is material and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess time might have elapsed. In the said context it is required to be noted that even in respect of the Guar Seed contracts the delivery date as per the said contracts was 27/07/2012. The Respondent did not address any correspondence for almost a year before addressing the letter dated 15/06/2013. Hence the aforesaid fact suggests that the parties being in continuous business relationship did not desire to precipitate the matter and were trying to resolve the same. 21 The contention as urged on behalf of the Respondent that the emails do not contain the signature made on behalf of the Petitioner and therefore the said fact impinges upon whether there were any contracts for purchase of Soyabean Meal. In our view, the said contention misses the point that the said contract was acted upon inasmuch as the Petitioner had made payment of the advance which constituted 50% of the contracted amount i.e. the sum of ₹ 51,00,00,000/and hence in terms of Section 8 of the Contract Act the same constitutes an acceptance. 22 In so far as the order passed by the Madhya Pradesh High Court is concerned, it seems that the parties and the contracts in issue before the Madhya Pradesh High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends." In IBA Health (I) Pvt. Ltd's case (supra) the Apex Court has held that solvency of a company might not constitute a stand alone ground for setting aside a notice under Section 434(1)(a), meaning thereby, if a debt is undisputedly owing, then it has to be paid. Paragraph 24 of the said report is material and reproduced herein under : "24 Appellant company raised a contention that it is commercially solvent and, in such a situation, the question may arise that the factum of commercial solvency, as such, would be sufficient to reject the petition for winding up, unless substantial grounds for its rejection are made out. A determination of examination of the company's insolvency may be a useful aid in deciding whether the refusal to pay is a result of the bona fide dispute as to liability or whether it reflects an inability to pay, in such a situation, solvency is relevant not as a separate ground. If there is no dispute as to the company's liability, the solvency of the company might not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcised by the Trial Court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph (1960) 3 SCR 713 : AIR 1960 SC 1156 : (SCR 721) ...... These principles are well established, but as has been observed by Viscount Simon in Charles Osention & Co. v. Johnston [1942 AC 130] …. the law as to the reversal by a court of appeal of an order made by a judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case. The appellate judgment does not seem to defer to this principle." Hence going by the test laid down by the Apex Court in Wander Ltd.'s case (supra), the view taken by the learned Single Judge being a possible view taken in the facts and circumstances of the instant case, the same does not merit any interference in the Appellate Jurisdiction. 25 In our view, the Respondent i.e. the Appellant herein has not raised an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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