IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.07.2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE K.VENKATARAMAN O.S.A.NO.45 OF 2005 M/s.Jai Enterprises, rep. by Partner, S.Chandramouli No.22, Rutland Gate IV Street, Chennai-600 006 .. Appellant Vs. M/s.Omega Cables Limited, No.16-17, Industrial Estate, Chennai-600 058. .. Respondent This O.S.A. has been preferred under Section 483 of the Companies Act against the order of the learned Single Judge, dated 23.04.2003 in Company Petition No.108 of 1994. For Appellant : Mr.Prakash Goklaney for Menon & Goklaney Associates For Respondent : No appearance - - - - JUDGMENT
(The judgment of the Court was made by M.CHOCKALINGAM, J.)
This appeal challenges an order of dismissal made by the learned Single Judge in Company Petition No.108 of 1994.
2.The Court heard the learned counsel for the appellant. No representation on the side of the respondent, despite service.
3.Seeking an order of winding up under Sections 433(e), 434(1)(a) and 439(1)(b) of the Companies Act, the appellant herein/petitioner came with specific allegations that the petitioner supplied PVC compound and other raw materials to the respondent under various invoices during May, June and July, 1976 and in respect of the said supplies, a sum of Rs.1,64,914.41 was due and payable by the respondent Company as detailed in the petition; that there was practice of payment of 18% interest per annum; that again in the year 1984, there was supply made under three invoices, amounting to Rs.1,755.52, Rs.2100/- and Rs.3006.75 on 10.05.1984, 11.05.1984 and 21.07.1984 respectively; that many a reminder was made; that the respondents unconditionally promised to pay the outstanding in 10 instalments and confirmed the same in its letter, dated 19.09.1991 and paid a sum of Rs.16,500/- as first instalment and thus, total payment of Rs.38,000/- was made and the balance was Rs.1,26,914.41; that due to non payment, despite reminders, the petitioner was compelled to issue a statutory notice under Section 434 of the Companies Act, which yielded no reply and under these circumstances, the petitioner was constrained to file the petition for winding up.
4.It was resisted by the respondent on three grounds. Firstly, he denied the transactions and further asked for production of original of the credit bills with due acknowledgement made by the respondent Company and the delivery notes relating to the purchases. Secondly, payment of Rs.38,000/- was denied. Thirdly, the Company was the sick unit till 31.03.2001 and thus, the claim was barred by limitation and therefore, the company petition was not maintainable and was liable to be dismissed.
5.The learned Single Judge raised questions whether the respondent company was liable to be wound up and whether the claim was barred by time as pleaded by the respondent. The learned Single Judge heard the submissions made by either side and also looked into the available materials and took the view that the petition was one which requires an order of dismissal. Accordingly, the learned Single Judge dismissed the petition. Hence this appeal has arisen at the instance of the petitioner.
6.The learned counsel, advancing arguments on behalf of the appellant, would submit that in the instant case, the liability of Rs.1,26,914.41 was the definite one and necessary details have been given in the annexure annexed to the petition. It is not the case where transactions were denied and even payments have been made. There was payment of Rs.38,000/- made and there was acknowledgement of liability by letter, dated 19.09.1991 and thus, in the instant case, there was evidence for the transactions, which were not denied and liability was also acknowledged by a communication from the General Manager(F&A) on behalf of the Company and it was sufficient to point out the liability, which was definite. When statutory notice was issued, it was not replied and further, the non payment and non reply to the notice would be pointing to the inability of the respondent company in making payment of demands made under the notice and under these circumstances, winding up should have been ordered. The learned Single Judge has taken into consideration Section 18 of the Limitation Act and acknowledgement should have been made within a period of limitation. Section 25(3) of the Contract Act is applicable where necessary circumstances were placed before the learned Single Judge to the effect that even acknowledgement made out of stipulated period would be well within time and under these circumstances, the findings recorded by the learned Single Judge that it was time barred is not correct.
7.Added further the learned counsel that letter was given by the General Manager on 19.09.1991; that it was found by the learned Single Judge that there was no evidence to show that the person, who had signed the letter dated 19.09.1991, was authorised to issue such a letter, acknowledging the liability and in the absence of the same, the letter cannot be taken into consideration for saving the period of limitation; that further, in the instant case, all the communications addressed were also filed before the learned Single Judge; that all would go to show that they have emanated from the respondent company; that it is pertinent to point out that the letter was not only acknowledged the liability, but also there was payment made; that if payment has been made, that would point out that the person, who made payment, had the authority; that once payment was accompanied by the letter, the person, who issued the letter, had competent to acknowledge the liability and under these circumstances, the view taken by the learned Single Judge is not correct and thus, the statutory requirements for winding up the company are actually satisfied and under these circumstances, the appeal has got to be allowed, setting aside the order of the learned Single Judge.
8.The learned counsel, in support of his contentions, has relied on the following decisions:
a)AIR 1915 MADRAS 242 (MRS. C.SIMON V. AROGIASAMI)
b)AIR 1923 LAHORE 481 (DAVID SUTHERLAND CLARK VS. ROSE GRIMSHAW).
c)AIR 1929 ALLAHABAD 657 (NATHU SINGH AND ANOTHER VS. GIRWAR SINGH AN ANOTHER)
d)AIR (30) 1943 BOMBAY 447 (KASTURCHAND JIWAJI VS. MANEKCHAND DEVCHAND)
e)AIR (36) 1949 NAGPUR 229 (TULSIRAM SHRIKISAN MARWADI VS. ZABOO BHIMA SHANKAR)
f)AIR (38) 1951 MADRAS 903 (MUTHAYEE ACHI VS. SABBIAH)
g)AIR 1954 PEPSU 44 (KISHAN SINGH VS. BACHNA)
h)AIR 1967 ORISSA 158 (MAWAJI RAMJI AND OTHERS VS. PREMJI KUMBHABHAI CHANDA)
i)AIR 1975 MADRAS 333 (N.ETHIRAJULU NAIDU VS. K.R.CHINNIKRISHNAN CHETTIAR).
9.After hearing the learned counsel for the appellant and after looking into the materials available, the court is of the considered opinion that the appeal does not carry any merit whatsoever. The petition was brought forth, after issuance of the statutory notice as contemplated under the Companies Act, for winding up that the respondent, despite notice, was unable to make payment as per the demands made under the statutory notice and that liability was to an extent of Rs.1,26,914.41. It is pertinent to point out that at the time when the counter was filed, the petition was resisted on the grounds that actually the liability as found in the petition and the transactions were denied. Further, the respondent required the petitioner to produce the original of the credit bills with due acknowledgement made by the respondent company and the delivery notes. Thus, it would be quite clear that those documents were not produced. The learned counsel for the appellant, in reply, would submit that it is true, those documents were not filed, since they were not necessary and the liability has been acknowledged in the communication addressed by the Company and hence it is not necessary. Even assuming that there was balance of Rs.1,26,914.41 as claimed by the petitioner and though it was definite, the Court is able to see that certain issues have got to be decided by adducing evidence of both sides and only on appreciation of the same, the court could pass the order for winding up.
10.It is clear from the counter filed by the respondent that it was barred by time. It was contended by the learned counsel for the appellant that what is available under the situation is Section 25(3) of the Contract Act. It is true, the letter dated 19.09.1991 was out of time, but by operation of Section 25(3) of the Act, even after the period of three years, if it has been done, it has got to be accepted and it was well within time. At this juncture, it is pertinent to point out that the learned Single Judge has pointed out that before acknowledging the liability as provided under Section 292 of the Companies Act, certain powers will have to be exercised by the Board only at the meeting and Section 290 of the Act validates the acts of the Directors. Under these circumstances, now the question is that whether the person, who signed the letter dated 19.09.1991, had got the authority to issue such a letter, acknowledging the liability.
11.It could be seen from the available materials that rehabilitation scheme was approved with effect from 19.07.1989 and it continued till 31.03.2001 and during which period, the letter was issued. Under these circumstances, the Court is of the considered opinion that when the defence plea that was stated in the course of the counter was that it was time barred, it has got to be looked into and decided only on appreciation of evidence and not otherwise. At this juncture, it is pertinent to point out that the learned Single Judge, at the end of the order, recorded the finding that the claim was time barred. Now, the grievance was that that finding has got to be removed from the order. Accordingly, that finding is removed from the order. Thus,
M.CHOCKALINGAM, J.
AND
K.VENKATARAMAN, J.
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the question as to whether it is time barred or not is to be decided only on adducing evidence of both parties and on appreciation of the same. With the above observation, this O.S.A. is dismissed. No costs. It is open to the appellant to make a claim, as per the law, before the appropriate forum for getting appropriate remedy.
(M.C., J.) (K.V., J.)
22.07.2008
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O.S.A.NO.45 OF 2005