ARROW ELECTRONICS INDIA PRIVATE LIMITED REPRESENTED BY ITS SENIOR FINANCE MANAGER AND AUTHORISED SIGNATORY, MR. SURESH AMMUGAM Vs. SEM INDIA SYSTEMS PRIVATE LIMITED REPRESENTED BY ITS MANAGING DIRECTOR

JUDGEMENT

(1.) THESE petitions are heard and disposed of by this common Order, as they are directed against the same respondent company, in almost identical circumstances and are filed seeking the winding up of the respondent -company. The petitioner -company, in the first of these petitions, and the respondent were said to have been transacting business for several years prior to the petition. The petitioner is said to be a leading electronic component distributor and is engaged in the business of providing a range of products to suppliers worldwide. The respondent was said to be engaged in the design and development of telecom and broadcasting products. It is stated that the respondent would place purchase orders with the petitioner for the purchase of various electronic products and the petitioner would have the goods manufactured as per specifications and the same would be supplied as per terms of payment specified in the purchase order, it had been the practice for the respondent to issue post -dated cheques and in some instances, letters of credit towards payment of the supplies. However, it transpires that the respondent began defaulting in payments from the year 2009, when the respondent was either making delayed part payments or completely defaulted in making payments which were due on invoices raised by the petitioner. It is claimed that the several cheques issued by the respondent had been returned dishonoured on presentation for collection. The respondent had repeatedly acknowledged and admitted their failure to honour commitments -while continuing to place orders for additional goods. It is stated that the respondent who had promised to pay a sum of Rs. 7 crore by mid -September 2011, failed to do so. The Petitioner claims that it had already procured and stocked goods worth about Rs. 5.72 crore towards purchase orders issued by the respondent, of which the petitioner was constrained to withhold delivery - until all payments were made. It is stated that the respondent being unable to make payments in respect of several consignments delivered to the respondents, by December 2010, had requested the petitioner to take back a substantial quantity of goods supplied, in order to mitigate the mounting losses. It is claimed that the petitioner thus was able to take possession of goods worth Rs. 5.44 crore, without prejudice to a claim for damages -by virtue of the failure of such transactions It was thus claimed that after giving credit to the respondent for inventory returned to the petitioner, an amount of Rs. 3.85 crore was due and payable by the respondent towards goods supplied. The petitioner having issued a statutory notice, dated 17.8.2011 calling upon the respondent to pay the outstanding amounts, the respondent had neglected to reply to the notice, after having acknowledged receipt, and failed to pay the amount under demand. It is further stated that through out the subsistence of the business relationship with the respondent, there had been no dispute raised by the respondent of any nature as regards the terms of contract. Hence the petition.

(2.) THE respondent has entered appearance through counsel and has filed statement of objections to contend that the claim of the petitioner is admittedly subject to the adjustment of a substantial sum of Rs. 5.44 crore, being the value of goods which the petitioner has admittedly retrieved from the custody of the respondent -the said adjustment is unilateral and does not bind the respondent. The claim therefore is not certain and cannot be the subject matter of adjudication in these proceedings. It is contended that the components supplied by the petitioner were utilized in the assembly of a finished product. The same were to be supplied to a third -party, M/s. Bharat Sanchar Nigam Limited (BSNL), by the respondent. As the goods supplied by the petitioner suffered from serious defects, the products supplied were returned in large quantities by the buyer. It is contended that the entire production schedule depended on the supply of components by the petitioner. A delay on the part of the petitioner led to imposition of liquidated damages by the buyers namely, BSNL and Indian Telephone Industries (ITI), and the collective delay on the part of the petitioner in respect of the series of Orders placed on the petitioner, had led to the imposition of liquidated damages by the said buyers, in a sum of Rs. 4.37 crore. It is claimed that without there being an adjudication of these unresolved issues, the demand on the part of the petitioner for any amount is without basis. The said claim cannot be set up as the basis for an allegation that the respondent is unable to pay its debts and bring this petition Therefore, it is contended that the petition be dismissed.

(3.) IT is the case of the petitioner that it is engaged in the business of manufacture and supply of precision engineering plastic parts and components including modems and has an established business. The petitioner is said to have supplied 48000 units of modems and 346 pieces of completed printed circuit boards to the respondent against a Purchase Order dated 7.3.2009, the total value of the order was US$ 1048504. The petitioner is said to have supplied the goods from time to time and by 31.3.2010, the value of the goods supplied was at US$ 1088164. The respondent, however, made no payments beyond 5.4.2010. And had, by the said date, paid only US $ 468804. Thereafter, there was constant exchange of correspondence in the petitioner seeking payment of the amounts due -and though the respondent had made several assurances over the years, no payment was made, clearly establishing the inability on the part of the respondent to make any payment. It was in that background, after issuing a notice under Section 434 of the Companies Act, 1956, which was duly acknowledged, but to which there was no reply, that the present petition is filed.