HINDUSTAN TIN WORKS LTD Vs. HIMALAYA INTERNATIONAL LTD

JUDGEMENT

(1.) The petitioner is in the business of processing, printing tin plates and making containers thereof. The respondent approached the petitioner some time in October 1998 for supply of cans of different sizes. These cans were supplied by the petitioner to the respondent from time-to-time as per the requirement and specifications. According to the petitioner, substantial sum is due and the said debt is not paid by the respondent in spite of statutory notice and, therefore, this petition is filed seeking winding up.

(2.) It is case of the petitioner that during January, 2001 and March, 2001 total cans supplied were of the value of Rs. 29,07,000/-. Goods worth Rs. 72,656- 22 paise were returned by the respondent. Net supply was, therefore, for Rs. 28,34,343-78 paise. The bills of these supplies were raised, details whereof are given in para 7 of the petition. Since payment was not made in time, the respondent also became liable for payment of interest at the rate of 18 per cent per annum. In order to liquidate the liability, the respondent issued 7 cheques for a total amount of Rs. 31,64,640-48 paise. When these cheques were presented for encashment some were returned unpaid with the remark 'funds insufficient'. Notice under Section 138 of the Negotiable Instruments Act (for short 'the NI Act') was also given but no payment was made and, therefore, the petitioner filed proceedings against the respondent under Section 138 of the NI Act which are pending before Mr. S.S. Malhotra, Metropolitan Magistrate, Delhi. The petitioner further discloses that after filing of the complaint under the NI Act, the respondent for the first time got legal notice served alleging defects in the goods supplied by the petitioner from 16th September, 2000 onwards although no such plea was taken earlier. The respondent also lodged claim against the petitioner for Rs. 4,42,50,646. According to the petitioner, this was an afterthought plea as in the earlier communications, the respondent had accepted the liability but expressed financial difficulty in releasing the payment. The petitioner, therefore, sent statutory notice dated 10th June, 2002 calling upon the respondent to pay Rs. 38,63,052-95 paise which was an admitted liability of the respondent towards the petitioner on account of goods received for non- furnishing of Forms H and C as well as interest on the amount due. Since the demand was still not made, the petitioner has filed this petition.

(3.) The defence of the respondent in the reply is substantially the same which was the subject matter of legal notice of the respondent. It is alleged that no debt is payable and the present petition is a pressure tactic. It is reiterated that the goods supplied were defective. In fact, according to the respondent, the petitioner company deliberately and intentionally and knowingly supplied absolutely defective cans which did not meet the required standards and quality control test at all and these goods were earlier rejected by many other buyers. The petitioner has, therefore, defrauded the respondent for supplying inferior and bad quality packing tin cans which were expressly ordered for canning and preserving required food stuffs specially fresh grown and picked mushrooms to be exported to USA as the respondent is 100% export oriented company. It is stated that the respondent is one of the largest markets and is known for its quality of its products. Its foods canning facility and process is approved by Food and Drugs Administration of USA. The petitioner knew that the tin cans to be supplied by the petitioner were to meet these standards as they were meant for packing mushrooms and other food stuffs and vegetables and, therefore, had to be of 100% excellent quality without any error. It is explained that the respondent has been placing orders with the petitioner since 1998 and payments have always been made. The dispute arose for supplies made from September 2000 to December, 2001 as many supplies made during this period were defective. It is stated that for those supplies which were in order the respondent made full payments. However, out of total supplies of 615420 cans the petitioner supplied 171360 defective cans which were earlier rejected by another customer of the petitioner, namely, M/s. Agro Dutch Industries Limited. It is stated that the respondent used to purchase 'flattened' cans but this time the petitioner compelled the respondent to buy builtup cans on the pretext that the petitioner was not having flattened cans available. The petitioner is the only supplier of cans to the respondent. On the aforesaid representation of the petitioner, respondent purchased these cans. It is also explained in the reply that the respondent thus carried out its food processing and canning of food stuffs as usual for exports to USA in the cans supplied by the petitioner and the respondent being 100% export oriented company, exported the food stuff mushroom cans to USA. Upon consignment reaching the US shores, the respondent received serious complaints regardings the quality of cans. The complaints pertained to leakage of the cans and the resultant loss at the arrival of these goods in US ports. Several complaints were made to the petitioner and the petitioner's representative and their quality analyst made various visits. In these meetings, the petitioner's representative agreed that there were quality deficiency in the cans, which had resulted in total loss of consignment. While companies from the US warehouse was that the leaked cans were emitting foul smell and container after container started blowing up. All these facts were brought to the knowledge of the petitioner. For the first time on 26th March, 2001, it was admitted by the petitioner that the cans supplied to the respondent were made for M/s. Agro Dutch and were being diverted to respondent due to commercial reasons. Even then the petitioner never informed that M/s. Agro Dutch has serious problem with these cans and had actually rejected and returned these cans to the petitioner. It is further stated that the fact that the petitioner had admitted to the inferior and defective quality of the cans supplied to the respondent can be gathered from the minutes of the meeting held between the respondent and the petitioner on various dates, which have jointly been signed by all the parties concerned. The minutes of the meetings held on 1st November, 10th November, 3rd December, 6th December, 2000, 14th February, 5th February, 5th April, 10th July and 19th July, 2001 would indicate the following: