LAXMICHAND PRAKASHCHAND Vs. KALYAN SOLVENT EXTRACTIONS LTD

JUDGEMENT

(1.) THE petitioner is a partnership firm duly registered under the Indian Partnership Act, 1932, and carries on business as merchants and agents at Bombay. The opponent-company, M/s. Kalyan Solvent Extractions Ltd. , is a limited company incorporated and registered under the Companies Act, 1956, having its registered office at Indore and carries on a business in manufacture of soya products, refined oils and de-oiled cakes at their plant at Dewas. The opponent-company had been supplying to the petitioner-firm soyabean extractions, rape extractions, etc. , and, as alleged, the petitioner's sister concern, M/s. Rameshkumar Devkinandan, had been supplying rice bran to the opponent-company. According to the petitioner, in the course of the business of supplying of rice bran, the documents including railway receipts were to be retired through the bank by the opponent. The opponent-company was not able to retire the documents on account of its financial difficulties. Thereafter, an understanding was reached that the documents would be given without payments through bank against which the opponent issued delivery orders on their plant for the goods to be supplied to the petitioner. It has been further averred that, on July 15, 1987, the accounts of the two firms, namely, the petitioner-company and its sister concern, M/s. Rameshkumar Devkinandan, were made up and settled. A sum of Rs. 1,37,580. 08 was found due from the opponent company to the petitioner-firm. A statement was duly prepared and signed by the accountant of the opponent-company as an authorised representative of the company and handed over to the petitioner. Thus, the opponent company acknowledges its liability to the tune of the aforesaid amount. The opponent company had previously issued delivery orders dated April 30, 1987, and June 23, 1987, against the due amount but the opponent company did not deliver the materials. Therefore, the petitioner is entitled to recover the amount of Rs. 1,37,580. 08 from the opponent company. The petitioner claimed a sum of Rs. 1,29,375 on account of compensation for loss/damage caused to the petitioner on account of breach of contract and failure by the opponent to deliver 23 trucks. Accordingly, the petitioner had sent a debit note vide its letter dated July 28, 1987, by registered post. A sum of Rs. 9,600 was paid in advance to Shri A. K. Kaushik on the advice of the opponent-company towards payment of its bill No. D. O. C. 87-88, dated May 19, 1987, by account-payee cheque by the petitioner. The opponent-company had defaulted in delivering the materials covered by the said bill. As such, the petitioner was entitled to the refund of the said amount from the opponent-company. As such, a total sum of Rs. 2,76,555. 00 is due and payable by the opponent-company to the petitioner-firm, the company having failed and neglected to pay the said amount despite repeated demands. Therefore, the petitioner served a notice dated November 20, 1987, under Section 434 of the Companies Act, 1956, on the opponent requiring to pay the aforesaid sum within 21 days from the date of receipt of the notice. But, despite the receipt of notice on November 25, 1987, the opponent-company has not complied with the said notice and has failed and neglected to pay the said amount within the said period. Therefore, the opponent-company being unable to pay its debts, it be wound up in accordance with law.

(2.) THE petition has been opposed by the opponent-company which has appeared in response to the show-cause notice on the ground that there is not an iota of evidence to show that M/s. Rameshkumar Devkinandan, is a sister concern of the petitioner-firm. There is nothing like a "sister concern" in commercial law. The petitioner-firm and the proprietary concern, M/s. Rameshkumar Devkinandan, are two distinct business entities and dealings with one cannot constitute any business transaction with the other. The very fact that, on the basis of the alleged claim of M/s. Rameshkumar Devkinandan, the present petition has been filed by the present petitioner-firm itself shows that the petition is entirely misconceived and is not maintainable. It should, therefore, be dismissed on this short ground alone. It has been further averred that rice bran was never supplied by the petitioner-company. The purchases of rice bran were made from M/s. Rameshkumar Devkinandan and that concern is not in any way related to the petitioner-firm. Even otherwise, on account of the transactions of purchases from M/s. Rameshkumar Devkinandan, the respondent-company has to receive a substantial amount from the said concern and, therefore, a notice has already been sent to that concern, and it was not accepted by the said concern. The notice would show that a debit balance of Rs. 3,71,279. 50 is due towards that concern of the opponent-company. The petition has been filed with oblique motives to harass the company on false premises. Rice bran was never supplied by the petitioner-firm and, therefore, there could have been no occasion for non-retirement of any consignment of the petitioner by the respondent-company. As regards settlement of accounts it has been averred that the respondent-company is neither concerned with the accounts settled between the petitioner-firm and M/s. Rameshkumar Devkinandan nor was it obliged to make any payment either to the petitioner or to the said concern on the basis of the said accounts. A copy of that statement was got inwarded mischievously by the petitioner in the office of the respondent-company. An acknowledgment has been given by the receiving clerk on the clear understanding that its contents have not been verified. It was the routine course on the part of the receiving clerk who received the correspondence delivered to the company but such a receipt would not amount to acknowledgment of any liability by the company. As such, the action of the petitioner-firm is fraudulent in obtaining the signature of the clerk by misrepresentation. Furthermore, annexures A to A-4 which are alleged to be the statements do not tally with the accounts maintained in the regular course by the respondent-company, indicating a debit balance against the petitioner-firm. A notice dated August 28, 1988, together with the statement was sent to the petitioner on August 28, 1988, through the advocate by the respondent-company calling upon the petitioner-company to make payment of a sum of Rs. 3,35,72. 61 and interest thereon. Thus, the petitioner-firm has refused to receive the said notice. As regards the supply, the company is not under an obligation to supply the goods to the petitioner-concern because the firm was liable to pay a substantial sum to the company but neglected to discharge its liability towards the respondent-company. The claim of damages is not a debt in accordance with the company law. The question of damages is always a debatable question. As regards the payment of Rs, 9,600, it has been averred that Shri A. K. Kaushik has an unholy alliance with the petitioner. The letter bears the signature of Shri Kaushik himself. Even the accompanying invoice bears his signature. The company does not know whether actual payment has been made to Shri Kaushik because no documentary proof has been furnished in that behalf, and it was in any case a dealing between Shri Kaushik and the petitioner-firm. It has, therefore, been prayed that the petition be dismissed. By way of a rejoinder, the petitioner has stated that M/s. Rameshkumar Devkinandan is a proprietary concern of Shri Thanwardas who is the father of the partners of the petitioner-firm.

(3.) LEARNED counsel for the petitioner, Shri N. C. Behl, in support of his petition, argues that the counter claim has been raised by the respondent-company after the filing of the petition and notice having been issued to the company. Therefore, the defence of the company is not bona fide. The accounts have already been settled on July 15, 1987, and the debt, has been acknowledged, vide annexures A, A-1, A-2, A-3 and A-4. The account is signed on behalf of the company. The company accountant personally delivered the account to the petitioner-firm. On the other hand, Shri Kulshreshtha appearing on behalf of the opponent-company states that the firm was not purchasing anything through the petitioner and if the company had any dealings with another proprietary concern, it is a different entity arid as regards Rs. 9,600, the company does not owe anything. On the other hand, the petitioner-concern owes a substantial amount to the respondent-company.