TaxTMI 
TaxTMI 
1983 (9) TMI 235
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....e accordingly supplied by the petitioner from time to time, and a number of payments received from the respondents. The petitioner's case is that a sum of Rs. l,70,947.16 has been still due from the respondent from January 1, 1979, towards the supply of those bottles, and the same has remained unpaid in spite of repeated demands. Interest at the rate of 18% per annum is further, it is stated, payable on that amount. The respondent company had issued two cheques, one for Rs. 50,000 on November 18, 1979, and another for Rs. 20,947.16 but they on presentation were dishonoured. Subsequently, the respondent confirmed in February, 1979, that the balance outstanding due from it to the petitioner, as on December 31, 1978, was of Rs. 1,70,947.16. This, however, was not cleared in spite of repeated demands by the petitioner. The respondent continued to make assurances, but without result. Finally, a statutory notice under the Companies Act, 1956, was served, but it too remained unreplied. Hence, the petition. The respondent company has contested this petition, pleading that it is mala fide, abuse of the process of the court and meant to put pressure and coercion for an unconscionabl....
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....est at the rate of 18% per annum would be charged on the outstanding amounts. As regards the breakages, the stand taken by the respondent, it is pleaded, is mala fide, and without any basis as they had never quantified the amount of breakages before the filing of the petition, and had been generally indulging in vagaries. Besides no damaged goods were returned to the petitioner. In any case, it is pointed out that the respondent waived their rights towards breakages when they without reservation later confirmed the outstanding amount of Rs. 1,70,947.16. It has been denied that the respondent had at any time offered payment of Rs. 70,947 towards full and final settlement. Before proceeding further and discussing the evidence that has been led by the parties on record, it is relevant to mention here what transpired on different hearings of this petition before the court. The record shows that on November 12, 1980, Anand J. recorded that the respondent company was admitting the liability to the extent of Rs. 70,947.12 as against the petitioner's claim of Rs. 1,70,000 odd besides interest. The respondent, it was noted, had been disputing the balance claim on the ground of heavy brea....
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....78, in which it was stated that the petitioner had carried out detailed checks on the bottles, and their glass composition had been analysed in the petitioner's factory and also by the Central Glass and Ceramics Institute, Calcutta. No abnormality had been found which could cause high breakages. The learned judge noted that the total value of the breakage as alleged in the letter dated April 16, 1978, would come to approximately Rs. 7,680. Reference was next made to a number of endorsements and letters subsequently written by the respondent in which the liability for the payment of Rs. l,70,947.16 was without, reservation admitted. As such it was observed that prima facie the dispute sought to be raised by the respondent in the reply affidavit was not bona fide. As regards the order dated November 12, 1980, of Anand J., it was observed that merely because the petitioner had agreed to accept the so-called undisputed amount of Rs. 70,947.12, it did not mean that in fact there was a bona fide dispute regarding the balance amount. The learned judge had no manner of doubt that the respondent had raised the dispute solely with a view to avoid the admission of the petition. The petition w....
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....t it appeared hat the bottles were weak resulting in breakages at the filling point. The matter was, therefore, required to be investigated, and reasons apprised. The respondent reserved the right to claim compensation. To this the petitioner replied on April 21, 1978, that they regretted that there had been excessive breakages in the said two consignments, and as apprised to the respondent over the telephone, they were tightening up their quality control so that it would not be repeated in future consignments. The respondent again wrote a letter dated July 12, 1978, to the petitioner in which it was restated that the bottles were weak resulting in too much of bursting at the filling stage. Cracks were also noticed at the bottom of bottles. The petitioner was, therefore, required to look into the matter, and let the respondent know what steps were being taken in this regard. It was also stated that in case the quality was not improved the respondent would have to stop taking the bottles. This position was further stated in the letter dated August 1, 1978, and the petitioner was apprised that there were not only abnormal breakages at the respondent end, but in the market also, with ....
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.... the respondent on August 24, 1978, that the respondent could always send their technical representative to see that the printing and quality of the bottles were good. The respondent by letter dated August 29, 1978, informed the petitioner that they were having some difficulties with their bankers, and as such sending of the consignment should be detained till such time the outstanding amount due to the petitioner was cleared. The correspondence which followed thereafter did not mention of any breakages or the claim for compensation on that score by the respondent. They rather show that the petitioner had been apprising the respondent of the outstanding bills, and the respondent assuring that they would be cleared as early as possible. The respondent continued stating that they were having some financial difficulties. In the letter dated October 6, 1978, the respondent assured that 50% of the outstanding would be cleared by the 15th of that month, and the rest towards the end of the month. Another letter was written on October 16, 1978, by the respondent that they were expecting enhancement of limit from their bankers, and would clear the petitioner's account by the end of th....
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....e claim of Rs. 1,70,947.16, Rs. 25,000 only have been paid in court. The following cheques issued by the respondent were stated to have been dishonoured : Date Cheque No. Amount Remarks Rs. 8. 8.78 28,616.50 Unpaid 24.8.78 21. 8.78 28,616.50 Unpaid 7.9.78 10.11.68 233306 50,000.00 Unpaid 29. 6.79 988549 20,947.16 Unpaid 7.12.80 693706 20,000.00 Unpaid 7.12.80 693710 947.00 Unpaid 7. 2.81 693708 25,000.00 Unpaid In cross-examination, he stated, M/s. Parle had also not renewed the contract with the petitioner for the supply of bottles, but this, according to him, was because they wanted double coloured bottles while the petitioner was manufacturing single coloured bottles. He denied that the reason for not renewing the contract was that they had complained that the bottles were weak. As regards the petitioner agreeing before the court to receive a sum of Rs. 70,000 and to go in for arbitration with regard to the balance, he stated that this was in order to accommodate t....
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....that Rs. 1,36,000 were payable to them towards breakages. The damaged bottles were also not returned to the petitioner as this, according to him, is not the trade practice. He next admitted that after 1978, the respondent company has no audited balance-sheet, and that the Oriental Bank of Commerce has instituted a suit for the recovery of rupees 62 lakhs odd. The respondent's factory has been attached in that suit. M/s. Jain Construction Company has also filed a suit against the respondent, and two criminal cases under section 420 of the Indian Penal Code have also been filed against him personally because of the dishonour of cheques. He further admitted that the salary of the employees of the respondent have not been paid from February, 1981, and the proceedings in this regard are pending in the Labour Court, Meerut. An award too has been given in the same. The sales tax authorities have also raised a demand of rupees 17 lakhs against the respondent of which rupees 5 lakhs odd is accepted by the respondent, and the rest is being disputed in the Allahabad High Court. An amount of Rs. 1,07,000 is also being demanded by the Central Excise from the respondent about which stay has been....
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....still in operation, and the second contract had not come into being. This has been the only letter on record in which there was mention of specific quantities of breakages, and as already noted above, their value came to about Rs. 7,680. The respondent's managing director has conceded this in his cross-examination. The other letters which followed from the respondent were generalised and mentioned of breakages and called for their rectification. However, no specific quantification of the value of such breakages was brought out. The petitioner had first replied that they were tightening up their quality control and regretted the excessive breakages in the two consignments as had been intimated by the respondent. However, the petitioner by its letter of August 11, 1978, unwittingly informed the respondent that the technical analysis carried out by them at their laboratory and at the Central Glass and Ceramics Research Institute, Calcutta, had revealed no abnormality which could cause high breakages. The petitioner also sent their chief glass technologist to the respondent's factory. No technologist or specialist was kept by the respondent of their own. The respondent at one time aske....