TaxTMI 
TaxTMI 
2009 (5) TMI 552
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....nt against the security to be deposited by the consumers. Against each new gas connection, the consumer was required to deposit a sum of Rs. 1,800 (Rs. 1,000 as security for cylinder and regulator and Rs. 800 as security for rentals) in favour of the respondent-company, which was received by the dealer and passed on to the company. On surrender of the connection, the company was required to refund the amount to the consumer through the dealer as the collections were themselves made only through the dealer. As per the averments in the petition, the petitioner had collected the security deposit against 510 connections and passed on the same to the respondent-company from time to time through demand drafts drawn in the name of the company as also in cash. The petition sets out all the details of the various connections that were made between the periods from October 4, 1994 to March 16, 1996, relating to the final net connection and the amounts collected towards the cylinder, regulator and the rental charges totalling a sum of Rs. 9,30,795. The document appointing the petitioner-company as a dealer and the details of the supply and the security deposits remitted by the petitioner to t....
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....hat the petitioner M/s. Brothers Gas Agency has been represented through Shri Madan Lal as a sole proprietor. The defence which has been set up by the respondent through its written statement states in the preliminary objection that the agreement which was entered with M/s. Brothers Gas Agency was represented only through Ramesh Chand Soni as representing the agency but the petition has been filed by another person. According to the respondent, Madan Lal was an utter stranger to the contract and he was not competent to maintain the petition. It was specifically mentioned even in the dealership agreement (annexure P2) that the business shall not be transferred and assigned without the written consent of the respondent and hence the contract itself has become unenforceable. The respondent would state that it had no knowledge that Ramesh Chand Soni had ceased to have any interest in M/s. Brothers Gas Agency and the respondent-company had never had dealings with the knowledge that they were dealing with the present representative of the petitioner agency. 6. Having regard to the fact that the petition had been filed in the year 1997, the respondent would also state that the liability ....
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....agreement and the subsequent retirement of Shri Ramesh Chand Soni, the petitioner would file the respective documents which are exhibited as annexures P39 and P40. At the first instance therefore M/s. Brother Gas Agency was a partnership but subsequently it came to be a proprietary concern of Madan Lal with effect from November 30, 1994. All the remittance which the petitioner had made to the respondent as security deposits made by the customers had been done only by Shri Madan Lal and this fact was also known to the respondent-company and particularly the fact that M/s. Brothers Gas Agency was being owned and controlled only by Shri Madan Lal. The petitioner would also join issue on the right of enforcement of the claim even prior to five years by pointing out that the respondent had completely closed down its operations even before the completion of five years period and the contract had come to an end making available to the petitioner a right to recover the money which had been paid through the petitioner. Although it was the customers' money, the petitioner-company had rendered itself liable to the customers for having received the money on their behalf and making itself perso....
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....no relevance. 11. On June 26, 2005, this court recorded the rival contentions between the parties and reserving to the parties to file affidavits in support of the respective contentions, this court directed the respondent to furnish a bank guarantee of Rs. 3 lakhs without prejudice to the contentions. Such bank guarantee was also furnished but it is not clear from the records, whether the bank guarantee, which was originally furnished by Canara Bank on behalf of the respondent-company was extended beyond the period of January 5, 2006 and an affidavit of Shri Charanjit Singh, managing director of the respondent-company was filed reiterating the contention that the business of the company was still being run and that they had no privity of contract with the petitioner. This was recorded by an order of the court dated September 8, 2005. On April 25, 2008, this court again directed the petitioner to file an affidavit along with the records, if any, whether the payments referred to in paragraphs 5 and 9 were paid directly to the respondent-company and the mode of payment. Similar affidavit was also directed to be filed by the respondent-company stating whether payments had been receiv....
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....the petitioner taking a dealership with yet another company against the terms of the final engagement of the petitioner as a dealer. If the respondent had no connection at all with the petitioner, it is not understood as to how it could have complained of the petitioner making any violation of the terms of appointment as a dealer. 13. Several documents have been filed by the respondent-company referring to the assessment for the period subsequent to the year 1997 with the sales tax authorities as well as through the sales register filed along with the reply to Company Application No. 368 of 2008. It is not possible to find out prima facie that the company has ceased its operations. The direction for winding up on the just and sufficient grounds is not available and the case would require to be considered only on the averments whether the petitioner has prima facie proof of the indebtedness of the company to the petitioner and that the respondent has been unable to pay the debt in spite of the notice, there being no bona fide dispute about the debt themselves. 14. Several documents filed by the respective parties and the affidavits bring to fore the following facts : The responde....
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....ts money from the depositors and transmits it to the respondent-company, does so by receiving the money from the customers undertaking to repay the amount at the time of surrender of the connection. As far as a customer is concerned, the right of entitlement from its dealer arises by the deposit of the money to the dealer and the dealer may therefore become answerable to the claims of customers. By the fact that the respondent-company itself does not receive the money directly from the customers, it does not absolve the company of its liability and the customer will be entitled to sue and recover the money from the dealer who has received the money as well as the respondent-company whose products the customers were consuming. The security deposits were themselves only for such user of the company's products. However, the personal liability of the dealer itself is in doubt for the dealer is but an agent of the company and in an action that may be brought by the customer, both the dealer and the principal company may be made parties. The defence of the respondent that the money remitted in the name of the respondent-company belonged only to various individual customers will be a vali....