TaxTMI 
TaxTMI 
2012 (6) TMI 643
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....e without any protection against rain, sun, storm, etc. At that time, the said cranes were not in operation at all. 6. In response to the said quotation of the Petitioner, the Respondent had issued a Letter of Intent (LOI) dated 3rd December, 2007 to the Petitioner for 7 (seven) out of 12 (twelve) operational aspects identified and quoted by the Petitioner in the above quotation submitted by it to the Respondent clearly quoting the specific item rate for each of the above 7 items. The total amount of all these items came to Rs. 14,24,000/- excluding various levies like excise duty, VAT, service tax, etc. to the extent they were leviable for which the said LOI provided a sum of Rs. 1,12,640/-. It also provided for a sum of Rs. 1,08,620/- towards the labour cost of erection and commissioning of the said equipments. The aggregate of all these amounts came to Rs. 16,44,666/-......... The work of erection and commissioning of the equipments was beyond the scope of the item rate contract. However, it was mutually agreed to be paid by the Respondent to the Petitioner calculated on the basis of the man-days likely to be involved in it. The petitioner agreed to carry out the said work on....
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.... stated, inter alia, that: 12. ........the respondent was desirous of getting repair, erection and commissioning of Gantry cranes - 2 nos., which were lying unused at its factory premises. The prime concern of the respondent was to bring to use the said cranes for its manufacturing activities. On the other hand, the petitioner was desirous of starting business relations with the respondent, as the respondent company enjoys good name and fame in the market of ship-building. Accordingly, after discussions, the respondent company placed a LOI envisaging the exact details of work to be undertaken by the petitioner, which was agreed and accepted by the petitioner without any dispute or demur. The LOI clearly envisaged the job description which was "repair and erection and commissioning" of the cranes. It is empathetically submitted that the prime object of the respondent was to put the cranes in use, and therefore, the work of erection and commissioning of the cranes was as important and integral part of LOI as that of the work of repairs. The petitioner had agreed to undertake the job which was clearly described in the LOI. It is submitted that as per LOI, the petitioner was suppose....
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....d the petitioner company for getting certain work executed. The petitioner company had, in response to the inquiry, forwarded its quotation which, upon being finalized after negotiations, culminated into work order/contract. He submitted that the petitioner company executed the work awarded to it, as per the agreement/work contract. However, the respondent company has failed to make the payment as per the agreed terms. The learned counsel for the petitioner also claimed that when the invoices remained unpaid, the petitioner company made repeated requests. However, the letters and reminders forwarded by the company were not responded to by the respondent company. He claimed that it was only after the petitioner company made demand for payment of interest in view of inordinate delay caused in making the payment towards the invoices raised by the petitioner company, that the respondent company for the first time came out with its reply and at that stage, for the first time the respondent company raised dispute regarding execution of the work carried out by the petitioner company. The learned counsel for the petitioner has submitted that without any justification and even after complet....
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....ned in the reply affidavit and additional affidavits filed on behalf of the respondent company and in that background the learned counsel for the respondent company submitted that the claim raised by the petitioner company is disputed claim and that therefore petition seeking order of winding up against the respondent company is not maintainable. He also submitted that the respondent company has already filed a civil suit for the same claim which is pending and therefore also the petitioner is not entitled to and/or justified in maintaining present petition and it does not deserve to be entertained. Mr. Chudgar, learned counsel further submitted that the present petition has been filed only with a view to causing harassment and enforcing recovery of the claim which is disputed. He submitted that the petitioner has not executed the work which was awarded to it by the respondent company and has left the work incomplete and abandoned the work/contract without completely executing the work awarded to it and that therefore the petitioner is not entitled to claim or receive any amount and the respondent company is not obliged to make any payment. He submitted that actually the respondent....
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.... in case of Gautam Electric Motors v. Firm Shantilal & Bros. ILR 1969 Delhi 708. (10) The decision in case of Madhusudan Gordhandas & Co. (supra). 9. So as to consider and appreciate the contentions raised by the contesting parties, it is necessary to take into account the relevant factual backdrop as well. It emerges from the record of present petition that: 9.1 In response to the query by respondent company, the petitioner had submitted its quotation dated 24.12.2007 (Annexure P1 Page 16). After considering the said quotation, the respondent company issued, in favour of the petitioner, Letter of Intent dated 03.12.2007, which describe, inter alia, the scope of work, under the heading 'Job Description'. The 'Job Description' as per the Letter of Intent reads thus: "The scope of work as per the said Letter of Intent dated 3.12.2007 was, 'repair of Gantry cranes (consolidated rate of work given in annexure-0I)." 9.2 The annexure 1 annexed to the said Letter of Intent enlisted 7 different items forming the scope of work which was individually described along with the details of unit rate and total price payable in respect of each of said 7 items. "Job Description ....
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....the payment was not received even after the said letter dated 31.05.2010, the petitioner forwarded the statutory notice dated 15.07.2010 at the respondent's registered office (Annexure PA page 47). The respondent company forwarded its reply dated 06.08.2010 in response to the statutory notice dated 15.07.2010. 10. In its rejoinder affidavit dated 9th June 2011, the petitioner company has also claimed that the respondent company has already availed benefit of CENVAT and VAT credits to the tune of Rs. 2,30,438/- on the basis of the work carried out by the petitioner company. It is claimed that by taking CENVAT and VAT credit, the respondent has admitted and approved the said transaction and admitted its liability to pay the amounts. 11. Before proceeding further it is necessary to mention at this stage that with reference to the contention by the learned counsel for the respondent that due to the action of the petitioner company the respondent company had to incur loss and damages and it had to get the work executed through another agency and that therefore the respondent company has a claim against the petitioner, it was inquired from the respondent company as to whether any c....
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....sion by the High Court of Delhi in case of Karam Chand Thapar & Bros. (Coal) Sales Ltd. (supra). 14. The position with reference to the disputed claim is considered by the Apex Court in case of IBA Health (India) (P.) Ltd. (supra). The Apex Court has, observed thus: "20. The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first t....
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....y the dispute is raised for the first time upon claim being pressed and upon service of notice, then such belated dispute may, in the facts of the case and in light of the conduct of the parties, lead the Court to the belief that the dispute and defence which are raised for resisting the petition and the order of admission are raised by way of afterthought. 15.2 The grounds of dispute should not, as observed by the Apex Court, "consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle". 16. In this view of the matter, it becomes necessary to examine in present case as to whether the dispute raised by the respondent is genuine, substantial and bonafide dispute and it is not spurious. 16.1 As mentioned hereinabove earlier the respondent has disputed the claim mainly on the ground that the petitioner delayed the execution and denied to complete the entire work awarded to it, inasmuch as it did not complete the job related to erection and commissioning. 16.2 In present case so as to address the said aspect it is necessary to recall certain relevant dates. It s noticed from the record that: 1 24.11.200....
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.... 26.02.2008 when the first invoice was issued until 23.04.2010 when the last of the aforesaid communications was forwarded by the petitioner to it i.e. the respondent, any intimation of whatsoever nature, particularly raising grievance about alleged delay and/or unsatisfactory performance of work or of such nature connected with the execution of the work was ever issued by the respondent company. 16.8 It is pertinent to note that though in the interregnum, important events occurred, viz. the respondent company invited quotation from the said other agency and the said other agency submitted its quotation somewhere on or around 26th September 2009 and in pursuant to the said quotation the respondent also issued work order in favour of the said agency on 20th October, 2009, the respondent company does not appear to have given any notice or any intimation to the petitioner about the said development. Ordinarily, before assigning work to any other agency during operation of the contract, the principal/employer would intimate the contractor that because of its default or negligence or delay or such other reason it is compelled to award contract to other agency. However, in present cas....
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....or. However, in present case no material or single communication of a date prior to the subject reply dated 4th May 2010 and particularly of relevant period is placed on record by the respondent to support its allegations and submissions. 16.13 Similarly, as mentioned hereinabove, before allegedly awarding the work order to the other agency viz. M/s. Hebankraft, surprisingly the respondent company never raised any grievance or expressed any concern to the petitioner company and did not ever intimate the petitioner company that because of its (i.e. petitioner's) conduct it was compelled to, and therefore it had decided to, award the contract work to other agency. 16.14 The respondent, not only did not inform anything to the petitioner before allegedly awarding contract to the said other agency but even after awarding the contract to other agency the respondent company did not inform the petitioner about the said fact until 04.05.2010. 16.15 From the record it appears that it was only vide its letter dated 04.05.2010 that the respondent company for the first time informed the petitioner, as mentioned in para (f) of said letter, the fact about the said other agency. 16.16 ....
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....n such a stand. In ordinary course, if such is the reason for not making payment the Principal would in the first instance put the contractor to notice or atleast immediately on receipt of the invoice and in any case on receipt of the demand notice, inform the contractor about its decision and reason for the decision. 16.20 If the work was critical and was required to be completed in prescribed time frame, then ordinarily the principal/employer would immediately draw attention of the contractor, in writing, for the delay being caused or for non-performance. However, as mentioned hereinabove earlier, any material prior to the date on which the respondent addressed the letter dated 04.05.2010 is not placed on record by respondent to demonstrate that such dispute and grievance were raised by it at the relevant time and its concern for non-performance was expressed by it at the relevant time to the petitioner. 17. The overall effect of conjoint consideration and the reading of the aforesaid aspects lead the Court to believe that the disputes raised by the respondent company have been raised as afterthought and that the disputes were not raised contemporaneously but have been rais....
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....etition and the contention that the petitioner company has already filed a suit and that therefore the petition should not be entertained and that since the contract/LOI provides for arbitration, the petition is not maintainable are concerned, the learned counsel for the petitioner submitted that the suit has been filed for recovery of the dues and mainly to ensure that the claim of the petitioner may not become time bar and that therefore the petition under Sections 433 and 434 cannot be dismissed on the said ground. He relied on the decision in the case of Sukhani Mining & Engg. Industries (P.) Ltd. (supra) and also on the decision of Andhra Pradesh High Court in the case of Fibrex Inc. (supra) and the decision by the Delhi High Court in case of Richa Laboratories (P.) Ltd. (supra). 21. On this count it is necessary to note that the remedy provided under Section 433 and 434 of the Act is a special statutory remedy which is made available to the creditors of a company besides the ordinary civil suit remedy for enforcing recovery of dues and payable amounts would not be eclipsed by the action of filing a suit for recovery of dues or for enforcing recovery. Actually it is a settl....
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....Apex Court has also observed that:- "...........The cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property........" 21.8 Once, it is established that one or more eventuality contemplated under Section 433 of the Act exists then right to maintain winding up petition and to request for an order of admission arises and accrues to the creditors, unless it is shown or established that the debt in question is disputed bonafide and there are genuine and substantive grounds for disputing the debt. 21.9 In present case, the foregoing discussion demonstrates that the petitioner has made out case that the eventuality contemplated under Section 433(e) and/or under Section 433(f) ....
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....24. So far as the decisions relied on by the learned counsel for the respondent are concerned, I have considered the same however, in light of the facts of this case and in view of the conclusion of this Court as to the facts of the case and respondent's contentions, the said decisions do not become applicable and do not help the respondent in taking its case further. 25. Now, the question which arises in light of the facts, circumstances, events and the legal position emerging from the decisions referred to hereinabove, is whether to grant the request for order of admission of the petition seeking order of winding up and permission for publication of the advertisement, or not. 26. On this count is is relevant to note that this Court has in the case between Ficom Organics Ltd. v. Laffans Petrochemicals Ltd. [2000] 99 Comp. Cas. 471/[1999] 20 SCL 266 after reaching the conclusion that the dispute raised by the respondent company against the petitioner's claim was not bonafide, granted time to the respondent company to pay the petitioner the claim amount. 27. On over all consideration of the aforesaid and other factual aspects recapitulated hereinabove earlier, this Court ha....