TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 636
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....ICE OF MOTION LODGING NO. 27 OF 2017, NOTICE OF MOTION LODGING NO.24 OF 2017, NOTICE OF MOTION LODGING NO. 30 OF 2017 AND NOTICE OF MOTION LODGING NO. 33 OF 2017 For The Appellant : Mr.Yusuf Iqbal Yusuf a/w Mr.Neville Majra, Ms. Shaista Pathan, Mrs.Anvee Mehta, Mr.Feroj Qureshi i/by Mr. Akhileshwar Sharma For The Respondents : Mr.Yusuf Iqbal Yusuf a/w Mr.Neville Majra, Ms. Shaista Pathan, Mrs.Anvee Mehta, Mr.Feroj Qureshi i/by Mr. Akhileshwar Sharma for the Appellant. Mr. Sharan Jagtiani a/w Mr. Sunny Shah i/by Mr. Hemant Sethi JUDGMENT : [PER R M SAVANT, J] 1 All the above Appeals are admitted and with the consent of the learned counsel for the parties are heard forthwith. 2 The above Appeals challenge the order dated 17/18th October 2016 passed by a learned Single Judge of this Court (A.K.Menon, J.) by which order the Company Petitions filed by the Respondents herein came to be disposed of in terms of the directions issued in the said order which directions interalia contained the direction to deposit the amounts claimed in the statutory notices issued by each of the Respondents in the above Appeals. The said directions are reproduced herein under for the sake of ready re....
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....e referred to as per their nomenclature in the Trial Court i.e. before the learned Single Judge, the Appellant would be referred to as the Respondent whereas the Respondent would be referred to as the Petitioner. The case of the Petitioner as appearing in the Company Petition is that the Petitioner under the five contracts for purchase of Soyabean Meal had paid a sum of Rs. 51,00,00,000/to the Respondent as advance against the total purchase price of Rs. 101,34,00,000/. The said amount of Rs. 51,00,00,000/was transferred to the account of the Respondent by RTGS on various dates as mentioned in paragraph 9 of the Company Petition. The Petitioner in respect of the said payment has placed reliance on the bankers certificate annexed at Exhibit D to the Petition confirming that six remittances totalling to Rs. 51,00,00,000/have been made to the Respondents. The receipt of the advance in the instant Company Petition of Rs. 51,00,00,000/as also the advances from the other Petitioners in the other companion Company Petitions is not in dispute. The details of the Soyabean Meal contracts entered into between the Petitioner and the Respondent are tabulated herein under :lgc Sr.No. Contr....
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....e case of the Respondent that at the request of the Petitioner, the Respondent reduced the advance by 30% of such price and the Petitioner agreed to pay further amounts against which the Respondent would supply Guar Seeds. It was the case of the Respondent that the amounts already paid were to be adjusted in the last lot of Guar Seeds to be supplied. It was the case of the Respondent that though the Petitioner did not make further payments, the Respondent continued to purchase the Guar Seeds on behalf of the Petitioner and contended that it was in a position to supply the seeds provided the Petitioner made payments of the amount due. It was the case of the Respondent that it notified the Petitioner that if the balance amounts were not paid within a period of 15 days the amounts already paid would stand forfeited and the Respondent would claim damages. The said letter was replied to by the Petitioner by letter dated 11/07/2013. The Petitioner denied the contentions of the Respondent and denied that there was any contract for supply of Guar Seeds. According to the Petitioner it had never agreed to purchase the Guar Seeds and such a contract was never signed by it. The Petitioner rei....
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....ils produced by the Petitioners were false and fabricated. It was contended that since the Respondent went on purchasing Guar Seeds and since the Petitioner did not make the balance payment on account of which the Respondent had suffered financial loss, it was therefore, denied there was any debt due to the Petitioner. A reference was also made in the said affidavit to the investigation conducted by the Director General, Competition Commission of India (for short "the DG CCI") in Case No.76 of 2012 pertaining to the sharp rise in the price of Guar Seeds during the period October 2011 and March 2012. In the said reply affidavit it is stated that various observations were made by the DG CCI during the course of investigation into the operation of Ruchi Group [to which the Petitioner and the other Petitioners belong]. It was further stated in the said affidavit that the investigation reveals that the funds received by the Respondent Company from the 9 Petitioners were for purchase of Guar Seeds. A reference has been made to paragraph 5.12.15 of the investigation report. It was therefore the case of the Respondent that the funds received pertain to the supply of Guar Seeds and not for ....
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....ng to the learned Single Judge what has been lost sight of is the fact that the said contracts have originated from the Respondent. The learned Single Judge further held that the contention that these are all fabricated and designed to reflect data matching the credit balances is farfetched. The learned Single Judge has further observed that the denial of the contracts' authenticity appears to be a feeble attempt to avoid liability and the consequences that follow. The learned Single Judge has observed that the signatures of Mr. Bothra - the deponent of the affidavit in reply which are on the contracts have not been denied. Having regard to the dispute raised by the Respondent as regards the authenticity of the emails the learned Single Judge was of the view that the denial appearing is bare and bereft of particulars. The learned Single Judge has observed that though on the one hand the Respondent has alleged that the contracts are fabricated and data is created to match the credit balances, but on the other hand denies having sent any email as annexed by the Petitioner. The learned Single Judge has taken into consideration the fact that after the affidavit in reply was filed o....
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.... the fact that the Respondent has not relied upon any evidence of having purchased any quantities of Guar Seeds pursuant to the alleged repeated orders to purchase the Guar Seeds, the defence of the Respondent was not a plausible one. The learned Single Judge therefore as indicated above deemed it appropriate to direct the Respondent to deposit in this Court the amount claimed by way of the statutory notices by the Petitioners in the above Company Petition as also the Petitioners in other companion Company Petitions. As indicated above it is the said order dated 17th/18th October 2016 which is taken exception to by way of the above Appeals. 9 Heard the learned counsel for the parties. 10 SUBMISSIONS ON BEHALF OF THE APPELLANT/ORIGINAL RESPONDENT BY THE LEARNED COUNSEL MR. YUSUF IQBAL YUSUF : A] That the learned Single Judge erred in shifting the burden on the Respondent i.e. the Appellant herein when the Petitioner has not discharged its burden; B] That the learned Single Judge erred in directing the Respondent to make the deposit as directed by the impugned order when the Respondent has a bonafide defence to the Company Petition as filed; C] That the learned Single Judge ....
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....Petitioners have not signed the contracts for purchase of Soyabean Meal, it could not be said that the said contracts were completed and therefore the reliance placed on the said contracts was misfounded. K] That even though the Respondent may have neglected to pay the debt, it being commercially solvent, a Petition for winding up is not maintainable. 11 SUBMISSIONS ON BEHALF OF THE RESPONDENT/ORIGINAL PETITIONERS BY THE LEARNED COUNSEL MR. SHARAN JAGTIANI : i] That the Petitioners produced the Soyabean Meal contracts as signed by the Respondent with the rubber stamp of the Respondent appearing on the same. The Petitioners have also produced evidence of payment of Rs. 51,00,00,000/as advance to the Respondent. That being done so, the onus therefore shifted upon the Respondent to show that the defence raised is in good faith and is one of substance and it is likely to succeed; ii] That though the defence of the Respondent was that the amount was advanced for purchase of Guar Seeds which fact was denied by the Petitioner, the Respondent has failed to produce the most basic document i.e. the Guar Seeds Contracts along with any of its pleadings before the learned Single Judge. ....
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....the Apex Court reported in (2008) 12 SCC 73 in the matter of Raymond Woollen Mills Ltd. v/s. Director General (Investigation and Registration) & Anr. to contend that the said report does not have any evidentiary value. xiii] That the report of DG CCI is solely based on the bank statement of the parties. The DG CCI did not have the benefit of material facts necessary to determine the inter se disputes between the parties as also the admissions made by the Director Mr. D Narsimhan and the representative of the Chartered Accountants Mr. P Bhargava before this Court that the amounts paid by the Petitioners are shown as advances received in the account of the Respondent which has been recorded in the orders dated 23/02/2015 and 27/02/2015. xiv] That the email dated 14/02/2012 has been wrongly construed by the Respondent, as Mr. Rajkumar Goyal of the Petitioners has clearly stated that the advances given below for Soyabean Meal can be adjusted through some other product i.e. guar seeds which Betul seems to be holding. Hence on a bare reading of the email it talks about a proposal to the Respondent i.e. the Appellant herein that the advances can be adjusted with Guar Seeds. xv] That....
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....ter of IBA Health (I) Pvt. Ltd. v/s. InforDrive Systems SDN, BHD, xxi] The view taken by the learned Single Judge is a possible view in the facts and circumstances of the case and therefore the impugned order need not be interefered with by this Court in its Appellate jurisdiction. Reliance is sought to be placed on the judgment of the Apex Court reported in 1990 (Supp) SCC 727 in the matter of Wander Ltd. and another v/s. Antox India P. Ltd. xxii] Having regard to all the aforesaid facts, the order passed by the learned Single Judge of this Court need not be interfered with as the Respondent i.e. the Appellant herein has not raised any substantial or genuine ground to avoid payment or defences raised by the Respondent i.e. the Appellant herein are not bonafide. CONSIDERATION : 12 Having heard the learned counsel for the parties, we have considered the rival contentions. The question which arises for consideration is whether the order passed by the learned Single Judge of this Court directing the Respondent i.e. the Appellant herein to make deposit of the amounts contained in the statutory notice and in the event a suit is filed by the Petitioners i.e. the Respondents herein....
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....t to be produced. By an order passed today the said Notice of Motion (L) No.1548 of 2017 has been dismissed for the reasons stated in the said order. 14 In so far as the 5 Soyabean Meal contracts which have been received by email by the Petitioner is concerned, each contract bears the signature and rubber stamp of the Respondent. Each contract identifies the quantity, rate, payment terms, delivery date. The Petitioner has given inspection of the emails to the Respondent. In so far as the said contracts are concerned, in the affidavit in reply though the authenticity of the email is sought to be disputed the denial is bare and bereft of particulars. The same can be seen by the averments made in paragraph 20 which are reproduced herein under : " The Respondent states that the alleged contracts annexed by the Petitioners are also fabricated. The date are created to match the existing position of credit balance with the Respondent Company. The Respondent denies having sent any mail as annexed by the Petitioner. The following error is patent in the contracts." Hence a reading of the said paragraph indicates that though the Respondent has alleged that the contracts are fabricated an....
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.... are sister concerns of the Petitioner also does not further case of the Respondent in so far as contracts being for purchase Guar Seeds and not for purchase of Soyabean Meal is concerned. The contracts relating to Guar Seeds, according to the Respondent are dated 14/01/2012 whilst the Guar Seeds are alleged to have been supplied even prior to the contract date i.e. 28/11/2011. It is only in respect of the alleged Guar Seeds contract between the Respondent and M/s. Nova Trading Pvt. Ltd. (one of the Respondents in the companion Appeals) that the contract date is prior to the delivery date. Hence the aforesaid fact also does not support the case of the Respondent that the contracts were in respect of purchase of Guar Seeds and not for purchase of Soyabean Meal. 18 Now coming to the report of the DG CCI on which much reliance was sought to be placed on behalf of the Respondent in support of its case that the contracts were in respect of supply of Guar Seeds and not for Soyabean Meal. The said report has been submitted by the DG CCI after undertaking an inquiry under Section 26 of the Competition Act 2002. The statutory scheme comprising the said Act indicates that the investigation ....
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....submitted by the Director General (I&R). The preliminary investigation report cannot be taken into consideration as it is not produced in evidence. It is only a report submitted in terms of Section 11 of the MRTP Act for initiating the enquiry. Only those facts contained therein, which are proved on record by evidence, can be looked into. The preliminary investigation report, as such, is not evidence on record. As such, any reference to the contents thereof, which have not been put in evidence and subjected to cross examination, cannot be looked into. This is without prejudice to the contention that there is nothing stated in the preliminary investigation report, which in any way establishes that any competition was affected within the meaning of Section 2(o) of the Act and that competition was affected to any "material degree" in the relevant trade or industry, as contemplated under Clause (h) of Section 38(1) of the Act. In our view, therefore the findings of the DG CCI as contained in its report do not further the case of the Respondent i.e. the Appellant herein. 20 In so far as the discrepancies in the Soyabean Meal contracts alleged by the Respondent are concerned, it is ....
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....gnature of M/s. Nova Trading Pvt. Ltd.; whereas in the instant case the Respondent has failed to produce any such Guar Seeds contracts. Further before the Madhya Pradesh High Court there was no admissions as are in the present case by the Director Mr. D Narsimhan and the representative of the Chartered Accountants Mr. P Bhargava. In so far as the said order passed by the Madhya Pradesh High Court is concerned, it is required to be noted that the Review Petition being No.1 of 2017 filed in Company Petition No.586 of 2014 came to be filed by the Respondent on the said very ground i.e. placing reliance on the order passed by the Madhya Pradesh High Court dismissing the Company Petition. The said Review Petition came to be dismissed by the learned Single Judge by the order dated 24/02/2017. In our view, therefore, the order passed by the Madhya Pradesh High Court does not in any manner aid the Respondent to deny that it owes any debt to the Petitioner in the Company Petition. 23 In so far as the contention that urged on behalf of the Respondent that the Respondent is commercial solvent and therefore the order of the nature passed by the learned Single Judge was not required to be pass....
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....f the company refuses to pay on no genuine and substantial grounds, it should not be able to avoid the statutory demand. The law should be allowed to proceed and if demand is not met and an application for liquidation is filed under Section 439 in reliance of the presumption under Section 434(1)(a) that the company is unable to pay it debts, the law should take its own course and the company of course will have an opportunity on the liquidation application to rebut that presumption. Apart from the aforesaid legal position, it is sought to be pointed out on behalf of the Petitioners that the net worth of the Respondent as per its last balance sheet is much lesser than outstanding debts of the Petitioners. It is further sought to be pointed out that the amount lying in the bank account of the Respondent is also not sufficient to pay off the outstanding debts. 24 Now lastly coming to the issue as to whether this Court should interfere with the impugned order passed by the learned Single Judge. In the said context it is necessary to make a reference to the judgment of the Apex Court in Wonder Ltd's case. (supra). Paragraph 14 of the said report is material and is reproduced he....