TaxTMI 
TaxTMI 
2018 (1) TMI 1181
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....as issued by the Petitioner and on 18 March 2013, an agreement was drawn up. As per the Letter of Intent ,power up to 150MW was to be sold between 16 May 2013 to 15 August 2013. The details regarding billing cycle, the due date of payment, rebate, surcharge, etc. , were enlisted. The LOI contained clauses regarding force majeure event and compensation for short supply and off-take. The tariff rate for the period 16 May 2013 to 31 May 2013 was specified as 3.46/- per KwH and after that Rs. 3.36 per KwH. The surcharge was payable for payments outstanding and open access charges were also specified. 4. The Petitioner commenced the supply of power with effect from 16 May 2013. The power was supplied by the Petitioner between May 2013 to August 2013, and the invoices were raised. The invoices were raised for the period between 16 May 2013 to 1 August 2013 and these amounts of invoices were paid by the Respondent, except for the invoices from 2 August 2013 to 15 August 2013. The total amount by the invoices raised was Rs. 52,71,65,549.82 for the period from May 2013 to 18 December 2013. The Respondent Company paid an amount of Rs. 41,81,43,090.90 and the amount of Rs. 10,90,22,458.92,....
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....ll in supply, the Petitioner issued a force majeure notice on 9 July 2013 in respect of non-supply of power between 6 July 2013 to 9 July 2013. It was asserted by the Respondent Company that there was no warrant to invoke force majeure clause. It was contended that sudden shortfall in power caused immense loss to the Respondent and affected the Petitioner's commitments to its customers. It was contended that the parties attempted to reconciliation from July 2013 to December 2013 and ultimately a joint meeting was held on 18 December 2013 for closing the accounts. In this meeting, the Petitioner agreed to recommence the supply upon deposit of Rs. 1 crore by the Respondent, and in spite of the Respondent depositing Rs. 1 crore, the supply was not recommenced. It is in this background; the e-mail correspondences was entered into between the parties which shows that the Respondent was eager to have the supply of power restarted and upon the assurance to the Respondent to do so made the payment of Rs. 1 Crore. It was contended that the amount demanded varied from time to time and bank guarantee given by the Respondent was not even invoked by the Petitioner. Broadly stating thus, the....
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....2016, the Respondent offered, without prejudice to their rights and contentions to show their bonafides to pay Rs. 25 Lakhs to the Petitioner. Again, the Petition was adjourned for settlement. Finally, it was informed to the Court that the settlement is not possible and the matter was posted for arguments. 10. Mr. Kevic Setalvad, the learned Senior Advocate, addressed the court on behalf of the Petitioner and Mr. Nitin Sardessai, learned Senior Advocate for the Respondent. 11. The contentions advanced by Mr. Setalvad ,in short, were that the petitioner has made out a clear case based on the admitted position. Power was supplied to the Respondent as per the agreement between the parties and the payment for this supply has admittedly not been done. In the notice for winding up, details of the invoices raised and the power supplied was given and it is an admitted position that for the invoices for the period between 2 August 2013 to 5 August 2013, 6 August 2013 to 8 August 2013, 9 August 2013 to 12 August 2013 and 13 August 2013 to 15 August 2013,amounts have not been paid by the Respondent. It was contended that merely on the ground of short supply in respect of some other peri....
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....e consumed. The dispute will have to be understood in the context of the peculiar business of electricity supply and distribution. Since electricity cannot be stored, when shortfall occurred, it instantaneously affected the supply to the consumer of the Respondent Company. The Petitioner, without warning, supplied less power than what was agreed under the agreement, which caused serious embarrassment to the Respondent in fulfilling its commitments to its consumer, and the Respondent suffered a serious loss of reputation and damages. Under the agreement, itself the damages for shortfall were provided for, and the Respondent has a legitimate claim against the Petitioner for seeking damages. It was contended that therefore the present is the case where both the parties raised the money claim against each other based on the very same agreement. First, the parties were first discussing the issue orally, and it led to the meeting on 18 December 2013 in which an agreement was arrived at. The parties agreed that the Petitioner will restart the electricity, which was the main concern of the Respondent, and that the Respondent will pay an amount of Rs. 1 crore. In spite of the payment of Rs.....
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.... Force Majeure events shall include but limited to: a) Act of War, invasions, armed conflict, blockade, revolution, riot, insurrection or civil commotion, terrorism, sabotage, fire or criminal damage. b) Act of God including fire, lightening, cyclone, typhoon, tidal wave, storm, earthquake, landslide, epidemic or similar cataclysmic event. c) Any curtailment/suspension/no availability of transmission capacity imposed by any Intervening RLDC's. d) Change in law. e) Regulatory/Govt. Intervention in the matter of Power trading as also orders from CERC/SERCs./Appellate Tribunal of Electricity/High Courts/Supreme Court particularly related to rates at which power can be sold/purchased/traded. This will also include regulations/orders already issued but yet to be conclusively enforced." Second is regarding Compensation Charges which reads as under : "Compensation charges:- Without prejudice to the provisions for force majeure, if the selling utility fails to schedule the contracted quantum for the concerned period at least to the extent of 80% on monthly basis of total contracted period, the selling utility....
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....ss position vis-a-vis the petitioner and the Respondent has to be kept mind while examining the contemporaneous correspondence between the parties and their rival stands. 16. Mr. Setalavd has argued the case for the petitioner in great detail to demonstrate how the Respondent Company is liable to pay the amount to the Petitioner. However, I must keep in mind the nature of the jurisdiction of the Company Court in a petition for winding up. A company petition is not suit for recovery of money. Broadly what is to be seen is whether the company is withholding the payment of amount without any good reason and the company has become commercially unviable. The remedy under Sections 433 and 434 of the Companies Act,1956 is within the discretion of the Company Court. A creditor cannot demand winding up of the perfectly solvent company, irrespective of other surrounding circumstances which the Company Court is entitled to take into consideration. The Company Court is not bound to wind up a company merely because one of the ingredients for the discretion is present. It is necessary for the Company Court to consider all aspects before proceeding, such as financial status of the company, imp....
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....e two propositions will have to examined. 18. There is no dispute that during the period when the power was supplied to the Respondent under the agreement dated 18 March 2013, there was a shortfall by the petitioner in the supply of power. The Respondents grievance is that this shortfall had serious ramifications on the Respondents business. The clause for compensation in the agreement dated 18 March 2013 entitles the Petitioner to raise a claim of compensation. The response of the Petitioner is, firstly is that the reason why shortfall occurred was out of its control. Secondly, this aspect need not be considered in view of the non-payment for the period of admitted receipt of power during the other period. 19. It is the contention of Mr. Setlavad that even if there was a shortfall in supply of power, it is irrelevant for payment of dues for the period there is an admitted supply. In short, the court should only focus on the admitted non-payment. It is not possible to compartmentalize the relationship between the parties in this fashion. The parties had entered into a comprehensive agreement on 18 March 2013 for a specified period. The delivery, point rate, access, rebate, su....
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...., Burla clearly restricting the Petitioner from drawl of any water from Hirakud Reservoir as there was shortfall supply of water. The Petitioner stated out that this unpredictable scenario was a force majeure event. The letter is dated 9 July 2013. The letter was sent by the Petitioner after shortfall had occurred. Mr. Sardessai contended that there was no such force majeure event as annexure to the letter itself indicates that the Engineer had written the letter on 10 June 2013 and on that date, there was no such low level of water. Mr. Setalvad raised an objection that this has never been the stand of the Respondent in the correspondence or otherwise and this contention cannot be allowed to be raised. This objection has no substance. The Respondent has all along been disputing the fact that the Petitioner are entitled to invoke the force majeure clause .Even in reply to the Petition a contention is raised to that effect. The communication relied upon by the Petitioner itself make a reference to the letter of the Executive Engineer and once both these documents are part of record, the Respondent are entitled to base their case on the same. Perusal of the letter from the Executing ....
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....reason withholding payment. It cannot be said that the Respondent has no case whatsoever when contended that the Petitioner could have made an alternate arrangement or at least given a warning. There is merit in the contention of the Respondent that there was no force majeure event. That being so it can be said that the Petitioner failed to adhere to its part of the agreement and once there was a failure to adhere to the part of the agreement by supplying the power below the agreed level, the Respondent was entitled to raise its independent claims for damages as provided under the agreement itself. Mr. Sardessai is right in contending that it is not the law nor business prudence that the Respondent must first return the money to the Petitioner irrespective of the breach by the petitioner and then file a suit for recovery of its dues. The Respondent was entitled to demand that parties should sit across and reconcile accounts. A stand that was repeated even during the arguments. 23. Turning now to the correspondence between the parties, which is heavily relied upon by Mr. Setalvad to contend that the claim was admitted by the Respondent. When the notice for winding up was issued b....
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....wer purchase from Sterlite. 6. GEPL will off-take power from 1st January 2014 onwards on RTC firm basis. 7. As discussed GEPL also undertake that as GEPL has valid PSM in form of Performance Bank Guarantee from each of such HT consumers, we anticipate no payment issue in same respect and if required we may provide all PSM copies to Sterlite too. I hope the points as discussed is well covered, we acknowledge your kind support in taking our professional association forward." This e-mail was sent at 13.29 p.m. Petitioner immediately responded at 13.44 p.m. that there needs to be remittance of 20% of the outstanding to kick-start, and the Respondent was requested to move forward. There was no denial of what was stated in the e-mail sent at 13.29 p.m. Tenor of the mail was also conciliatory. By an email at 18.54 p.m. on the very same day, the Respondent had agreed to clear 20% of the outstanding to kick-start the transaction and requested to issue LOI on priority on the next date as the Respondent had to take up the application process for January 2014, in advance. Thereafter, the Petitioner responded that it had received an amount of Rs. 1 crore however as....
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....ompany Court was considering a petition arising from a contract between the parties in respect of purchase of homeopathy medicines and the goods were supplied however the payments were not made. The learned Company Judge observed that for a counter claim to be effective and complete shield must exceed the admitted claim. In a given case, it is possible to compartmentalize the claim and counter claim separately and to call upon the Respondent to demonstrate that how its counter claim is justified. It will depend on the nature of the transaction and the agreement between the parties. In the facts of the present case, two admitted positions themselves make the defence of the Respondent possible. That there is an admitted shortfall in supply of power and second the agreement itself give rise to the claim of damages. There is no such law that the Company Court has to ignore all aspects, including the conduct of the petitioner, and permit the Petitioner to force through its claim and wind up the company. Ultimately, whether to wind up the Company or not is within the discretion of the Company Court and for that purpose totality of the circumstance goes into the use of the discretion. Sam....
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.... which has been filed and only for the purpose of understanding the case of the Respondent in the suit, that I have looked at the plaint. It has to be noted that till date the Petitioner has not filed a written statement on the ground that the suit is transferred to the Commercial Court. In this suit, a prayer is made for the specific performance of the contract of 18 December 2013 and seeking damage. It is contended by Mr. Sardessai that the damages are as such in the alternative as if in future the price of electricity fall, it will be inequitable to have a binding agreement at that price and therefore damages have been sought in the alternative. It was contended that the discussion of 18 December 2013, to which there was no dispute at that time, clearly stipulate an agreement for starting of power for which consideration was paid. Be that as it may, merely because the suit was filed subsequently, does not mean that this defense was thought of subsequently. This defense of the Respondent always existed, which is discernible from the correspondence as far as in December 2013. 29. The Respondent Company has placed on record by way of an additional affidavit showing the net worth....