Dismissed

m/s jiangtsu gouai international group hua tai import and export company limited v. m/s manav drugs Pvt. Ltd.

Bombay HC27 Jun 2008CP/200/2007

Case brief

AI extract

What is this about?

In this winding up petition arising from an international drug supply contract, the court dismissed the relief due to a bona fide dispute regarding privity of contract and suppression of material facts concerning a third-party buyer. The court clarified that winding up is not the remedy for such commercial disputes and left the parties to litigate recovery in appropriate proceedings.

What did the court decide?

The company petition for winding up was dismissed. All pleas in the alternative for recovery of money were kept open.

in as much as the respondents are dealing in manufacturing, trading of drugs and other pharmaceuticals. In or about March, 2005 on the basis of Letter of Indent more particularly set out in para 5 of the petition, the petitioners agreed to supply 17000 kgs. of Paracetamol BP 2000 to the respondent company, a copy of the Indent and sale confirmation are annexed. The goods were accordingly shipped under the Bill of Lading dated 7th April, 2005 and

the agreed amount. The petitioners agreed to the discount subject to immediate payment which has not been made. Thereafter the respondents raised the issue of goods requiring testing and the petitioners agreed to test the sample of the goods and accordingly furnished the report dated 14th October, 2005 certifying that the goods are fit in all requisite quality. Thereafter, demands were made but the respondent Company refused to make payment. It again sought discount in November 2005 but these requests were not accepted.

2. It is, therefore, stated that the goods were supplied. The goods were accepted and there is a contract between the parties. The petitioners did not reserve any right of disposal of goods. As all relevant documents being tendered by the petitioners to the Agent of the respondent company, on the happening of that event contract was completed. The property and goods stood transferred and liability to pay the amount arose.

3. In these circumstances the deeming fiction comes into play, more so when the statutory notice was delivered at the registered office as evidenced by Annexures EI and EII and despite receipt of the same, the company failed and neglected to make payment. The amount due is as per the

4. The respondents have filed their affidavit in reply. Mr.Bhavesh G.Shah, Director of the respondents has stated that the petitioner had entered into arrangement with the third party Ruskin Chemipharma. The third party with the permission of the petitioners has taken delivery of the goods and sold the same. The petitioners have recovered the consideration for the goods from the said Ruskin Chemipharma. This material fact is suppressed in the petition. The petitioners have not stated whether the goods have been accepted or appropriated by the respondent or what happened to the goods. The respondents are, therefore, not liable to make any payment. Thereafter, it is stated that one Opec International was the one which conducted the transaction. The respondents for the first time became aware of the transaction referred to in the petition. It is Opec International which executed the contract with the petitioner as buyer of the goods. The respondent did not have any knowledge of acceptance of any sales confirmation by the petitioner. Therefore, it is stated that M/s Opec International is a necessary party.

5. Without prejudice it is contended that the respondents had agreed with Opec International for purchase of goods on the basis that the goods were to reach within a particular period frame i.e. 15th April, 2005. Opec International promised that the goods will leave China on 30th March, 2005 and reach Nhava Sheva within 15 days. There is no communication or correspondence with the petitioners directly regarding the goods. It is based upon this assurance of Opec International that a letter of indent was executed. Validity of shipment in the letter is given as very prompt before 5th April, 2005. Normal practice is to cover for the slightest delay and a fresh document is to be executed. The consignment was shipped on 17th March, 2005 and it was to reach before 31st March, 2005. The respondents’ sister concern Mac Pharma had entered into agreement for sale of the goods for onward export to Africa which was time bound before 16th April, 2005. However, the goods arrived on 2nd May, 2005. That means shipment was not as agreed in April, 2005 and as per the scope of Bill of Lading. There is also alteration in the Bill of Lading. There is e-mail referred to of 6th July, 2005. At the petitioners’ request the respondents agreed to take the goods upon renegotiations of the contract and verification of the quality of goods which was agreed by the petitioners as is clear from the

petition itself. It is stated that the respondents’ representative went to the petitioners in 2nd week of November, 2005 for renegotiations. The renegotiated price which was less than the original consideration was agreed to and this fact is also suppressed. There is a e-mail recording all this and the date thereof is 22nd November, 2005. Thereafter there is a fax from the petitioners’ representative in China dated 28th November, 2005. As stated in the affidavit it is contended that the goods were meant for M/s Ruskin Chemipharm and the petitioners were negotiating with that very concern. It is contended that the respondents are small traders of drugs and pharmaceuticals. The material fact with regard to the consignments have been suppressed. The respondents’ sister concern thereafter continued the negotiations for reduction in price and other aspects pertaining to the subject shipment. Therefore, sister concern of the petitioners opened two letters of credit with regard to other consignments. The said Letters of Credit were received but the goods have not been discharged by the petitioners. The petitioners have thus caused loss to the sistern concern of the respondents. It is stated that in all these circumstances, the respondents are not liable to make any payment and there is a bonafide dispute with regard to liability. Merely because the statutory notice

has not been replied does not mean that the petitioner is entitled to winding up order. All contentions in the petition have been specifically denied. The delay in shipment of goods and its receipt has been high lighted.

6. There is a rejoinder affidavit and it is contended that the respondents have not denied its liability. The rejoinder itself in para 11 refers to the role played by Opec International. It is contended that Opec International are acting as agent and transaction is between the petitioner and respondent. The petitioner denied that any assurances were given that the goods would reach before 15th April, 2005. Thereafter details with regard to retesting and rechecking are reiterated. It is contended that dispute raised is not honest and bonafide. It is the respondent who is responsible for the payment.

7. There is additional affidavit to bring on record certain documents including e-mail of 30th July, 2005, 12th September, 2005 and 31st October, 2005. The respondents have filed a further reply and has contended that despite these documents being brought on record belatedly, no assistance can be derived of the same because the respondents are not liable to make any

8. From perusal of the petition and annexures thereto, it is apparent to me that the document in question is Exh.A i.e. the Indent carries the name of Opec International. The buyer is M/s Manav Drugs Pvt.Ltd. The petitioners are beneficiaries. The date of the same is 17th March, 2005. The shipment validity is stated as 5th April, 2005 plus 15 days for negotiations. The shipment was from China Port to Nhava Sheva. The product is drug. The sales confirmation letter at Exh.B dated 17th March, 2005 shows the buyer’s name as Opec International and the order number is GHTC 050101146 of Opec International. There is no reference to the petitioners in this document. Thereafter Exh.C is the bill of lading. The bill of lading refers to the order number and the consinee’s name is shown as that of the respondent but it is apparent from a reading of the petition itself and annexures thereto that the indent bears the name of M/s Opec International. However in the petition there is no reference to the role of M/s Opac International. Further, if the entire transaction was between the petitioner and respondent and no third agency or party was involved then how does this document mention the name of that party is not clear at all. Further, on the own showing of the petitioners,

there were negotiations with regard to discount and testing of the goods. For all these reasons it is prima facie apparent that the case is not of the petitioners selling and supplying so also delivering the goods ordered by the respondents, the respondent agreeing to pay the price after accepting the goods and shipment. There being a dispute, repeatedly, a query was put to Mr.Baya whether in the facts and circumstances of the present case and assertions in the affidavit in reply what is the remedy of the petitioners to recover the price of the goods/shipment so also loss allegedly caused by non lifting of the same. Mr.Baya could not satisfy me as to why the petitioners

9. I am not in a position to accept this position for more than one reason. Paras 6 to 10 of the petition and denials in the affidavit so also the contents of the annexures to the petition would make it apparent that the petitioners have not come to the Court with clean hands and there is suppression of material facts. There is a dispute raised with regard to privity of contract and that is bonafide. Triable issues arise in the light of all the material placed before me. Further, the right of the

petitioners as is apparent from amended para 11a of the petition is to recover the price of the goods sold and delivered allegedly. Considering that arguable questions would arise and the petitioner would have to prove its case in the light of the bonafide dispute raised by the respondents, the company petition is not its remedy. The petition is, therefore, dismissed.

10. However, dismissal of this petition does not prevent the petitioners from instituting such proceedings for recovery of the money as are permissible in law and all pleas of both sides in that behalf are kept open.

m/s jiangtsu gouai international group hua tai import and export company limited v. m/s manav drugs Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

m/s jiangtsu gouai international group hua tai import and export company limited v. m/s manav drugs Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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