Dismissed

M/S. Cozy Interiors Pvt. Ltd. v. Digital Outsourcing Pvt. Ltd.

Bombay HC6 Jan 2011CP/130/2010

Case brief

AI extract

What is this about?

The High Court examined a company petition seeking winding-up of the respondent under section 434 of the Companies Act, 1956 due to alleged non-payment of dues. It held that the dispute involved contractual issues regarding quality, delays, and terms, constituting a bona fide dispute, and thus dismissed the company petition.

What did the court decide?

The company petition is dismissed without costs.

M/S. Cozy Interiors Pvt. Ltd. Vs Digital… — Contract and Commercial Disputes | Bombay HC (2011)

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CP130-10

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.130 OF 2010

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In the matter of Companies Act, 1956; and In the matter of Sections 433, 434 and 439 of the Companies Act, 1956

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M/s.Cozy Interiors Pvt.Ltd.

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Mr.Vishal Kanade with Mr.Mukul Taly, Jamshed Ansari, Rakesh Misar, Yusuf Shaikh i/b. Mahommedbhai and Co. for petitioner Mr.Gautam Ankad with Mr.Hemant Sethi for respondent.

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CORAM : S.C.DHARMADHIKARI, J.

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DATE : 6th January 2011.

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P.C.:

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1] The jurisdiction of this Court under section 434 of the

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Companies Act, 1956 is sought to be invoked to wind up the respondent company.

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2] According to the petitioner, it is engaged in the business of supply of furniture and a service order was placed on it by respondent,

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details of which are set out in paras 7 and 8 of the petition and in pursuance thereof, the petitioner has supplied materials and rendered services for which invoices, details of which are set out in para 10 have been raised on the company. In para 11 it has been pointed out as to how part payment of Rs.53,76,429/- has been made. Reliance is also placed upon para 12 and Annexure F to the petition, which is stated to be a balance confirmation by the respondent.

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3] Mr.Kanade, learned Counsel for petitioner submitted that there

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is no dispute raised by the respondent with regard to the quality and quantity of the goods supplied or the service rendered. On the other hand, part payments have been made and the confirmation of the balance has been issued all in writing by the respondent. In these circumstances, not releasing the sum which is due and payable under the invoice would mean that the respondent is unable to pay its debts. There has been no reply to the statutory notice as well. In such circumstances, this is a fit case for exercising this Court’s jurisdiction under the aforementioned statutory provision and admitting this

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petition, particularly, because the defence set out is not bonafide.

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4] On the other hand, the learned Counsel appearing for respondents submitted that in the affidavit in reply it has been pointed out as to how there is suppression of the material facts by the petitioning creditor. Firstly, what is sought to be relied upon are service orders but complete copy of the same has not been annexed. The petitioning creditor has conveniently omitted to annexe the terms and conditions which are part and parcel of the service order. In that behalf my attention has been invited to Annexure A to the affidavit in reply dated 5^th August 2010. It is stated that once the service order states that all invoices pertaining to the order should be mailed to the (“Invoice II address indicated above (Please see the terms on the next date)”, then, the parties are aware that there are certain terms and conditions on which the order is placed. Even acceptance is on these terms and conditions by the petitioning creditor. In such circumstances and when the work which is described in the service order under headings and sub-headings is identical to that description

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of the work in the invoice, then, suppression of the terms and conditions vitally affects the claim of the petitioner.

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5] Secondly, there is an explanation on merits inasmuch as the amount paid is not a part payment and cannot be termed as such. It is for the works done. These works were measured and after measurements the amounts in that behalf have been released. That is how even the balance confirmation stated to have been issued, must be understood. For all these reasons and when there were defects in the quality of the goods which are subject matter of detailed correspondence, including e.mails, then all the more there is bonafide dispute raised and the company petition is not the remedy and the petition be, therefore, dismissed.

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6] With the assistance of the learned Counsel appearing for parties, I have perused the petition and the annexures so also the affidavits in reply and rejoinder. In the affidavit in reply it has been stated that the service order dated 25^th January 2008 has an annexure which contains

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the terms and conditions. The first service order is for civil and interior, electrical works and Air-conditioning. There is another service order dated 29^th January 2008 for supply, installation and commissioning of fire suppression. The respondent states that it received three invoices which were raised by the petitioner. There is an explanation given as to how the amounts in respect of invoices came to be verified as against actual work done and, therefore, withholding a certain part, a sum of Rs.35,49,885 has been paid. That is for the actual work done. The other part was not paid for various reasons including delay, difference in agreed and actual work done, extra charges etc. From a reading of the affidavit in reply, to my mind, there is a clear prima facie case of the respondent company having made payment for completed work. It cannot be said to be an admission of liability prima facie. That is how even the balance confirmation letter reads.

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7] That the petitioner also understood the same in this manner is clear from the rejoinder affidavit wherein while not disputing that

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there were certain annexures to the service orders, what has been stated is that there were Consultants appointed viz., Expat Designs Studio, which is a division of Expart Properties Pvt.Ltd. There is a reference to an e.mail dated 22^nd December 2008 from Mr.Kurt D’Silva, Associate at Expart Studio. If the amounts under the invoices is an undisputed sum and there is no dispute raised with regard to the quality of work done or the material supplied, then, there is no occasion for the petitioning creditor to have referred to the appointment of the expert consultant and his opinion or the correspondence including e.mails in that behalf. In such circumstances, reliance placed by the respondent on one of the mails, copy of which is at page 150 is apposite.

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8] To my mind, the claim arises on account of assertion of the petitioner that it completed the work at site to the satisfaction of the respondent company but it has wrongfully withheld the sum under the invoice whereas the contrary assertion of the respondent that the petitioner’s work was not satisfactory, that there were delayd and

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defects as well. These are contractual disputes between parties. There is a bonafide assertion in the affidavit in reply which coupled with the allegations of suppression of material facts on the part of the petitioner makes out a triable case.

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9] The company petition, therefore, is not a proper remedy for the petitioner and the same is dismissed but without costs.

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(S.C.DHARMADHIKARI, J)

M/S. Cozy Interiors Pvt. Ltd. v. Digital Outsourcing Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

M/S. Cozy Interiors Pvt. Ltd. v. Digital Outsourcing Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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