Dismissed

Official Liquidator of M/S Victory Glass and v. M/S Mc Dowell & Co. Ltd.

Karnataka HC9 Aug 2024CA/790/2006

Case brief

AI extract

What is this about?

In this company liquidation proceeding, the applicant sought a decree from the respondent for a claimed sum derived from a statement of affairs. The court dismissed the application because the applicant failed to produce documentary evidence, such as invoicing records, to substantiate the debt despite having a running account history. The respondent rebuts the claim with its own accounts and payme

What the court decided

AI extract

Official Liquidator of M/S Victory Glass… — Contract and Commercial Disputes | Karnataka HC (2024)

¶1

¶2

NC: 2024:KHC:31969 CA No. 790 of 2006

¶3

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9^TH DAY OF AUGUST, 2024

¶4

BEFORE

¶5

THE HON'BLE MR JUSTICE C.M. POONACHA COMPANY APPLICATION NO. 790 OF 2006

¶6

¶7

COMPANY PETITION NO.272 OF 2002

¶8

BETWEEN:

¶9

OFFICIAL LIQUIDATOR OF M/S VICTORY GLASS & INDUSTRIES LIMITEDATTACHED TO HIGH COURT OF KARNATAKA 4TH FLOOR KENDRIYASADAN KORAMANGALA BANGALORE 34

¶10

…APPLICANT

¶11

(BY SMT KRUTIKA RAGHAVAN., ADVOCATE FOR OL)

¶12

AND:

¶13

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

¶14

M/S MC DOWELL & CO LTD ROSA SAHAJAHAPUR DISTUTTAR PRADESH 406

¶15

…RESPONDENT

¶16

(BY SRI. RAGHURAM CADAMBI., ADVOCATE)

¶17

THIS APPLICATION IS FILED UNDER SECTION 446(2) OF THE COMPANIES ACT, 1956 RULE 9 OF THE COMPANIES(COURT ) RULES, 1959 PRAYING TO GRANT A DECREE IN FAVOUR OF THE APPLICANT AGAINST THE RESPONDENT FOR A SUM OF RS. 1,80,794/- WITH INTEREST ON THE SUM OF RS. 1,17,230/- AT 6% PER ANNUM FROM TE DATE OF THE APPLICATION I.E. 3.8.2006 TILL THE DATE OF JUDGMENT, THE FUTURE INTEREST; AND ETC.,O.L HAS NOT FILED THE MEMO OF SERIVE.POST FOR ORDERS.REG. NON FILING OF MEMO OF SERVICE BY O.L.

¶18

THIS APPLICATION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

¶19

¶20

NC: 2024:KHC:31969 CA No. 790 of 2006

¶21

CORAM: HON'BLE MR JUSTICE C.M. POONACHA

¶22

ORAL ORDER

¶23

The present application is filed under Section 446(2) (b) of the Companies Act, 1956¹ and Rule 9 of the Companies (Court) Rules, 1959² by the company in liquidation claiming a sum of 1,80,794/- (1,17,230/- being the amount due as on 13.06.2003 together with `63,546/- being the interest at 18% p.a., from 13.06.2003 to 03.08.2006) from the respondent therein.

¶24

It is the case of the applicant - company in liquidation that the said company was ordered to be wound up by order dated 13.06.2003 passed by this Court in Company Petition No.272/2002 (which company petition was filed on 05.12.2002). That the respondent was having trade transactions with the company in liquidation. That as per the statement of affairs filed by the ex-directors of the company in liquidation, the respondent is indebted to the company in sum of `1,17,230/- as on 13.06.2003. That a demand notice was

¶25

1 Hereinafter referred to as ‘Act 1956’

¶26

2 Hereinafter referred to as ‘Rules 1959’

¶27

¶28

NC: 2024:KHC:31969 CA No. 790 of 2006

¶29

issued to the respondent on 07.10.2004 calling upon them to pay the due amount. That another letter 02.05.2005 was also issued to the respondent demanding payment of the amount. Neither the acknowledgment cards nor the undelivered postal covers have been received. Hence, the present application is filed.

¶30

The respondent has entered appearance and has filed statement of objections, denying the claim made by the applicant. It is contended that the respondent placed orders for supply of packaging material etc., through a manufacturing and bottling unit situated at Rosa, located at Sahajahanpur, District Uttar Pradesh. With regard to the supplies made by the company in liquidation, the respondent maintained a running account, whereunder the amount towards supplies made have been shown as also the payments. That as per the said running account the respondent is not liable to pay the company in liquidation any amount, much less the amount claimed in the application. It is further contended that payments during the relevant periods were made by two cheques dated 13.01.2003 and 19.02.2003 drawn on City Bank, Bengaluru. Hence, it is contended that the respondent does not owe any money to the

¶31

¶32

NC: 2024:KHC:31969 CA No. 790 of 2006

¶33

company in liquidation and the respondent sought for dismissal of the application.

¶34

In order to prove its claim, the applicant examined the Assistant attached to the office of Official Liquidator³ as PW.1. Ex.P.1 to Ex.P.3 have been marked in evidence. The authorized representative of the respondent has been examined as RW.1. Ex.R.1 to Ex.R.8 have been marked in evidence.

¶35

Heard the submission of learned counsel Smt. Krutika Raghavan for the applicant and learned counsel Sri. Raghuram Cadambi for the respondent. The question that arises for consideration is ‘Whether the applicant proves that the respondent is liable to pay the amount claimed in the application?’

¶36

It is forthcoming that Ex.P.1 is an extract of the statement of affairs which is a list of the trade debtors of the company in liquidation. The entry in Ex.P.1 pertaining to the respondent is shown to have a debit balance of `1,17,230.17/[which is marked as Ex.P.1(a)]. Notice and letter issued by the

¶37

3 Hereinafter referred as to ‘OL’

¶38

¶39

NC: 2024:KHC:31969 CA No. 790 of 2006

¶40

OL have been marked as Ex.P.2 and Ex.P.3. In the crossexamination PW.1 admits that Ex.P.1 is not certified by the Chartered Accountant. He further admits that he has not made any enquiry as to whether any debt is due from the respondent in terms of the amount shown in Ex.P.1(a).

¶41

The authorized representative of the respondent has been examined as RW.1. In his testimony he has produced a copy of the statement of account showing the debit and credit entries (Ex.R.3) and the certificate issued by the Chartered Accountant certifying that there is no due to the company in liquidation (Ex.R.4). Further, the bank payments extracts have been marked as Ex.R.5 to Ex.R.7. The relevant entries where the payments have been made by the respondent to company in liquidation are marked as Ex.5(a), Ex.6(a) and Ex.7(a). Further the computer generated bank statement issued by the banker of the respondent has been marked as Ex.R.8 and the entries showing payment made by the respondent to the company in liquidation is marked as Ex.R8(a) to Ex.R8(c).

¶42

In the cross-examination of RW.1 he has stated as

¶43

follows:

¶44

¶45

NC: 2024:KHC:31969 CA No. 790 of 2006

¶46

“8. Now I see Ex. R3, copy of debit and credit entries. This is prepared by company’s accounts branch. I say that Ex.R3 is the entries from original books of account of the company. From Ex.R3 I cannot name person who prepared it. The signature of the employee or the seal The company is not found on Ex.R3, but the seal of Charted Accountant is put on it. The entry in Ex.R3 dt. 04.04.2003 refers to payment made by the company through cheque mentioned therein. The payment of ` 1,58,313.36/- refers to bills no. 2616 and 2866 mentioned in Ex. R3 for the date 31.01.2003, less debit note dt 31.01.2003 in respect of debit note no. RC-0607 and RC-0612 and another debit note RS-0652 as mentioned in Ex. R3. The debit notes represents deductions on account of bottle breakages. Whenever there are breakages they are deducted from the invoice and debit notes sent to the supplier. In this case also we have sent debit notes to the company in liquidation. In this case I have not produced copies of debit notes sent to company in liquidation. It is not true that we have not at all sent copies of debit notes to company in liquidation and that as such we have not produced such copies in this case. Our company had running account with the company in liquidation. Running account means the supplier supplies to various distilleries of our company and the details of supplies and payments are recorded in the books of accounts. It also includes the details of supply of goods and payment made periodically in respect of such supply. It is true that whenever the company in liquidation had supplied, it was raising invoices. The copy of such invoice should be with our company. I have not produced such invoices in this case. I say that such invoices may not be readily available with our company. I have not produced the invoices corresponding to the bank payments as per Ex.R5, R6 and R7. Since the details of the invoices are not referred in the main application I cannot say as to whether the amount claimed by the company in liquidation does not refer to the amount mentioned

¶47

7 - NC: 2024:KHC:31969 CA No. 790 of 2006

¶48

Ex. R5 to R7. I say that the amount mentioned in Ex.R5 to R7 refers to invoices mentioned in Ex.R3. It is not true that since I am not aware of the amounts claimed in the application I am not able to say as to whether what amount is due from our company to the company in liquidation. The witness volunteers that, he is certain that the respondent company is not at all in due of any amount to the company in liquidation. It is quite possible that since I do not deal with material and accounts department there may be other invoices. I again say that as per the books of accounts no amount is due by the respondent company to the company in liquidation.”

¶49

(emphasis supplied)

¶50

It is forthcoming from the aforementioned that the sole basis of the claim of the applicant is extract of the statement of affairs (Ex.P.1) and the entry pertaining to the respondent at Ex.P.1(a). The respondent has admitted that it had business transaction with the company in liquidation. However, it has denied that any amounts are due and payable by it to the applicant.

¶51

The respondent has been examined as RW.1 who has produced the documents available with it i.e., statement of account maintained during the course of business (Ex.R.3), as well as the certificate issued by it’s Chartered Accountant (Ex.R.4). The bank statements evidencing payment of money

¶52

8 - NC: 2024:KHC:31969 CA No. 790 of 2006

¶53

from the respondent to the applicant have also been produced. Although RW.1 has admitted that he has not produced any invoices evidencing the transactions between the respondent and the company in liquidation, and the debit notes to demonstrate the amounts debited towards breakages in the bottles supplied by the company in liquidation, it is the burden of the applicant to demonstrate that the respondent is due and payable the amounts claimed in the application. As noticed above apart from the extract of the statement of affairs (Ex.P.1), no other documents have been produced by the applicant to prove its claim.

¶54

In view of the aforementioned, the question framed for consideration is answered in the negative .

¶55

Hence, the application is dismissed as being devoid

¶56

of merit.

¶57

Sd/(C.M. POONACHA) JUDGE

¶58

List No.: 1 Sl No.: 2

¶59

PNV,BSS

Official Liquidator of M/S Victory Glass and v. M/S Mc Dowell & Co. Ltd.

Case brief

What is this about?

What the court decided

Official Liquidator of M/S Victory Glass and v. M/S Mc Dowell & Co. Ltd.

Case brief

What is this about?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Kum Keerthana Reddy Vs Sri Krishnamurthy C

Kariyappa M.C. Vs Future General India

Rathnamma Vs Siddegowda

Official Liquidator of M/S Mother Care (India) Ltd. (in Liqn) Vs Sri Prakash Lachman Ahuja

Official Liquidator of Vs M/S Shaw Wallace & Co. Ltd.

Official Liquidator of M/S Victory Glass & Vs M/S Shaw Wallace & Co. Ltd.