Allowed

M/s Cethar Vessels Ltd., v. M/s Sanghi Textiles Ltd.

Telangana HC30 Jul 2012CP/137/2000

Case brief

AI extract

What is this about?

The court adjudicated a winding-up petition filed by M/s.Cethar Vessels Limited against M/s.Sanghi Textiles Limited. The court found the debt undisputed based on admitted letters, verified the service of the statutory notice, and determined that the failure to pay the amount rendered the respondent commercially insolvent. Consequently, the winding-up order was issued.

What did the court decide?

Company petition allowed; respondent company wound up; Official liquidator appointed; order to be advertised in Indian Express and Vaartha.

M/s Cethar Vessels Ltd., Vs M/s Sanghi Textiles Ltd. — Company and Corporate | Telangana HC (2012)

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THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY

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Company Petition No.137 of 2000

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Date:3 0 th July, 2012

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**Between: M/s.Cethar Vessels Limited …Petitioner And M/s.Sanghi Textiles Limited …Respondent *****

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THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY

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Company Petition No.137 of 2000

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ORDER:

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This Company Petition has been taken out under Sections 433(e)&(f) and 439 of the Companies Act, 1956, (for short, ‘the Act’) seeking an order for winding up of respondent Company – M/s.Sanghi Textiles Limited. 2. The petition averments, in brief, are: M/s.Sanghi Textiles Limitedthe respondent Company was incorporated as ‘M/s.Sanghi Textiles Process Private Limited’, on 11.05.1979. Subsequently, the respondent Company changed its name as ‘M/s.Sanghi Textiles Limited’ on 06.04.1995. The registered office of the respondent Company is situated at Hayathnagar Mandal, Ranga Reddy District, Andhra Pradesh, Pin Code No.501 511. The authorized share capital of the respondent Company is Rs.25,00,00,000/- divided into

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25,00,000 equtiy shares of Rs.100/- each. The issued, subscribed and paid up capital of the respondent Company is Rs.10,00,00,000/divided into 10,00,000 equity shares of Rs.100/- each. The main objects of respondent Company are to process, bleach, mercerize, dye, print, give finish to cotton, synthetic textiles and made by mill, power looms, handloom and various textiles, textile goods, spinning and weavers, etc. The respondent Company took over a sick paper mill in Assam viz., M/s.Ashok Paper Mills’ located at Jogoghopa, Bongaigaon, for long term lease. The respondent Company placed an order with the petitioner vide order No.ST/CV/031, Dt.18.04.1995, for erection and commission of three numbers of 14 TPH 40 Kg/CM2 Stoker fired boiler at its Jogoghopa works, Bongaigaon, Assam. The petitioner executed the work as per the contract. The total value of the work executed by the petitioner is Rs.2,00,00,000/-. The respondent Company made a payment of Rs.1,63,44,489.39 ps. leaving a balance of Rs.36,55,501.61 ps. The respondent Company assured the payment of the balance amount by 15.12.1997 under letter dated 11.11.1997. However, the respondent Company failed to honour its commitment. Therefore, the petitioner issued a notice, dated 19.02.2000 to the respondent Company by registered post demanding payment of the amount of Rs.36,55,501.61 ps. within three weeks from the date of receipt of the notice. Since the petitioner has not received the postal acknowledgement, a letter has been addressed to the Customer Care Centre, Tiruchirappalli (G) HPO, Tiruchirappalli, vide letter No.Ref.CVL/A.4.1/2k/4505, dated 12.06.2000 to inform the date of delivery of the registered letter to the respondent Company. The petitioner received confirmation from the postal authorities that the said letter has been delivered to the respondent Company. No reply has been received from the respondent Company to the demand notice. Since the respondent Company failed to pay the undisputed liability within the statutory period, the respondent Company has become commercially insolvent and thus, sought for an order for winding up of

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the respondent Company.

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3. Notice before admission came to be ordered on 03.11.2000.

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4. The respondent Company entered appearance and filed counter affidavit contending inter alia that the claim of the petitioner is barred by limitation. The machinery alleged to have been purchased from the petitioner is installed in the premises of M/s.Ashok Paper Mills and the same is not under the control of the respondent Company. Therefore, recovery of amount, if any, is to be made by proceeding against the new lessee of M/s.Ashok Paper Mills. The respondent Company has not received any notice contemplated under the provisions of the Act.

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5. A reply affidavit has been filed by the petitioner denying the averments of the counter affidavit and also stating that the confirmation was received by the petitioner from the postal authorities that the registered notice was delivered to the respondent Company and a copy of the confirmation issued was also filed along with the reply affidavit.

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6. On haring the counsel appearing for the parties, the company petition came to be admitted, by order, dated 02.04.2002. For better appreciation, I may refer para.15 of the order and it is thus:

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“15. In the present case also, admittedly, the Respondent wrote a letter dated 11.11.1997, admitting the debt claimed by the petitioner and also assured the payment of the same by the Respondent. Even by its own words the Respondent had admitted that the company petition was filed some time in July, 2000, and if so, the said petition is well within the time and the question of bar by limitation subsequent to the filing of the petition does not arise, as the theory of relation back would apply. Further, as already held, the debt is admitted by the Respondent, though in the counter it was disputed without any material and the Respondent admittedly failed to pay the same.”

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7. The respondent Company filed O.S.A.No.19 of 2002 assailing the order, dated 02.04.2002. In the said appeal, the contention of the respondent Company that the debt claimed by the petitioner is barred by limitation has been rejected. The appeal filed by the respondent Company ended in dismissal on 27.01.2006. Thus, the order, dated

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02.04.2002, regarding admission of the company petition against the respondent Company reached finality.

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8. On behalf of the petitioner, G.Dinesh Kumar, has been examined as PW.1 and 33 documents have been marked as Exs.A1 to A33. On behalf of the respondent Company, T.Anjaiah, Manager of the respondent Company, has been examined as RW.1 and no documents have been marked.

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9. Heard learned counsel appearing for the petitioner and learned counsel appearing for the respondent Company.

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10. It is contended by the learned counsel appearing for the petitioner that the respondent Company has not disputed the fact of execution of the work as per the work order and indeed the respondent company under letter dated 11.11.1997 assured the payment of balance amount, in which case, it can be said that the liability of the respondent Company to the petitioner is undisputed and since the undisputed liability has not been discharged, the respondent Company has become commercially insolvent warranting an order for winding up of the respondent Company. The learned counsel took me to the cross-examination of RW.1 T.Anjaiah, wherein, he admits of Ex.A11 and Ex.A15 letters addressed to the petitioner by the respondent Company. It is also contended by him that statutory notice has been sent to the registered office of the respondent Company and the same has been delivered as per the confirmation received from the Customer Care Centre, Tiruchirapally vide Ex.A32. It is further contended by him that the respondent Company failed to liquidate its liability despite granting four weeks time in the O.S.A. and therefore, the respondent Company has become commercially insolvent warranting an order of winding up of the same.

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11. Per contra, it is contended by the learned counsel appearing for

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the respondent Company that there is no proper service of statutory notice and therefore, the winding up petition based on Ex.A28 notice dated 19.02.2000, is not sustainable. The learned counsel refers the postal receipt, which has been marked as Ex.A29 to buttress his submission that the postal receipt cannot be connected to the reply received from the customer care centre to the register letter No.5782. What he means to say is that the registered letter number is 5792 and whereas, the registered letter mentioned in the reply received from the customer care centre is 5782. A further contention has been advanced that the statutory notice, dated 19.02.2000 does not find place in the letter, dated 25.03.2000 addressed to the respondent Company and therefore, it is to be inferred that no such notice has been emanated from the petitioner. The learned counsel would contend that in the Company Petition, it is pleaded that the respondent company has been demanded to pay the amount due within three weeks from the date of receipt of the notice, whereas in the notice dated 19-02-2000, time allowed to the respondent company is 15 days and therefore, the statutory notice is not in tune with the provisions of Section 434 of the Act and thus, the company petition based on the improper statutory notice is liable to be dismissed in lumini.

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12. The issues that arise for consideration in this petition are:

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1) Whether the company petition filed basing on Ex.A-28 notice is valid ?

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2) Whether the petitioner has established that the respondent has become commercially insolvent and thereby, warranting order for winding up?

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13. POINTS 1 AND 2: Section 433 of the Act deals with the circumstances under which the company may be wound up by the Court. One of the circumstances referred in Section 433 is inability of the company to pay its’ debts. There is no dispute with regard to supply of the machinery basing on the work order placed by the respondent company. Indeed, the respondent-company made

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payment of Rs.1,63,44,489.39 paise leaving a balance of Rs.36,55,501.61. The respondent company admitted the liability under letter dated 11-11-1997, copy of which has been exhibited as Ex.A-11, and sought for time for payment. For better appreciation, I may extract the text of the letter dated 11-11-97, which reads as hereunder:-

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“ With reference to the above we would like to bring to your notice that our Mill is closed due to labour and other problems. The negotiations are under progress with the workers and we are hoping that the mill may be resumed to normalcy by 15^th Dece.1997. We will intimate when we will release the payment only after the mill is resumed. Until such time you are requested to bear with us”.

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14. The letter dated 11-11-1997 does not give any room for ambiguity with regard to the admission of liability of the respondent company to pay the amount due to the petitioner. Therefore, it can be said that the amount due to the petitioner is undisputed. The respondent company under Ex.A.15 letter dated 10-3-1998 while admitting the liability made a part payment of Rs.2,00,000/-. A reading of the letters Ex.A-11 and A-15 do not give any room for doubt with regard to the admission of the amount due to the petitioner by the respondent company. Therefore, it can be said that the liability of the respondent company to the petitioner is an undisputed liability. The petitioner issued notice dated 19-02-2000, copy of which has been marked as Ex.A-28 demanding the respondent to pay the amount due, i.e., Rs.36,55,501.61 paise. Ex.A-29 is the postal receipt. Ex.A-33 is letter from the Customer Care Centre, Tiruchirapalli, wherein it is stated that the registered letter No.5782 dated 22-3-2000 has been delivered to the address on 28-2-2000.

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15. Learned counsel appearing for the respondent-company tries to convince the Court that the registered letter issued under Ex.A-32 cannot be connected to the registered letter receipt, which has been exhibited as Ex.A-29. According to the learned counsel, the number of

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the registered letter under Ex.A-29 is 5792 whereas the article referred in Ex.A-33 is 5782. I do not see any substance in his contention since the number of registered letter mentioned under Ex.A29 appears to be 5782 but not 5792. Therefore, the article mentioned in Ex.A-33 can be connected to Ex.A-28 statutory notice. A reading of Ex.A-33 letter of Customer Care Centre, Tiruchirapalli shows that the statutory notice dt.19-2-2000 has been served on 28-2-2000. Under Section 434 of the Act, three weeks time is to be allowed to the respondent company to pay the sum due. The date of delivery of the statutory notice as per Ex.A-33 is 28-02-2000. The date of presenting the company petition is 07-8-2000. Since the presentation of the company petition is after expiry of three weeks’ time allowed to the respondent company, it can be said that the presentation of the petition is in accordance with the Section 434 of the Act. Since the respondent company neglected to pay the admitted dues, it is to be inferred that the respondent-company has become commercially insolvent. In that view of the matter, I order winding up of M/s.Sanghi Textiles Ltd.

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16. Accordingly, the Company Petition is allowed ordering winding up of the respondent Company- M/s.Sanghi Textiles Ltd and the official liquidator attached to this Court is appointed as liquidator. Notice of the Order for winding up of respondent Company shall be sent forthwith to the Official Liquidator in Form No.50 under Rule 109 of the Companies (Court) Rules, 1959, enclosing a copy of the petition and affidavit filed in support of the petition. Pursuant to Rule 114, the Official Liquidator shall forthwith take into his custody or under his control all the properties and effects and the books and papers of the company and shall take necessary steps for that purpose. The order for winding up shall be drawn up in Form No.52 and two certified copies thereof shall be sent as per Rule 111 to the Official Liquidator. The Official Liquidator shall cause a sealed copy of the order served on the company as required by sub-rule (2) of Rule 111 and also serve

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true copy of the order on the Managing Director of the company by prepaid registered post. The order for winding up the respondent-company shall be advertised by the petitioner in “Indian Express” (English daily) and “Vaartha” Telugu daily. The petitioner shall deposit a sum of Rs.50,000/- (Rupees fifty thousand only) towards initial expenses within four weeks. No costs.

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_____________________ B.SESHASAYANA REDDY, J

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Dt.30-07-2012 CS/RAR

M/s Cethar Vessels Ltd., v. M/s Sanghi Textiles Ltd.

Case brief

What is this about?

What did the court decide?

M/s Cethar Vessels Ltd., v. M/s Sanghi Textiles Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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