Dismissed

M/s Kyori Oremin Limited, v. M/s Ncl Industries Limited, a Company Incorporated

Telangana HC27 Aug 2012CP/3/2012

Case brief

AI extract

What is this about?

Company petition filed for winding up respondent due to alleged unpaid dues was dismissed. Court held that bona fide dispute on quality of goods precludes examining disputed issues in summary proceedings, though undisputed balance attracts legal fiction.

What did the court decide?

Company Petition closed without adjudication on disputed dues; admitted amount acknowledged paid.

M/s Kyori Oremin Limited, Vs M/s Ncl Industries… — Company and Corporate | Telangana HC (2012)

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THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN

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COMPANY PETITION No.3 of 2012

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ORDER:

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This Company Petition is filed by M/s.Kyori Oremin Limited seek winding up of the respondent company under Section 433(e) and (f) of Companies Act, 1956 (for short, the Act).

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Sri R.Sachin Vinayak Rao, learned counsel for the petitioner, would sub that they are not pressing their claim under Section 433(f) of the Act an would suffice if this Court were merely to adjudicate on the petition contention that the respondent be wound up under Section 433(e) of Act.

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The petitioner is a company incorporated on 14.09.2007 having registered Office at Hyderabad. The respondent is a comp incorporated on 10.09.1979 with its registered Office also at Hyderab Its objects primarily involve carrying on business in production of cem and include trading and mining of various ore and mineral commodi such as coal, iron ore etc. The authorized capital of the responden Rs.62.00 crores, and its paid up capital is Rs.34,93,73,350/-.

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The petitioner supplied coal to the respondent during the pe 08.07.2011 till 16.07.2011 for a total quantity of 1990.400 MTs. They cl that, for the supplies effected by them Rs.69,86,305/- is due towards principal. They issued a legal notice on 16.09.2011 followed by a rejoin dated 10.10.2011 demanding payment within seven days from the date receipt of the said notice. It is their case that the respondent, only wit view to delay payment, had denied liability. A notice, under Sections and 439 of the Act, was issued by the petitioner on 07.11.2011 demand payment of the outstanding dues along with interest at 18% per ann from the date of accrual till the date of realization. The respondent w called upon to pay the said amount within 21 days from the date of rec of the notice. To this notice, a reply dated 09.12.2011 is said to have b issued by the respondent. Thereafter the present Company Petition

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filed.

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A counter affidavit is filed on behalf of the respondent contend that the supplies effected by the petitioner were found not to be of stipulated quality; the respondent had addressed e-mails to the petitio much prior to the filing of the Company Petition, disputing the quality of material; and the petitioner was informed that a portion of the amo payable to them would be deducted.

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The purchase order issued by the respondent prescribes payment terms as thirty days from the first truck load; and requires petitioner to guarantee the material for any manufacturing defect, and the material would be replaced, free of cost, if found defective. purchase order prescribes inspection of the goods to be at the port. W the petitioner would assert that the goods were inspected at the port, no dispute was raised regarding the quality of the material at that stage, M.Srinivas Reddy, learned counsel for the respondent, would contend the dispute raised by the respondent is bona fide as the petitioner w informed, much prior to the statutory notice, of the inferior quality of material supplied by them. Learned counsel would draw the attention this Court to the

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e-mail sent by the respondent on 14.07.2011 informing the petitioner the coal sent by them did not meet the specifications mutually agr upon. Again, vide e-mail dated 15.07.2011, the respondent informed petitioner that the coal lifted by them from Visakhapatnam was not as the specifications mutually agreed upon, and that they would proportionately deduct and make payment. By their e-mail da 24.08.2011, the respondent informed the petitioner that the bills had been certified by the authority due to quality issues and, once certification happened, they would release payment as per the term Again, vide e-mail dated 09.09.2011, the respondent informed the petitio that, after discussions, they had decided to release payment a deducting 30% of the total invoice value, and that they would keep petitioner posted when the cheque was ready.

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While the petitioner would assert that the coal supplied by them is per the specifications, the respondent would contend that the coal w inferior necessitating them to deduct 30% of the bill amount. respondent has disputed the quality of the material not only in its e-ma but also in the notice issued by them on 30.09.2011 and 28.10.2011, wh is prior to the statutory notice issued by the petitioner on 07.11.2011.

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Sri R.Sachin Vinayak Rao, learned counsel for the petitioner, wo submit that, since the amount claimed by the petitioner remained unp despite delivery of the statutory notice at the registered office of company, the legal fiction under Section 434(1)(a) of the Act would co into operation, and the respondent must be deemed to be unable to pay debts. On the other hand Sri M.Srinivas Reddy, learned counsel for respondent, would contend that the respondent is a solvent company, making profits, and it cannot be said either to be commercially insolven to be unable to pay its debts.

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The legal fiction, under Section 434(1)(a) of the Act, would arise o when the respondent has neglected to pay the debt due to the petition “Neglect” means failure to make payment without reasonable cau Where a bona fide dispute exists, with regards the liability to pay the d the respondent cannot be said to have neglected to pay the said amou This Court, in summary proceedings under Section 433(e) of the Act, wo not take upon itself the task of making a detailed enquiry as to whether claim of the petitioner is justified or whether the respondent is justified contending that the quality of the coal supplied to them was inferio quality. These are all matters which are required to be examined b competent Civil Court on the basis of the evidence adduced before it. mere fact that the respondent is commercially solvent, and is able to its debts would not justify its failure to make payment, in cases where debt is not in dispute. Except for retention of 30% of the invoice amo which the respondent claims they are entitled to deduct on the ground the quality of the coal supplied to them was inferior, it is evident that balance 70% due to the petitioner is not in dispute and, failure to m

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payment of the said amount, would attract the legal fiction under Sec 434(1)(a) of the Act.

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Sri M.Srinivas Reddy, learned counsel for the respondent, handed over, to Sri R.Sachin Vinayak Rao, learned counsel for petitioner, a copy of the pay order bearing No.683669 dated 23.08.20 drawn on Axis Bank, in favour of the petitioner for Rs.48,90,413.50, wh the learned counsel for the petitioner acknowledges receipt of.

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Since the admitted amount has been paid by the respondent to petitioner, and as there exists a bona fide dispute for the remain balance, which cannot be brushed aside, it would be wholly inappropr for this Court to examine these disputed questions of fact in summ proceedings under Section 433(e) of the Act. Leaving it open to petitioner to seek adjudication of the amount, withheld by the respond before the competent Civil Court inclusive of the interest claimed by th the Company Petition is closed.

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____________________________ (RAMESH RANGANATHAN

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27.08.2012 vs

M/s Kyori Oremin Limited, v. M/s Ncl Industries Limited, a Company Incorporated

Case brief

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M/s Kyori Oremin Limited, v. M/s Ncl Industries Limited, a Company Incorporated

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