G.S. Patel, J.
1.The petitioning-creditor, Tata Motors Ltd (previously Tata Finance Ltd; œTata Motors?) claims that an amount of Rs.16,14,515/- remains unpaid despite service of a statutory notice by the respondent company, Sundeep Polymers (P) Ltd. (œSundeep Polymers?) under an agreement dated 20th July 1988, by which Sundeep Polymers took a Mercedes Benz motor car on hirepurchase.
2.These are the facts. The parties entered into a hire purchase agreement on 20th July 1988. A copy is at Exhibit œB? to the petition. Sundeep Polymers took a Mercedes Benz motor car, registration number MH-01-V-5848, on hire purchase. Tata Motors was the owner. Sundeep Polymers was the hirer. It was required to pay monthly instalments to Tata Motors. The first of these was to be for Rs.1,32,020/- and the rest were to be of Rs.66,010/-. The aggregate amount payable was Rs.31,68,480/- over three years. Tata Motors claims that Sundeep Polymers was in breach of its contractual obligations. It did not pay overdue instalments despite reminders. Tata Motors advocates sent a statutory notice dated 23rd February 2001 under sections 433 and 434 of the Companies Act, 1956 to Sundeep Polymers, demanding that the vehicle be returned, or that Rs.15,88,405/- under the Hire Purchase Agreement be paid. Sundeep Polymers replied on 27th February 2001. It complained that the car was defective. It said that it had filed a complaint before the National Consumer Disputes Redressal Forum against Tata Motors Ltd, Concorde Finance Ltd and Mercedes Benz India Ltd. It denied, for these reasons, that it was liable to pay any amount to Tata Motors Ltd.
3.Mr. Dileep Nevatia, a director of Sundeep Polymers, appears in person. He has, on behalf of the Sundeep Polymers, also filed Company Application No. 119 of 2014 for dismissal of the petition. He has raised four principal defences to the petition:
(a)First, that Tata Motors advocates statutory notice was not sent to the registered office address of the company, Sundeep Polymers Pvt Ltd;
(b)Second, that the transaction is hit by the Bombay Money-Lenders Act 1946 and the agreement is not a hire-purchase agreement but a loan, thus making the petition not maintainable;
(c) Third, that Tata Motors claim is time-barred.
(d)Fourth, that the petitioner has obtained an arbitral award and cannot, for that reason, maintain this petition.
4.The petition is brought under Section 433(e) and Section 434(1)(a) of the Companies Act, 1956. These require the service of a notice at the companys registered office address. Mr. Nevatia says that the registered office of Sundeep Polymers is not at 52, Mamta œA?, New Prabhadevi Road, Mumbai 400 025, but at Udyog Bhavan, 250-D, Worli, Mumbai 400 025. Exhibit œB? to Mr. Nevatias affidavit in support of the Company Application is a print out of the Company Master Details of Sundeep Plastics Pvt. Ltd. It shows the Udyog Bhavan address. œSundeep Plastics Pvt. Ltd.? was, Mr. Nevatia says, the previous name of Sundeep Polymers Pvt. Ltd, the respondent-company. The change of name took place on 25th September 1984.
5.Mr. Kisna, learned advocate for Tata Motors, disputes this and says that this is deliberate obfuscation and prevarication by Sundeep Polymers. The Company Master Details print out that Mr. Nevatia shows is of Sundeep Plastics Pvt. Ltd. Exhibit œA? to the affidavit in reply by Tata Motors to the Company Application is also a print out of the Company/LLP Master Data. Clearly, this is the more recent. It shows the name of Sundeep Polymers Pvt. Ltd. The print out is of œCompany/LLP Master Data?, and limited liability partnerships were unknown to the Companies Act in 1984. Tata Motors print out shows the registered office address at 52, Mamta A, New Prabhadevi Road.
6.On my directions, Tata Motors filed a further affidavit dated 18th February 2014. In paragraph 2 of this affidavit, its deponent states that an examination of the records with the Registrar of Companies shows that Sundeep Plastics Pvt Ltd had its registered office at Udyog Bhavan, and that there is only one form no.18 showing this, dated 15th December 1980. After the change of name, the registered office address is at 52, Mamta œA?, New Prabhadevi Road. This is the address shown on Sundeep Polymers annual return for 28th September 1998, and the Directors Report and Balance Sheet as on 31st March 2000. The Company/LLP Master Data record, too, shows only this address. To this affidavit, at Exhibit œD?, is another print out of the Company/LLP Master Data, and this also shows the 52, Mamta œA? address. The CIN no of the company (both when it was known as Sundeep Plastics Pvt Ltd and later when its name was changed to Sundeep Polymers Pvt Ltd) is the same, U99999MH1981PTC024648.
7.Mr. Nevatia cannot explain this. He insists that œsomeone? has œtampered with? the official records. This is an argument of desperation. It does not explain the address shown in his own response, on behalf of Sundeep Polymers, to Tata Motors advocates statutory notice. That reply, dated 27th March 2001, shows only one address: 52, Mamta œA?, New Prabhadevi Road, Mumbai 400 025. This is the very address to which the statutory notice was sent.
8.There is, therefore, no substance at all to the first defence.
9.The second ground is also soon despatched. Mr. Nevatia insists that Tata Motors is a money-lender within the meaning of the Bombay Money-Lenders Act, 1947. Therefore, this petition is not maintainable. Mr. Nevatia insists that at the time what Sundeep Polymers obtained from Tata Motors (then Tata Finance Ltd) was a loan within the meaning of the Bombay Money-Lenders Act. Tata Motors did not have a money-lending license under that Act. Therefore, it cannot recover the amount of the loan. He points to certain portions of Tata Motors affidavit where the word loan is used.
10.Mr. Nevatia relies on the decision of a learned single Judge of this Court in Rushabh Precision Bearings v Marine Container Services ([2001] 106 Comp Cas 108 (Bom), per Rebello, J., as he was then). That decision held that, to maintain a petition under Section 434(1) (a), the debt claimed must be legally recoverable. If recovery is barred under Section 10 of the Bombay Money-Lenders Act, the petition would not be maintainable.
11.Section 2(9) of the Bombay Money-Lenders Act defines a loan. It contains several exclusions, of which one is important.
2(9)”œloan? means an advance at interest whether of money or in kind but does not include ”
* * *
(ee) loan to, or by, or deposit with, anybody (being a body not falling under any of the other provisions of this clause), incorporated by any law for the time being in force in the States;
12.Mr. Nevatia says that the exclusion under section 2(9)(ee) is restricted to companies incorporated by an Act of Parliament and does not cover companies incorporated under the Companies Act, 1956. For, he argues, the words used in Section 2(9)(ee) are œby any law? and not œunder any law?. That issue is no longer res integra in view of the binding decision in Rushabh Precision Bearings, which in terms holds that the expression in Section 2(9)(ee) does not include every company incorporated under the Companies Act, 1956, but only those established by an Act of the legislature.
13.But this argument proceeds on the assumption that the hire-purchase agreement is, in fact, a loan. An identical argument was raised and repelled by a learned single Judge of this Court in Kunnul Noorudin v Jayabharat Credit and Investment Co. Ltd (1984 (1) Bom CR 308; per Mrs. Sujata Manohar, J., as she was then). There, the 1st respondent to the arbitration petition, the corporate entity, was the owner that hired the vehicle to the petitioner. The Court held:
5. The second contention of the petitioner is that the agreement of 13-1-1979 is not an agreement of hire-purchase but is an agreement of loan. Since the transaction between the petitioner and the 1st respondent is of money lending, the 1st respondents are moneylenders. The 1st respondents have not complied with the provisions of the Bombay Money Lenders Act, 1946 and hence the agreement is illegal and/or void. ¦
6. The agreement of hire purchase in the present case, cannot in any view of the matter, be considered as a transaction of money-lending. The vehicle was purchased directly by the 1st respondents. Under the terms of hire-purchase agreement the 1st respondents remained the owners of the said vehicle. Under Clause 5 of the said agreement the petitioner is liable to pay to the owners monthly hire charges as set out in the said clause. It is provided that on the petitioner paying to the owner all sums of money and all installments of hire as set out in the said agreement, the hiring shall come to an end and the vehicle shall at the option of the hirer, become his absolute property; but until such payments are made, the vehicle shall remain the property of the owner. The hirer is also given the option of purchasing the vehicle at any time during the currency of the agreement by paying in one lump sum the balance of all the hire charges and all other sums under the said agreement. Under Clause 7 of the said agreement the hirer is at liberty to terminate the hiring at any time during the continuance of the said agreement by returning the vehicle to the owner at Bombay as set out in that clause. Under Clause 9, sub-clause (h), of the said agreement the hirer is required to declare to the Registering Authority that the vehicle is in his possession under this agreement and to have necessary endorsement to that effect made by the said authority. The agreement is clearly an agreement of hire-purchase. It is an agreement of bailment of the said vehicle with a provision for its sale to the petitioner as provided in the said agreement. It cannot be considered as an agreement of money lending covered by the Bombay Money Lenders Act, 1946. There is, therefore, no substance in the petitioner's contention that the agreement is illegal as it is contrary to the provisions of the Bombay Money Lenders Act, 1946. Incidentally, under the said Act, an agreement of money lending is not illegal. But (inter alia) under section 10 a Court cannot pass a decree in favour of a money lender in any suit to which the Act applies unless at the relevant time the moneylender had a licence under the said Act.
(emphasis supplied)
14.The present case is in pari materia with Kunnul Noorudin. Under the present hire-purchase agreement, Tata Motors is the owner of the Mercedes Benz. Sundeep Polymers is the hirer. On Sundeep Polymers paying all the agreed instalments to Tata Motors, it had the option of taking the car as its property. Till that time, the car remained the property of the Tata Motors. This is no money-lending transaction. It is an agreement of hire-purchase, a bailment of the car with a provision for sale added. There is, therefore, no substance to this defence either.
15.As to the question of limitation, I am unable to see how it arises. The hire-purchase agreement is dated 14th July 1998. The petition was filed on 20th June 2001. Even if the date of the agreement is reckoned as the starting point of limitation (which it cannot), the petition is in time. Sundeep Polymers was in default of payment of instalments between 14th August 2000 and 14th February 2001. Taking either of those two dates as the starting point of limitation, the petition is well within time.
16.The final, fourth, contention, that Tata Motors has an arbitral award in its favour and therefore cannot maintain this petition needs only to be stated to be rejected. The law in this regard is far too settled to warrant repetition. A petitioning-creditor with a decree need not put it into execution before bringing a winding up petition. He can proceed either under Section 434(1)(b) or, having served a notice, move against the debtor-company under Section 434(1)(a) (All India General Transport Corporation Ltd v Raj Kumar Mittal, [1978] 48 Com Cas 604 (Cal); Karpara Project Engineering v Ballarpur Industries Ltd., 2008 (Supp) Bom. C.R. 39; Madhuban Pvt. Ltd. v Narain Das, [1971] 41 Comp. Cas 685 (Del); Seethai Mills Ltd. v N. Perumalsamy and Anr, [1980] 50 Comp. Cas 422 (Madras); Suvarn Rajaram Bandekar v Rajaram Bandekar (Siringaon) Mines Pvt. Ltd., [1997] 88 Comp. Cas 673 (Bom). Section 36 of the Arbitration and Conciliation Act, 1996 makes it clear that an arbitral award can be enforced as a decree under the Code of Civil Procedure, 1908.
17.But Mr. Nevatia has a final string to his bow. The Mercedes Benz, he says, was defective. It lay in the garage and did not function as it ought. Therefore, in his submission, his company should not be asked to pay the hire-purchase instalments. It is hard to conceive of a more porous defence than this. It is entirely defeated by Clause 11 of Part I of the Hire-Purchase Agreement, one that is worth reproducing in its entirety:
11. The Hirer acknowledges and agrees with the Owners that:
a) the vehicle is of the size design capacity and manufacture selected by the hirer;
b) the Owners are not manufacturers or suppliers of the vehicle nor a dealer in such vehicle; the Hirer has inspected and selected the vehicle; the Hirer has signed this agreement relying entirely on the Hirers own judgment and not on any statements made by the Owners or the agents or servants of the Owners;
c) the vehicle is accepted by the Hirer in the condition it is (with all faults and defects, if any) and delivery shall be conclusive evidence that the vehicle is in good working condition and substantial working order and is acceptable to the Hirer;
d) the Owners have not made and do not hereby make any representation or warranty to respect to the merchandisability, fitness, condition, quality, durability, suitability, use or operation of the vehicle in any respect;
e) all promises, warranties and conditions, express or implied by statute or otherwise, whether given hereunder, collateral hereto or otherwise are expressly negativated and extinguished;
f) the Owners shall not be liable to the Hirer for any liability, claim, loss, damage or expenses of any kind or nature:
i) caused directly or indirectly by the vehicle, or any inadequacy thereof, or any defect therein or by the use thereof; or
ii) in relation to any repairs, servicing, maintenance or adjustment thereto, or any delay in providing or failure to provide the same or in relation to any loss of business or any damage whatsoever and howsoever caused;
g) The Owners shall not be responsible or liable in respect of any statement regarding the hirers rights/liabilities or position under any law relating to taxation or any other matter;
h) The Hirer is obliged to pay hire charges every month during the contracted period regardless of whether the vehicle requires repairs or is otherwise not operatable or working and the Owners shall not be liable or responsible in any way for the non-performance, if any, of the vehicle and further the Hirer shall look solely to the manufacturer/supplier or its selling agent for the performance of all guarantees and warranties with respect to the vehicle.
18.This is an all-encompassing disclaimer by Tata Motors. It is one that Mr. Nevatia signed for Sundeep Polymers. Given his legal acuity, it is impossible that Mr. Nevatia did not comprehend this; in fairness, he does not even so suggest. The defects in the vehicle, if indeed there were any, are matters wholly alien to the present proceeding and well beyond its scope. That Mr. Nevatia seems not to have obtained any orders in the pursuit of his consumer complaint against Tata Motors is another matter altogether.
19.None of the contentions taken by Mr. Nevatia for Sundeep Polymers can be said to be either bona fide or of substance. There is, quite simply, no defence at all to this petition. This petition has been pending admission for an extraordinary period of some 13 years. How this has come to pass is unclear, but I can only attribute this to Mr. Nevatias forensic skills. Unfortunately, considerable though they are, they cannot rescue a matter so utterly beyond redemption. It is only because Mr. Nevatia has assumed the burden of defending his company, and discharged that most creditably, arguing with commendable restraint and clarity, that I am inclined to give him and Sundeep Polymers a final opportunity to make payment. It is for this reason, too, that I decline to appoint a Provisional Liquidator, grant an injunction or award costs.
20.As a result:
(a)The Company, Sundeep Polymers Private limited, shall pay to the petitioners, Tata Motors Ltd, the sum of Rs. 16,14,515/- on or before 16th June 2014. On that payment being made, this Company Petition shall stand disposed of with no order as to costs.
(b)Should the Company default in making that payment, then ”
(i) this petition shall stand admitted without further reference to the court, and shall be made returnable on 16th July 2014.
(ii) Service of the petition on the company under Rule 28 of the Companies (Court) Rules, 1959 shall be deemed to have been waived;
(iii) The petition shall be advertised in two local newspapers, viz., (i) the Free Press Journal (in English) and (iii) Navshakti (in Marathi); as also in (iii) the Maharashtra Government Gazette;
(iv) On or before 30th June 2014, the petitioners shall deposit a sum of Rs.10,000/- toward publication charges with the Prothonotary and Senior Master, with intimation to the Company Registrar, failing which the petition shall stand dismissed for non-prosecution. Upon such publication being made, the balance of the deposit, if any, shall be refunded to the petitioner.
21.In view of this order, the Company Application does not survive and is disposed of as infructuous.