V.N. Sinha, J.
1. Heard learned Counsel for the parties.
2. Petitioner is a Private Limited Company and has filed this petition praying, inter alia, to wind up M/s. Deep Shikha Autos Pvt. Ltd. (hereinafter referred to as the Company) in terms of the provisions contained in Sections 433(a), (c), (e) read with Section 434 of the Companies Act, 1956 (hereinafter referred to as the Act) primarily on the ground that the company has not been able to pay its debt amounting to Rs. 33.03 and 14.94 lacs. In support of such claim, reliance is being placed on the books of account maintained by the petitioner for the period 1.4.1994 to 31.3.2000 as contained in Annexure-9 to flag '13', part whereof for the period between 1.4.1999 to 31.3.2000 was annexed with the winding up petition, as Annexure-2.
3. With reference to the aforesaid extracts of the books of account, it is submitted that during the period between 1994 to 1999 the petitioner supplied leaf springs to the company against which the company made on account payment subject to final settlement of the accounts and pending such final settlement, debts amounting to Rs. 33.03 and 14.94 lacs accrued on 10.11.1999 and for failure of the company to clear such determined debts, the instant winding up petition has been filed. In this connection, it was further pointed out, with reference to memorandum of understanding signed between the petitioner and the company dated 24.4.1999 as contained in Annexure-3 to flag '2', which became effective from 1.4.1999 as also another memorandum of understanding dated 4.11.1999, as contained in Annexure-7/III to flag '2', that all orders, invoices and payments to the petitioner were to be routed through the company. Payment for such supplies to the different dealers if not made within 60 days from the date of supply or for supplies made in April by June and for supplies made in May by July and so on then 2% interest per month over such delayed payments was payable by the company to the petitioner. It was further agreed between the parties in the MOU that outstanding dues for the month of January/ February, 1999 be cleared by April/May, 1999, failing which the company shall be liable to pay interest at the rate of 2% per month. Under Clause 18 of the MOU, company had undertaken to send its accounts for the year 1998-99 for reconciliation to the petitioner by 10th May, 1999.
4. In terms of the MOU, the company placed orders with the petitioner requesting it to supply auto parts to the dealers named in the supply order as is evident from the supply order dated 17.5.1999, 22.5.1999 and 15.5.1999, as contained in Annexure '4' to flag '2' and under letter dated 18.5.1999, Annexure-6 to flag '2' the company further informed the petitioner that they have already posted draft of Rs. 20 lacs against outstanding balance of Rs. 56.92 lacs which outstanding they are yet to confirm and then proceeded to express apprehension that collection / payment may fall as the parties have not received supplies for the last two months.
5. It appears, after settlement of accounts, petitioner desired five cheques of Rs. five lacs each from the company as guarantee against the outstanding to be returned after receipt of the payment from the market, which was to be collected by the company for being forwarded to the petitioner. As desired, five cheques of Rs. five lacs each, bearing No. 000462- 000466 were forwarded by the company to the petitioner under their letter dated 4.11.1999 clearly stating that the cheques were given as guarantee towards the outstanding and be returned after payments were collected by the company and forwarded to the petitioner. However, when the dealers refused to make payment, as the representatives of the petitioner himself were collecting the drafts even for the old dues, then information to that effect was given to the petitioner by the company under their letter dated 23.11.1999 as contained in Annexure-6/1 to flag '2'. Petitioner instead of addressing the concern of the company proceeded to credit the value of five cheques forwarded to it under letter dated 4.11.1999 on 3.4.2000 and when those cheques could not be encashed then the account of the company maintained by the petitioner was again debited to the extent of the value of the cheques showing debit balance of Rs. 33,03,219/-. The company having failed to clear the said outstanding was served with notice dated 29.7.2000/16.8.2000 calling upon the company and its representative to clear the aforesaid dues, failing which the proceedings under Section 433(e) shall be initiated for the winding up of the company. In response whereto, reply dated 9.9.2000, as contained in Annexure-A to the supplementary counter affidavit was served stating, inter alia, that the relationship between the petitioner and the company was that of distributor and marketer of Jai brand spring leaves and as a distributor the company was entrusted with the responsibility of collecting and forwarding the orders as well as payments received from the customers or parties to the Patna office of the petitioner and in absence of the staff at the Patna office to send the payment/ drafts to Gwalior office of the petitioner. It was further asserted in the reply that the supplies were never directly made to the company and the responsibility of the company was only to collect the payments/ drafts from the dealers to whom the supplies were directly made and the company was entitled to receive discount for the services rendered in collecting dues from the dealers in the market and a sum of Rs. 28.1658 lacs was due to the company from the petitioner as discount for which a registered notice dated 2.4.2000, Annexure-A/2 to flag '3' was served on the petitioner. It was further clarified in the reply dated 20.5.2000, Annexure-A/3 to flag '3' that five cheques of Rs. five lacs each were given to the petitioner by way of guarantee so that the supply may be resumed/ continued and the dealers may clear the earlier outstanding but as supplies were never resumed/ continued, the company instructed the bankers on 12.1.2000 itself not to clear those cheques, which instruction to the bankers was also intimated to the petitioner but the petitioner only with a view to intimidate and harass the functionaries of the company, credited those cheques in the account of the company on 3.4.2000 and when the cheques could not be encashed in the light of the instructions of the company then the petitioner again made debit entries in the books of account.
6. Counsel for the petitioner appearing in support of this petition, submitted that in terms of the memorandum of understanding entered into between the parties on 24.4.1999, Annexure-3 to flag '2', the statement of accounts for the year 1998-99 was to be reconciled between the parties, which reconciliation appears to have been made on or before 4.11.1999 whereafter on 4.11.1999 five cheques of Rs. five lacs each were issued by the company in favour of the petitioner towards settlement of the outstanding dues and once those cheques could not be encashed in the light of the instructions issued by the company itself to the bankers on 12.1.2000 then in the background of the aforesaid facts, it should not be difficult for this Court to hold that the company is unable to pay the outstanding dues of Rs. 25 lacs for which they had issued those five cheques and this Court should pass orders for winding up of the company, as admittedly the company is unable to pay its admitted outstanding dues. In support of his submission, he has relied on the judgments in the case of Steel Equipment & Construction Co. (P) Ltd. reported in (1967) 1 Company L.J. 172, in the case of Madhusudan Gordhandas and Co. v. Madhu Woolen Industries Pvt. Ltd. reported in : [1972]2SCR201 , in the case of Rajasthan Spinning and Weaving Mills Ltd. v. Textool Company Ltd. reported in (1971) 41 Company Cases 66(Mad), in the case of Newfinds (India) v. Vorion Chemicals and Distilleries Ltd. reported in (1976) 46 Company Cases 87(Mad) and in the case of S. Kantilal and Co. Pvt. Ltd. v. Raja Ram Bandekar (Sirigao) Mines Pvt. Ltd. reported in (1993) 76 Company Cases 800(Bombay).
7. Learned counsel for the company/opposite party, with reference to the memorandum of understanding dated 24.4.1999, Annexure-3 to flag '2', submitted that the accounts maintained by the parties were never reconciled as was agreed to under the aforesaid memorandum of understanding but pending reconciliation of accounts, supplies were initially resumed, which enabled the company to collect the draft of Rs. 20 lacs towards the earlier outstanding, which was posted to the company but as supplies were not made through the company after 7.9.1999, the company could not collect the remaining dues from the market after 7.9.1999, which fact is evident from the books of account itself and in this connection reliance was placed over entries made in the books of account at page 102 of Annexure-9 to flag '13'. To ensure that the supplies are resumed/ continued so as to enable the company to collect the remaining outstanding from the market, the company even forwarded five cheques of Rs. five lacs each by way of guarantee to the petitioner under letter dated 4.11.1999 but even after receipt of those cheques when supplies were not resumed and the petitioner's representative began misrepresenting in the market before the dealers that the company is no more their distributor as also began to collect the draft even for the old dues from the dealers then the company under letter dated 23.11.1999, Annexure-6/1 informed the petitioner about the conduct of its representatives in the market further requesting the petitioner to stop its representatives from spreading such incorrect, misleading fact, which was causing hindrance to the company in collecting drafts for the old dues. In spite of service of the registered letter containing such request, when situation did not improve and the company was unable to collect the remaining outstanding dues from the market then the company instructed their bankers not to clear those five cheques with further intimation to the petitioner about the circumstances prevailing in the market causing hindrance in their effort to collect the old dues. In the background of the aforesaid facts, it is further submitted that in terms of the memorandum of understanding signed between the parties, the goods were directly supplied/ dispatched by the petitioner to the dealers, who having received the goods, had the responsibility to pay the petitioner and the task entrusted to the company was only to collect the draft and forward the same to the petitioner but as the supplies were stopped after 7.9.1999, the company could not collect the dues from the market thereafter and whatever payments were collected prior thereto was forwarded to the company which is evident from the letter dated 18.5.1999, Annexure-6 to flag '2' Had the petitioner continued with the supplies even after 7.9.1999 then it may not have been difficult for the company to collect the balance outstanding but as the supplies were not continued after 7.9.1999, the outstanding could not be collected thereafter, which is only on account of unsound business practice of the petitioner, in the circumstances, for unsound business practice of the petitioner, the company cannot be held responsible for failure to collect the outstanding dues from the dealers in the market.
8. Counsel for the company further submitted that as per the contents of the memorandum of understanding signed by and between the parties, the relationship between the company and the petitioner is that of the agent and Principal and it is well known that for failure to collect the amount due to the Principal, agent cannot be sued as the amount is due from the dealers and not from the petitioner/agent, who is only liable for the interest on delayed payment by the dealers. In the background of the aforesaid facts, it is submitted that the dues of the dealers is not the dues of the company for which company can be wound up. It is further submitted that even if it is admitted that the dues are of the company, the same is not a determined dues as for failure of the petitioner to continue the supplies after 7.9.1999, the earlier outstanding could not be collected and in the circumstances, it is difficult for this Court to hold that it is on account of failure of the company the outstanding dues could not be collected as according to the company, it was the failure of the petitioner, which led to non-collection of the outstanding dues. So long petitioner was cooperating, the outstanding of Rs. 20 lacs was collected but the remaining dues could not be collected as supplies were not continued after 7.9.1999. In support of the aforesaid contention, learned Counsel for the opposite party has relied on the judgments in the case of Radhakrishna Sivadutta Rai and Ors. v. Taayeballi Dawoodbhai reported in : AIR1962SC538 , in the case of Madhusudan Gordhandas & Co. v. Madhu Woolen Industries Pvt. Ltd. reported in AIR 1971 S.C. 2600, in the case of U.V. Shenoy v. Karnataka Engineering Products Co. (P) Ltd. and Anr. reported in (1981) 51 Company Cases 116, in the case of Mediquip System (P) Ltd. v. Proxima Medical System Gmbh. reported in : AIR2005SC4175 and in the case of Registrar of Companies, Punjab v. Ajanta Lucky Scheme and Investment Co. Pvt. Ltd. reported in (2005) 124 Company Cases 155.
9. Having heard counsel for the parties and having perused the winding up petition, it appears that the case has been filed invoking the provisions contained in Section 433(a), (c) and (e) read with Section 434 of the Act, which provisions, inter alia, provides that the company be wound up if there is a special resolution to that effect or the company has not commenced its business within one year of its incorporation or if the company is unable to pay debts. In the present case, Sub-sections (a) and (c) of Section 433 has absolutely no application as neither there is special resolution seeking winding up of the company nor the company has failed to resume its business within one year of its incorporation. So far the claim of the petitioner that the company be wound up by resorting to Sub-section (e) of Section 433 of the Act is concerned, there is no determined debts as the accounts of the company, which was agreed by the parties to be reconciled under Clause 18 of MOU dated 24.4.1999, have not been reconciled so far and the five cheques of Rs. five lacs each were given to the petitioner on 4.11.1999 by way of guarantee for securing further supplies to the dealers in the market so that the dealers may clear the earlier outstanding but as is evident from page 102 onwards of the Books of Account, Annexure-9 to flag '13' that the supplies were never continued through the company after 7.9.1999 even after receipt of five cheques of Rs. five lacs each on 4.11.1999 then the dealers stopped clearing their earlier outstanding through the petitioner, in the circumstances, the company could not collect the dues from the market and in my opinion, until accounts are reconciled between the parties it would be difficult for this Court to hold that there is a determined debt of Rs. 25 lacs as from the forwarding letter dated 4.11.1999 itself whereunder five cheques were forwarded to the petitioner, it is crystal clear that those five cheques were forwarded by the company to the petitioner by way of guarantee to be returned after collection and receipt of the outstanding dues from the different parties in the market by the petitioner through the company and the company was unable to collect the old dues on account of misrepresentation of the representatives of the petitioner as is evident from the letter dated 23.11.1999, Annexure-6/1 to flag '2' addressed to the petitioner.
10. In view of my discussions above, I do not find any merit in the winding up petition, which is dismissed, however, with liberty to the petitioner to resort to any other legal proceedings for realization of its outstanding dues, if any.