The Statesman Ltd Vs Nevatia Udyog Ltd - Citation 1061283 - Court Judgment

Excerpt:
form not j.(2) in the high court at calcutta civil appellate jurisdiction original side present : the hon’ble mr.justice ashim kumar banerjee and the hon’ble mr.justice shukla kabir sinha a.p.o.no.247 of 2011 a.p.o.no.140 of 2012 a.p.o.no.141 of 2012 a.p.o.no.142 of 2012 the statesman ltd.-versusnevatia udyog ltd.and m/s.nevatia udyog -versusthe statesman limited and nathmal nevatia (huf) -versusthe statesman limited and chitra nevatia -versusthe statesman limited for the appellant : mr.s.b.mukherjee (sr.advocate) mr.supriyo ranjan saha (advocate) mr.anindya basu (advocate) (in a.p.o.no.247 of 2011) for the respondents : mr.s.k.kapoor (sr.advocate) mr.ratnanko banerjee (advocate) mr.raghunath ghosh (advocate) mr.jayanta mukherjee (advocate) (in a.p.o.no.247 of 2011 & for the appellants (in a.p.o.no.140 of 2012 & a.p.o.no.141 of 2012) heard on : june 26, 2012 judgment on : july 4, 2012. ashim kumar banerjee.j.all four appeals would relate to winding up petitions filed by four different petitioning creditors being controlled by the same business group. on appreciation of facts involved in all the four appeals, we would find the company statesman limited having dearth of financial resource way back in 2004, approach the other business group involved in the above appeals to extend assistance to the company by causing newsprint supplied through various suppliers.the arrangement was, the business group would clear of the bill immediately upon being raised on the company by the suppliers.the company would, in turn, execute a hundi payable after sixty days through bank together with interest at the rate of nineteen per cent and service charges at the rate of one per cent. in effect, the company would get sixty days credit for the supply that would cost them an additional burden of twenty per cent. the supply was made to the extent of crores, payments were also made from time to time. the company claimed that those payments were made by the business group in six different trade names being babcock udyog, cnn enterprise, nivetia udyog limited. the other two were mukherjee and zenith traders.the nivetia group however, disowned the relationship with zenith. in one of the pleadings they admitted having control over the business of mukherjee. however, four petitions would relate to the firs.four parties named above. zenith and mukherjee were not involved. as per the brief extract so handed over in court a sum of rupees seven crore thirty lacs approximately became due and payable as on april 30, 2007 out of which rupees three crores seventy-four lacs was paid on may 14, 2007 leaving a balance sum of rupees three crores fifty-six lacs approximately. the company in their defence admitted the agreement, however, denied the liability on the ground that the amount of rupees three crores seventy-four lacs paid on may 14, 2007 was in full and final settlement of the claim of nivedia group that was agreed upon in a meeting held between the representatives of both the parties. the company relied on a letter dated april 25, 2007 whereby payments were forwarded by the company in full and final settlement of the claim of the nivedia group. in the firs.winding up petition filed by nivetia udyog limited, the petitioning creditor claimed that a sum of rupees seven lacs ninety two thousand seven hundred forty three and paise thirty three became due and payable as on april 30, 2007 after adjustment of payment of rupees five lakhs on may 14, 2007. the balance amount together with interest became due and payable to the extent of rupees four lacs sixty five thousand eight hundred fifty-six and paise ninety two that the company failed and neglected to pay despite notice. the company filed affidavit denying the claim on the ground that the payment of rupees five lakhs was sent to the petitioning creditor through forwarding letter dated april 25, 2007 wherein it was categorically made clear that the payment was in full and final settlement of their dues. the company claimed that mr.raja mundra the representative of the petitioning creditor received the cheque and along with the letter by signing acknowledgement on a copy of the letter as appearing at page 126 of the paper book in apo 24.of 2011. the learned judge admitted the petition and directed payment. the other three winding up petitions were heard by another learned judge on a subsequent date. the learned single judge took a different view. according to his lordship, the claim was a disputed one, hence the party should approach the civil court. significant to note, the petitioning creditors in all the four matters already filed civil suit covering the identical claim, those were pending before the appropriate civil court. the learned judge avoided the order of the other learned judge in the matter of nivetia udyog limited by observing that the same was pending consideration in an appeal, hence could not be relied upon. the company preferred an appeal from the order of admission of the winding up petition in the case of nivetia udyog limited whereas the nivetia group filed three appeals in other three winding up petitions from the judgement and order of the other learned judge, who declined to admit those petitions and asked the parties to wait for a decision in the civil suit. we heard all the four appeals. mr.s.b.mukherjee, learned senior advocate appearing for the company contended that parties entered into an agreement by which the claims were settled and payment was made accordingly. belated claim made almost after three years.just on the eve of expiry of the period of limitation, would itself show that the claim was not a genuine one. he took us to the letter dated april 25, 2007 and contended that the nivetia group did not object to the contents of the said letter and collected the said cheque and encashed it. hence they were precluded from contending otherwise. he also referred to the specific averment made by the company appearing at page 109 – 110 of office paper book. the relevant extract is quoted below:“that the fact remains that the settlement was entered between mr.newatia representing the respondent and mr.ravindra kumar representing the appellant company in 2007. the settlement was arrived at and entered into after a prolonged negotiation over a period of time. and on 25th april, 2007, the appellant company issued a letter to the respondent enclosing the cheque of rs.5.0 lacs drawn on idbi bank, being no.756874 stating that this payment is in full and final settlement in terms of the negotiation of the dues. the said letter was accepted by the respondent and the aforesaid raja mundhra alias raju mundhra accepted the said cheque by signing his initial as usual “rm”. as per settlement and the said letter recording the said settlement was only received and acknowledged by said mr.mundhra and the said cheque was encashed.” relying on the said paragraph quoted (supra).mr.mukherjee contended that this would amount to bona fide dispute being raised by the company that would foreclose the right of the petitioning creditor to have an order of admission. mr.mukherjee further contended that the petitioning creditor filed civil suit that was pending at the time of filing of the winding up petition. that would itself show that the petitioning creditor was also aware that the claim was a disputed one and could not be made a subject matter in a winding up proceeding. mr.mukherjee relied on the following decisions to support his contentions :i) ram kumar agarwala & anr. –versus buxar oil & rice mills ltd.(all india reporter 1960 calcutta page-764) ii) m/s.mechalec engineers & manufacturers –versus m/s.basic equipment corporation (all india reporter 1977 supreme court page-577) iii) sr.steel (p) ltd.–versus bharat industrial corporation ltd.(2005 volume-iv calcutta high court notes page-343) he also relied on the passage from buckley on the phraseology “neglected to pay”.mr.mukherjee prayed for setting aside of the judgement and order passed in the c.p.no.168 of 2010 filed by nivetia udyog limited and dismissal of the three other appeals filed by nivetia group in respect of c.p.no.169, 177 and 178 of 2010 filed by other three petitioning creditors.mr.s.k.kapoor, learned senior advocate appearing for nivetia group on the other hand contended that apart from the said letter dated april 25, 2007 there was no document which could support the alleged settlement of claim. with regard to the letter mr.kapoor contended that the said letter was never received by any of the petitioning creditors.he contended that the initials appearing in the said four letters were forged for the purpose of putting forward a sham defence. he contended that claim of rupees seven crores thirty lacs could not be settled at rupees three crores seventy-four lacs and such agreement did not have any support of law in absence of appropriate consideration. on the issue of settlement mr.kapoor contended that the plea taken by the company was vague. they did not furnish any particulars as to the agreement for settlement. he contended that the transactions were had during the period of 1994 to 2007. monies were paid from time to time leaving the balance that was made the subject matter of the winding up proceeding. on the issue of pendency of suit, mr.kapoor relied on a decision of the madras high court in the case of 21st century management services ltd.–versus gujarat industrial investment corporation ltd.reported in 2011 volume-162 company cases page-206 wherein the division bench of the madras high court observed that there was no bar to maintain a winding up proceeding when a civil suit was already pending on the identical cause of action. mr.kapoor lastly relied on an unreported decision of this court in the case of m/s.dhariwal steel private limited –versus m/s.bengal rolling shunters and engineering works dated september 14, 2004 wherein the division bench of our court elaborately dealt with the scope of a winding up proceeding and the defence of the company to the extent of its permissibility. he prayed for dismissal of the appeal filled by the company and admission of the winding up petitions in three cases referred to above, setting aside the order of dismissal. replying to the submissions made by mr.kapoor, mr.mukherjee, on the other hand contended that the decision in the case of dhariwal (supra) dealt with a situation where documents were manufactured to put up a sham defence. in the instant case, the company relied on the letter forwarding the cheque in full and final settlement of the claim. the said letter was received by shri raja mundra, whose signature tallied with the copy of the logbook that was disclosed by the company. according to mr.mukherjee, logbook was not disputed. the initial appearing, therein, would tally with the one appearing in the letter. once the petitioning creditor disputed the same that would amount to a bona fide dispute to be resolved in the civil suit pending before the appropriate court. we have considered the rival contentions. we have also examined the defence. the precedents cited at the bar would indicate well-settled principle of law. the principle applied for admission of winding up petition is based upon the age old decision of our court as far back in 1945 when learned single judge of this court in the case of kiranmayee devi reported in volume-49 calcutta weekly notes page-246 framed a guideline to be followed while dealing with an application for leave to defend a proceeding initiated under order 37 of the code of civil procedure. the apex court reiterated the said principle in the case of m/s.mechalec engineers & manufactures –versus m/s.basic equipment corporation reported in all india reporter 1977 supreme court page-577. the guidelines are as follows :- “a) if the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend. b) if the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. c) if the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, she was such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security. d) if the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. e) if the defendant has no desham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence.” it is valid not only in a proceeding under order 37 but also in case of winding up proceedings too. if we read the aforesaid guideline and try to sum it up it would lead to a proposition that a just claim would need no regular trial to prove as no plausible defence could be set forth as against it. order of admission is a matter of course. what we need, in a winding up proceeding to receive it, is a just claim against the company that was neglected. mr.mukherjee relied on a passage of buckley on the companies acts. “neglected”. was defined as “omitted to pay without reasonable excuse”.if the debt is bona fide disputed, non-payment is no.“neglected”.this is the age old principle not only followed in our country but also in england whose company law on winding up is more or less same as ours.mr.kapoor heavily relied on the decision in our court in the case of dhariwal steel private limited –versus m/s.bengal rolling shunters & engineering works dated september 14, 2004. the single bench categorically held that the defence set forth by the company was based upon fabricated documents. the division bench affirmed the same. while deciding the issue their lordships elaborately discussed the law on the subject and meticulously applied the same in the given facts involved therein. mr.mukherjee is correct to say that a decision could only be applied on case to case basis. there could not be any straitjacket formula that could be applied in similar cases de- hors the dissimilarity involved in the factual matrix. coming back to the present scenario, we would find that the defence is based upon a single document, a simple letter forwarding a cheque recording final settlement of claim. the petitioning creditors say, it was not received. company relies on logbook to say, raja mundra received documents from the company in the past by putting his initial “r.m.” that would appear in those four letters involved in four winding up petitions. merely because the initials were disputed, would not make the claim disputed one. to successfully resist a winding up petition, it must be backed up by cogent evidence so as to lead the court to have a conclusion, at least on a prima facie view, the defence was illusory. a mere statement appearing at page 109110 in the paper book quoted supra would not be enough to support the case of settlement of accounts. if we stop here we have to admit all the winding up petitions. we would have done so, had there been a plausible explanation as to the delay. the letter was written on april 25, 2007 forwarding a cheque dated may 14, 2007. the petitioning creditors were silent as to how they received the said cheques. the petitioning creditors did not make any attempt to explain the prolonged delay from may 14, 2007 when they received last payment till april 2010 when they filed suit and winding up proceedings. why they would wait till the last day of limitation, is not clear to us. in cours.of hearing we asked mr.kapoor to give us plausible explanation as to delay. despite his eloquence he was not successful, obviously for lack of evidence, on the part of his client, appearing on record. the learned judge who subsequently heard three winding up petitions and declined to receive and admit them, was absolutely correct in his approach. rather the firs.order of admission was erroneous. facts involved in all the four winding up petitions are admittedly identical. claim made in four winding up petitions are on similar arrangements made between nevatia group and the company. the company avoided the claim relying on the letter sending the cheque dated may 14, 2007 recording settlement of claim. all the four winding up petitions must have the identical fate. in our view the firs.one being c.p.no.168 of 2010 should also be dismissed like the other three. the a.p.o.no.247 of 2011 succeeds and is allowed. the judgment and order dated june 30, 2011 passed in c.p.no.168 of 2010 is set aside. other three appeals being a.p.o.no.140 of 2012, a.p.o.no.141 of 2012 and a.p.o.no.142 of 2012 must fail and are hereby dismissed for the reasons noted above. parties would be at liberty to agitate their respective views in the civil suits pending before the appropriate court. we abundantly make it clear that our observation, if any, in this judgment must not prejudice the parties in any of the civil suits pending before the appropriate court. urgent xerox certified copy of this order, if applied for, be given to the parties on their usual undertaking. shukla kabir (sinha).j.i agree. [ashim kumar banerjee,j.].[shukla kabir (sinha),j.].

Judgment:

Form not J.(2) IN THE HIGH COURT AT CALCUTTA Civil Appellate Jurisdiction Original Side Present : The Hon’ble Mr.Justice Ashim Kumar Banerjee And The Hon’ble Mr.Justice Shukla Kabir Sinha A.P.O.No.247 of 2011 A.P.O.No.140 of 2012 A.P.O.No.141 of 2012 A.P.O.No.142 of 2012 The Statesman LTD.-VersusNevatia Udyog LTD.And M/S.Nevatia Udyog -VersusThe Statesman Limited And Nathmal Nevatia (HUF) -VersusThe Statesman Limited And Chitra Nevatia -VersusThe Statesman Limited For the Appellant : Mr.S.B.Mukherjee (Sr.Advocate) Mr.Supriyo Ranjan Saha (Advocate) Mr.Anindya Basu (Advocate) (in A.P.O.No.247 of 2011) For the Respondents : Mr.S.K.Kapoor (Sr.Advocate) Mr.Ratnanko Banerjee (Advocate) Mr.Raghunath Ghosh (Advocate) Mr.Jayanta Mukherjee (Advocate) (in A.P.O.No.247 of 2011 & For the Appellants (in A.P.O.No.140 of 2012 & A.P.O.No.141 of 2012) Heard on : June 26, 2012 Judgment on : July 4, 2012.

ASHIM KUMAR BANERJEE.J.All four appeals would relate to winding up petitions filed by four different petitioning creditors being controlled by the same business group.

On appreciation of facts involved in all the four appeals, we would find the Company Statesman Limited having dearth of financial resource way back in 2004, approach the other business group involved in the above appeals to extend assistance to the company by causing newsprint supplied through various supplieRs.The arrangement was, the business group would clear of the bill immediately upon being raised on the company by the supplieRs.The company would, in turn, execute a hundi payable after sixty days through bank together with interest at the rate of nineteen per cent and service charges at the rate of one per cent.

In effect, the company would get sixty days credit for the supply that would cost them an additional burden of twenty per cent.

The supply was made to the extent of crores, payments were also made from time to time.

The company claimed that those payments were made by the business group in six different trade names being Babcock Udyog, CNN Enterprise, Nivetia Udyog Limited.

The other two were Mukherjee and Zenith TradeRs.The Nivetia group however, disowned the relationship with Zenith.

In one of the pleadings they admitted having control over the business of Mukherjee.

However, four petitions would relate to the fiRs.four parties named above.

Zenith and Mukherjee were not involved.

As per the brief extract so handed over in Court a sum of rupees seven crore thirty lacs approximately became due and payable as on April 30, 2007 out of which rupees three crores seventy-four lacs was paid on May 14, 2007 leaving a balance sum of rupees three crores fifty-six lacs approximately.

The company in their defence admitted the agreement, however, denied the liability on the ground that the amount of rupees three crores seventy-four lacs paid on May 14, 2007 was in full and final settlement of the claim of Nivedia Group that was agreed upon in a meeting held between the representatives of both the parties.

The company relied on a letter dated April 25, 2007 whereby payments were forwarded by the company in full and final settlement of the claim of the Nivedia Group.

In the fiRs.winding up petition filed by Nivetia Udyog Limited, the petitioning creditor claimed that a sum of rupees seven lacs ninety two thousand seven hundred forty three and paise thirty three became due and payable as on April 30, 2007 after adjustment of payment of rupees five lakhs on May 14, 2007.

The balance amount together with interest became due and payable to the extent of rupees four lacs sixty five thousand eight hundred fifty-six and paise ninety two that the company failed and neglected to pay despite notice.

The company filed affidavit denying the claim on the ground that the payment of rupees five lakhs was sent to the petitioning creditor through forwarding letter dated April 25, 2007 wherein it was categorically made clear that the payment was in full and final settlement of their dues.

The company claimed that Mr.Raja Mundra the representative of the petitioning creditor received the cheque and along with the letter by signing acknowledgement on a copy of the letter as appearing at page 126 of the paper book in APO 24.of 2011.

The learned Judge admitted the petition and directed payment.

The other three winding up petitions were heard by another learned Judge on a subsequent date.

The learned single Judge took a different view.

According to His Lordship, the claim was a disputed one, hence the party should approach the Civil Court.

Significant to note, the petitioning creditors in all the four matters already filed civil suit covering the identical claim, those were pending before the appropriate Civil Court.

The learned Judge avoided the order of the other learned Judge in the matter of Nivetia Udyog Limited by observing that the same was pending consideration in an appeal, hence could not be relied upon.

The company preferred an appeal from the order of admission of the winding up petition in the case of Nivetia Udyog Limited whereas the Nivetia group filed three appeals in other three winding up petitions from the judgement and order of the other learned Judge, who declined to admit those petitions and asked the parties to wait for a decision in the Civil Suit.

We heard all the four appeals.

Mr.S.B.Mukherjee, learned senior advocate appearing for the company contended that parties entered into an agreement by which the claims were settled and payment was made accordingly.

Belated claim made almost after three yeaRs.just on the eve of expiry of the period of limitation, would itself show that the claim was not a genuine one.

He took us to the letter dated April 25, 2007 and contended that the Nivetia group did not object to the contents of the said letter and collected the said cheque and encashed it.

Hence they were precluded from contending otherwise.

He also referred to the specific averment made by the company appearing at page 109 – 110 of office paper book.

The relevant extract is quoted below:“That the fact remains that the settlement was entered between Mr.Newatia representing the respondent and Mr.Ravindra Kumar representing the appellant company in 2007.

The settlement was arrived at and entered into after a prolonged negotiation over a period of time.

And on 25th April, 2007, the appellant company issued a letter to the respondent enclosing the cheque of Rs.5.0 lacs drawn on IDBI Bank, being no.756874 stating that this payment is in full and final settlement in terms of the negotiation of the dues.

The said letter was accepted by the respondent and the aforesaid Raja Mundhra alias Raju Mundhra accepted the said cheque by signing his initial as usual “RM”.

as per settlement and the said letter recording the said settlement was only received and acknowledged by said Mr.Mundhra and the said cheque was encashed.”

Relying on the said paragraph quoted (Supra).Mr.Mukherjee contended that this would amount to bona fide dispute being raised by the company that would foreclose the right of the petitioning creditor to have an order of admission.

Mr.Mukherjee further contended that the petitioning creditor filed civil suit that was pending at the time of filing of the winding up petition.

That would itself show that the petitioning creditor was also aware that the claim was a disputed one and could not be made a subject matter in a winding up proceeding.

Mr.Mukherjee relied on the following decisions to support his contentions :i) Ram Kumar Agarwala & Anr.

–versus Buxar Oil & Rice Mills LTD.(All India Reporter 1960 Calcutta Page-764) ii) M/S.Mechalec Engineers & Manufacturers –versus M/S.Basic Equipment Corporation (All India Reporter 1977 Supreme Court Page-577) iii) Sr.Steel (P) LTD.–versus Bharat Industrial Corporation LTD.(2005 Volume-IV Calcutta High Court Notes Page-343) He also relied on the passage from Buckley on the phraseology “neglected to pay”.Mr.Mukherjee prayed for setting aside of the judgement and order passed in the C.P.No.168 of 2010 filed by Nivetia Udyog Limited and dismissal of the three other appeals filed by Nivetia group in respect of C.P.No.169, 177 and 178 of 2010 filed by other three petitioning creditORS.Mr.S.K.Kapoor, learned senior advocate appearing for Nivetia group on the other hand contended that apart from the said letter dated April 25, 2007 there was no document which could support the alleged settlement of claim.

With regard to the letter Mr.Kapoor contended that the said letter was never received by any of the petitioning creditORS.He contended that the initials appearing in the said four letters were forged for the purpose of putting forward a sham defence.

He contended that claim of rupees seven crores thirty lacs could not be settled at rupees three crores seventy-four lacs and such agreement did not have any support of law in absence of appropriate consideration.

On the issue of settlement Mr.Kapoor contended that the plea taken by the company was vague.

They did not furnish any particulars as to the agreement for settlement.

He contended that the transactions were had during the period of 1994 to 2007.

Monies were paid from time to time leaving the balance that was made the subject matter of the winding up proceeding.

On the issue of pendency of suit, Mr.Kapoor relied on a decision of the Madras High Court in the case of 21st Century Management Services LTD.–versus Gujarat Industrial Investment Corporation LTD.reported in 2011 Volume-162 Company Cases page-206 wherein the Division Bench of the Madras High Court observed that there was no bar to maintain a winding up proceeding when a civil suit was already pending on the identical cause of action.

Mr.Kapoor lastly relied on an unreported decision of this Court in the case of M/S.Dhariwal Steel Private Limited –versus M/S.Bengal Rolling Shunters and Engineering Works dated September 14, 2004 wherein the Division Bench of our Court elaborately dealt with the scope of a winding up proceeding and the defence of the company to the extent of its permissibility.

He prayed for dismissal of the appeal filled by the company and admission of the winding up petitions in three cases referred to above, setting aside the order of dismissal.

Replying to the submissions made by Mr.Kapoor, Mr.Mukherjee, on the other hand contended that the decision in the case of Dhariwal (Supra) dealt with a situation where documents were manufactured to put up a sham defence.

In the instant case, the company relied on the letter forwarding the cheque in full and final settlement of the claim.

The said letter was received by Shri Raja Mundra, whose signature tallied with the copy of the logbook that was disclosed by the company.

According to Mr.Mukherjee, logbook was not disputed.

The initial appearing, therein, would tally with the one appearing in the letter.

Once the petitioning creditor disputed the same that would amount to a bona fide dispute to be resolved in the civil suit pending before the appropriate Court.

We have considered the rival contentions.

We have also examined the defence.

The precedents cited at the bar would indicate well-settled principle of law.

The principle applied for admission of winding up petition is based upon the age old decision of our Court as far back in 1945 when learned Single Judge of this Court in the case of Kiranmayee Devi reported in Volume-49 Calcutta Weekly Notes Page-246 framed a guideline to be followed while dealing with an application for leave to defend a proceeding initiated under Order 37 of the Code of Civil Procedure.

The Apex Court reiterated the said principle in the case of M/S.Mechalec Engineers & Manufactures –versus M/S.Basic Equipment Corporation reported in All India Reporter 1977 Supreme Court Page-577.

The guidelines are as follows :- “a) If the defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.

b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.

c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, she was such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.

e) If the defendant has no desham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence.”

It is valid not only in a proceeding under Order 37 but also in case of winding up proceedings too.

If we read the aforesaid guideline and try to sum it up it would lead to a proposition that a just claim would need no regular trial to prove as no plausible defence could be set forth as against it.

Order of admission is a matter of course.

What we need, in a winding up proceeding to receive it, is a just claim against the company that was neglected.

Mr.Mukherjee relied on a passage of Buckley on the Companies Acts.

“Neglected”.

was defined as “omitted to pay without reasonable excuse”.If the debt is bona fide disputed, non-payment is No.“neglected”.This is the age old principle not only followed in our country but also in England whose company law on winding up is more or less same as ouRs.Mr.Kapoor heavily relied on the decision in our Court in the case of Dhariwal Steel Private Limited –versus M/S.Bengal Rolling Shunters & Engineering Works dated September 14, 2004.

The Single Bench categorically held that the defence set forth by the company was based upon fabricated documents.

The Division Bench affirmed the same.

While deciding the issue Their Lordships elaborately discussed the law on the subject and meticulously applied the same in the given facts involved therein.

Mr.Mukherjee is correct to say that a decision could only be applied on case to case basis.

There could not be any straitjacket formula that could be applied in similar cases de- hors the dissimilarity involved in the factual matrix.

Coming back to the present scenario, we would find that the defence is based upon a single document, a simple letter forwarding a cheque recording final settlement of claim.

The petitioning creditors say, it was not received.

Company relies on Logbook to say, Raja Mundra received documents from the company in the past by putting his initial “R.M.”

that would appear in those four letters involved in four winding up petitions.

Merely because the initials were disputed, would not make the claim disputed one.

To successfully resist a winding up petition, it must be backed up by cogent evidence so as to lead the Court to have a conclusion, at least on a prima facie view, the defence was illusory.

A mere statement appearing at page 109110 in the paper book quoted supra would not be enough to support the case of settlement of accounts.

If we stop here we have to admit all the winding up petitions.

We would have done so, had there been a plausible explanation as to the delay.

The letter was written on April 25, 2007 forwarding a cheque dated May 14, 2007.

The petitioning creditors were silent as to how they received the said cheques.

The petitioning creditors did not make any attempt to explain the prolonged delay from May 14, 2007 when they received last payment till April 2010 when they filed suit and winding up proceedings.

Why they would wait till the last day of limitation, is not clear to us.

In couRs.of hearing we asked Mr.Kapoor to give us plausible explanation as to delay.

Despite his eloquence he was not successful, obviously for lack of evidence, on the part of his client, appearing on record.

The learned Judge who subsequently heard three winding up petitions and declined to receive and admit them, was absolutely correct in his approach.

Rather the fiRs.order of admission was erroneous.

Facts involved in all the four winding up petitions are admittedly identical.

Claim made in four winding up petitions are on similar arrangements made between Nevatia group and the company.

The company avoided the claim relying on the letter sending the cheque dated May 14, 2007 recording settlement of claim.

All the four winding up petitions must have the identical fate.

In our view the fiRs.one being C.P.No.168 of 2010 should also be dismissed like the other three.

The A.P.O.No.247 of 2011 succeeds and is allowed.

The judgment and order dated June 30, 2011 passed in C.P.No.168 of 2010 is set aside.

Other three appeals being A.P.O.No.140 of 2012, A.P.O.No.141 of 2012 and A.P.O.No.142 of 2012 must fail and are hereby dismissed for the reasons noted above.

Parties would be at liberty to agitate their respective views in the civil suits pending before the appropriate Court.

We abundantly make it clear that our observation, if any, in this judgment must not prejudice the parties in any of the civil suits pending before the appropriate Court.

Urgent Xerox certified copy of this order, if applied for, be given to the parties on their usual undertaking.

Shukla Kabir (Sinha).J.I agree.

[ASHIM KUMAR BANERJEE,J.].[SHUKLA KABIR (SINHA),J.].

Court	Kolkata High Court
Decided On	Jul-04-2012
Judge	BANERJEE
Appellant	The Statesman Ltd.
Respondent	Nevatia Udyog Ltd.

The Statesman Ltd. Vs. Nevatia Udyog Ltd. - Court Judgment