Greenhills Exports (Private) Limited, Mangalore and Others Vs. Coffee Board, Bangalore - Court Judgment

Excerpt:
company - debt - companies act, 1956 - whether respondent made out prima-facie existence of 'debt' due by appellant - amounts claimed by respondent by way of reimbursements of several losses incurred by it as consequence of breach committed by appellant - claim of respondent disputed claim for damages and not to recover debt. - karnataka stamp act, 1957.[k.a. no. 34/1957]. section 34: [cyriac joseph, c.j. & a.n.venugopala gowda, jj] imposing of penalty - trial court imposed ten times the amount of the deficient portion of the proper duty as penalty - held, the impugned order was passed by the trial court in exercise of the power under the proviso to section 34 of the karnataka stamp act, 1957. according to clause (a) of the said proviso, when the amount of the proper duty or deficient portion thereof exceeds five rupees, the penalty to be imposed is a sum equal to ten times such duty or portion. there is no discretion granted to the court to impose a lesser penalty. - for convenience, first appellant will be referred to as 'the company' and the respondent will be referred to as 'the board'.2. the company was registered as a coffee exporter with the board, in march 1987. the board used to hold export auctions of coffee periodically, subject to the 'terms and conditions for sale of coffee in the course of export'.according to the board, the company participated in the auctions held by the board between 21-6-1989 and 20-12-1989 and purchased 654.6 metric tonnes of coffee, but failed to make payment and take delivery of the said coffee within the time stipulated for payment, or within the time extended by the board at the request of the company. when the company failed to pay for the coffee purchased and take delivery, the board enforced the said bank guarantees by letter dated 12-4-1991 and received the sum of rs. it also contended that the board had failed to mitigate losses and it was not liable to pay the amounts claimed. it is now well-settled that where the amount claimed is damages, either for breach of a contract or in torts, it is not a 'debt' due and therefore a company petition will not be maintainable. the respondent resisted the petition on the ground that there was no breach, as failure to lift the machinery was due to certain circumstances beyond its control. suryatronics private limited, a learned single judge of the andhra pradesh high court held that a company petition is maintainable only where the debt claimed is ascertained, definite and undisputed and the company has failed to pay such debt, and winding up cannot be ordered if there is bona fide and substantial defence denying the liability. the second premise is that where the contract specifies the losses/expenses to be made, good by a defaulting party to the other, and the party alleging breach has ascertained or calculated the damages (that is the loss and expenses incurred) in the manner provided in the contract, then the amount claimed is an ascertained sum and therefore a 'debt' as contrasted from an unquantified claim for damages'.while the first premise is correct, the second premise (that a claim for damages, when calculated by the aggrieved party in the manner provided in the contract, becomes an ascertained sum due and therefore a 'debt') is neither sound nor correct. it is well-settled that when there is a breach of contract the only right that accrues to the person who complains of the breach is the right to file a suit for recovering damages. in my opinion, with respect to the learned judge, greater emphasis should be placed on the expression 'any pecuniary liability' rather than on the expression 'whether ascertained or to be ascertained'.before it could be said of a claim that it is a debt, the court must be satisfied that there is a pecuniary liability upon the person against whom the claim is made, and the question is whether in law a person who commits a breach of contract becomes pecuniary liable to the other party to the contract. the expression 'to be ascertained' may well apply to a case which i have indicated earlier where the pecuniary liability cannot be ascertained without accounts being taken or some other process being gone through. 'now the law is well-settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a court or other adjudicatory authority. --the decision in raman iron foundry's case, supra, continues to be good law in regard to the principles relating to damages, even though it is dissented/impliedly overruled on another point in m/s. failure to take delivery may be due to several valid or lawful reasons which may show that the failure to take delivery is not a 'default' or 'breach' in which event, no pecuniary liability may fasten on him. as noticed above, the amount claimed by the board is not in regard to either loan advanced or as price of any goods supplied nor on account of failure to pay any sum which was agreed to be paid by the company. and as the buyer did not pay the price, and the goods were resold much later, until realisation of the price on resale, the buyer should make good the loss on account of non-availability of the money (that is sale price) by way of interest.r.v. raveendran, j.1. the respondent herein filed company petition no. 96 of 1992 under section 433(e) and (f) of the companies act, 1956 ('act' for short), seeking an order to wind up the first appellant-company. the learned company judge, after notice to appellants and hearing both parties, passed an order dated 13-2-1997 admitting the company petition. feeling aggrieved the respondents in the company petition have filed this appeal under section 483 of the act. for convenience, first appellant will be referred to as 'the company' and the respondent will be referred to as 'the board'. 2. the company was registered as a coffee exporter with the board, in march 1987. the board used to hold export auctions of coffee periodically, subject to the 'terms and conditions for sale of coffee in the course of export'. according to the board, the company participated in the auctions held by the board between 21-6-1989 and 20-12-1989 and purchased 654.6 metric tonnes of coffee, but failed to make payment and take delivery of the said coffee within the time stipulated for payment, or within the time extended by the board at the request of the company. the board contends that the company committed breach by failing to make payment and take delivery and as a consequence, the board resold 593.4 mt. of coffee in the auctions held in april/may 1991 and incurred a loss. as a result of such alleged breach, the board claimed the following amounts from the company: (a)loss incurred by the board on re-sale (on account of differencebetween the price at which coffee was sold to the company and the pricerealised on resale)rs. 8,09,478.00(b)interest on the auction sale price, from the dates of originalauction sales till date of resalers. 35,00,744.16(c)insurance chargesrs. 74,879.47(d)godown rentrs. 3,12,263.40(e)extension charges for non-shipment of coffeers, 9,49,440.00 total:rs. 56,46,805.033. the company had furnished bank guarantees aggregating to rs. 7,50,000,00 for due performance of its obligations in regard to the purchases in the export auctions. when the company failed to pay for the coffee purchased and take delivery, the board enforced the said bank guarantees by letter dated 12-4-1991 and received the sum of rs. 7,50,000.00 on 24-4-1991 and adjusted the same towards its dues leaving a balance of rs. 48,96,805.03. the board issued a notice dated 28-12-1991 through counsel demanding payment of the said amount and informed the company that if the payment is not made, a petition for winding up will be filed. the company sent a reply dated 8-1-1992 seeking time to send a detailed reply, but neither made any payment nor sent any reply. therefore, the board filed a petition for winding up against the company on 25-4-1992 contending that the company was unable to pay its debts to an extent of rs. 48,96,805.03 and was therefore liable to be wound up under section 433(e) and (f) of the act. 4. the company court issued a notice to appellants to show cause why the petition should not be admitted. the respondent filed its statement of objections denying the liability. it contended that the coffee sold in export auctions by the board could be used by the buyers only for export and could not be sold in domestic market; that chief marketing officer of the board could however permit sale of such coffee in theinternal market in special circumstances; that it purchased in all 1,827.70 metric tonnes and had paid for and took delivery of the major part of the coffee purchased; that 654.6 metric tonnes of coffee which was represented to conform to the specifications for sale in the international market (for which export auctions were held) was in fact inferior in quality and discoloured and did not conform to samples/specifications; that it produced documents [annexure-r3(a) to 3(e)] to show that it had sent samples to the foreign buyers who rejected the coffee as being of inferior quality; that therefore, it requested the board by telex dated 11-3-1991 for permission to divert the stock of coffee for sale in the internal market; that the board did not accept the said reasonable request nor grant such permission, even though it had granted such permission in the case of others; that if such permission had been granted, it would have paid for and taken delivery, as the internal market prices were higher than the international prices; and that therefore, it was not liable to pay damages for any alleged loss. the company also denied that the board had sustained loss as alleged. the company next contended that the board had granted extension for payment till december 1990, but refused to extend time till june 1991 as requested by the company; that if such extension had been granted the company would have been able to take delivery in view of the improved market conditions and devaluation of rupee. in short, the company denied that it had committed breach or default or liable to pay damages. it also contended that the board had failed to mitigate losses and it was not liable to pay the amounts claimed. it also denied the allegations that it had stopped its business and was unable to pay its debts. the company also contended that as the entire claim was for damages, a proceedings for winding up was not maintainable. 5. the learned company judge heard the matter in regard to admission and passed an order dated 13-2-1997 admitting the winding up petition. he accepted that 'damages are not debt and action to recover damages is not an action to recover a debt'. he further held the term 'debt' would refer to a definite sum of money, or a sum of money which was capable of being ascertained; that the terms and conditions of sale authorised the board to resell the coffee in the event of default and recover the difference between the price at which the coffee was originally sold and the resale price, apart from interest on the auction sale price till the date of resale in the event of delay, and godown rent and insurance charges. the learned judge held that each of these amounts, that is the difference in sale price, interest, godown rent and insurance charges were ascertainable and once the board ascertained the amounts due under those heads, the amounts became ascertained sums due and thus a debt. the learned judge held that defence did not disclose a prima facie bona fide dispute. the court therefore admitted the petition and adjourned the matter to consider the question of publication of notice. 6. feeling aggrieved, the company has filed this appeal contending that the amount claimed is not a 'debt' due and therefore, the petition for winding up not maintainable. 7. before considering the matter on merits, it is necessary to deal with a preliminary objection that an appeal is not maintainable against an order of admission of a petition for winding up. 7.1 in cotton corporation of india limited v united industrial bank limited and others, the supreme court observed: 'it is undoubtedly true that winding up petition is not a recognised mode for recovery of debt and if the company is shown to be solvent and the debt is bona fide disputed, the court generally is reluctant to admit the petition. therefore, the power is conferred on the judge before whom the petition comes up for admission to issue pre-admission notice to the company so that the company is not taken unaware and may appear and point out to the judge that the petitioner is actuated by an ulterior motive and presentation of the petition is a device to pressurise the company to submit to an unjust claim'.7.2 in hind overseas private limited v raghunath prasad jhun-jhunwalla and another, the supreme court observed: 'even admission of a petition which will lead to advertisement of the winding up proceedings is likely to cause immense injury to the company if ultimately the application has to be dismissed. the interest of the applicant alone is not of predominant consideration. the interests of the shareholders of the company as a whole apart from those of others interests have to be kept in mind at the time of consideration as to whether the application should be admitted on the allegations mentioned in the petition'.7.3 in the case of pradeshiya industrial and investment corporationof uttar pradesh v north india petro chemical limited , the companycourt after notice and hearing, ordered admission of a petition for winding up filed against the appellant-company but postponed advertisement, as in this case. the division bench dismissed an appeal by thecompany, challenging the admission. on further appeal by specialleave, the supreme court held that the two basic requirements for apetition under section 433(e) were that (i) there should be a debt; and(ii) the company must be unable to pay such debt; and that if either ofthese requirements were absent, the petition was liable to be dismissedas a case for admission was not made out. it was also held that an orderof admission, even without an order for advertisement, is fraught withserious consequence to the company. as the two requirements were notmade out in that case, the supreme court interfered by allowing theappeal and set aside the order of admission and dismissed the companypetition. 7.4 in airwings private limited v. viktoria air cargo gmbh , s.b. mujmudar c.j. (as he then was) speaking for a division bench of this court held that before admitting a petition for winding up, the court will have to hold a summary enquiry, after hearing the petitioner and the respondent on notice, for arriving at a prima facie finding on the following aspects: (1) whether the petitioner is a creditor to whom the company owed an ascertained sum of money; (ii) whether the said debt is within limitation; and (iii) whether the defence of the company is valid or bona fide. relying on section 439(8) of the act and rule 96 of the companies (court) rules, 1959, it was held that an admission in regard to a petition for winding up should be by an order 'sufficiently speaking so as to enable anyone who reads the order to find out as to what were the reasons which weighed with the court for arriving at said prima facie findings'.7.5 it is evident from the said decisions that if the petitioner in the company petition fails to make out prima facie existence of a 'debt' and inability to pay such debt, the petition should be rejected; and if admitted, the order admitting a company petition can be reserved in appeal. 8. the next question that arises for consideration is whether the board has made out prima facie, the existence of a 'debt' due by the company to the board. it is now well-settled that where the amount claimed is damages, either for breach of a contract or in torts, it is not a 'debt' due and therefore a company petition will not be maintainable. we may briefly refer to the decisions of various courts on this aspect. 8.1 in m/s. jyothi limited v m/s. boning fouress limited, it was held thus: 'the term 'debt' refers to an ascertained and definite amount 'due' and does not refer to a claim for compensation-/damages or a claim which requires assessment by a court before it becomes due and payable. . . . a company court can direct winding up, when the company is unable to pay its 'debts'. the word 'debt' as noticed above refers to an ascertained and definite amount due to the creditor. to become a 'debt', an amount should either be due by the debtor under an agreement/promise to pay, or admitted to be due by the debtor, or determined to be due by the debtor by a competent court. it does not include claims for damages or compensation which has to be assessed by a court before it becomes due and payable. . . . in a petition under section 433(e), the court can examine whether the dispute raised by the company in regard to the claim of petitioner is bona fide or whether the defence of the company is frivolous and intended merely to avoid an undisputed liability. but, it should not decide the claims which are disputed bona fide nor quantify the loss suffered by the petitioner and awarddamages, nor award interest to compensate loss on account of delay on the part of the company in paying the bills. exercise of such powers would be beyond the scope of proceedings for winding up, as such proceedings are not meant to ensure recovery of debts by creditors nor ensure that the creditors do not suffer loss on account of delay in payment'.(emphasis supplied) 8.2 we may next refer to the decision of a learned single judge of the punjab and haryana high court in gleason works v punjab tractors limited. in that case the respondent had agreed to purchase certain machinery, but subsequently cancelled the contract. the petitioner claimed that the respondent was liable to pay us $ 6,00,000 as damages in terms of the contract, and filed a winding up petition. the respondent resisted the petition on the ground that there was no breach, as failure to lift the machinery was due to certain circumstances beyond its control. the court held that though the amount claimed was in the nature of liquidated damages for breach of contract, the question whether there was a breach at all and what should be the damages under the circumstances is for the civil court to adjudicate. the court rejected the petition as the amount claimed was neither an ascertained sum due nor an admitted debt and as a claim founded only in damages, is not a 'debt'. 8.3 the delhi high court in sardar singh kohli v ahuja properties, financiers and promoters (private) limited , held that a company cannot be ordered to be wound up on the basis of non-payment of thi1 compensation claimed when there is a dispute about the alleged breach of contract and the amount of compensation is yet to be determined. 8.4 the madras high court in newfinds (india) limited v vorion chemicals and distilleries limited , held that the term 'debt' would refer to a definite sum and does not include any claim for unliquidated damages or a sum of money which is capable of being ascertained. 8.5 in m/s. multi metals limited v m/s. suryatronics private limited, a learned single judge of the andhra pradesh high court held that a company petition is maintainable only where the debt claimed is ascertained, definite and undisputed and the company has failed to pay such debt, and winding up cannot be ordered if there is bona fide and substantial defence denying the liability. 9. in this case, the amount claimed from the company is under five heads (referred to in para 2 above) aggregating to rs. 56,46,805.03. according to the board, the amount claimed by it as damages has been calculated/ascertained in terms of the contract. we may at this stage conveniently refer to the relevant clauses in the 'terms and conditions for sale of coffee in the course of export'. clause 14 requires payment otprice by the buyer within 30 days from the date of auction. clause 15 provides for extension of time for payment, not exceeding 60 days, on application by the buyer, subject to payment of interest as such rates as may be prescribed by the marketing committee from time to time for the period commencing from the expiry of 30 days from the date of auction till date of payment. clause 16 provides that if payment is not made within the time stipulated in clause 14 or within the time as extended under clause 15, the buyer will be treated as a defaulter and the coffee which had been agreed to be sold to him. will be sold at his risk and cost as soon as may be convenient and the loss, if any, resulting from such sale as also the insurance premia. godown rent and other charges incurred between the date of original auction and the date of resale shall be due and recoverable from the defaulter. the learned company judge has held that the board has ascertained the amounts due in accordance with the contract and therefore, the total amount claimed is an 'ascertained sum payable by the defaulter (company)' and therefore a 'debt'; and as the company has neglected to pay such 'debt', the board has made out prima facie, that the company is unable to pay its debts. 10. the learned company judge has proceeded on two premises to hold that the amount claimed is, a debt due. the first premise is that 'damages' is what is awarded in law for an injury or wrong as a consequence of a breach of contract or tortious act and it includes all amounts which an aggrieved party may recover under law; on the other hand, the term 'debt' refers to an ascertained sum due or a sum which is capable of being ascertained; and therefore a claim for damages is not a claim for a debt. the second premise is that where the contract specifies the losses/expenses to be made, good by a defaulting party to the other, and the party alleging breach has ascertained or calculated the damages (that is the loss and expenses incurred) in the manner provided in the contract, then the amount claimed is an ascertained sum and therefore a 'debt' 'as contrasted from an unquantified claim for damages'. while the first premise is correct, the second premise (that a claim for damages, when calculated by the aggrieved party in the manner provided in the contract, becomes an ascertained sum due and therefore a 'debt') is neither sound nor correct. 11. the correct legal position on this aspect is stated thus by chagla, c.j., in iron and hardware (india) company v firm shamlal and brothers, in the following classic passage, while distinguishing 'debt' from 'damages': 'now, in order that there should be a debt there must be an existing obligation. the payment may be due immediately or it may be due in future, but the obligation must arise in order that the debt should be due. it may even be that the actual payment due in respect of the debt may require ascertainment by some mechanical process or by the taking of accounts. but even whenthe actual amount is to be ascertained the obligation must exist. it is well-settled that when there is a breach of contract the only right that accrues to the person who complains of the breach is the right to file a suit for recovering damages. the breach of contract does not give rise to any debt and therefore it has been held that a right to recover damages is not assignable because it is not a chose in action. an actionable claim can be assigned, but in order that there should be an actionable claim there must be a debt in the sense of an existing obligation. but inasmuch as a breach of contract does not result in any existing obligation on the part of the person who commits the breach, the right to recover damages is not an actionable claim and cannot be assigned. (7) now, this principle has been accepted by the learned judge below, but the reason why he has taken a different view is that the definition of 'debt' given in this act is an artificial definition and is not the definition which has been accepted for the purpose of the transfer of property act, and what is emphasised is that debt is not merely a liability which is ascertained, but it is also a liability which is to be ascertained, and therefore the view is taken that unliquidated damages would constitute a debt within the meaning of this act. in my opinion, with respect to the learned judge, greater emphasis should be placed on the expression 'any pecuniary liability' rather than on the expression 'whether ascertained or to be ascertained'. before it could be said of a claim that it is a debt, the court must be satisfied that there is a pecuniary liability upon the person against whom the claim is made, and the question is whether in law a person who commits a breach of contract becomes pecuniary liable to the other party to the contract. in my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. as already stated, the only right which he has is the right to go to a court of law and recover damages. now, damages are the compensation which a court of law gives to a party for the injury which he has sustained. but, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. he gets compensation as a result of the fiat of the court. therefore, no pecuniary liability arises till the court has determined that the party complaining of the breach is entitled to damages. therefore, when damages are assessed, it would not be true to say that what the court is doing is ascertaining a pecuniary liability which already existed. the court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. but, till that determination there is no liability at all upon the defendant. the expression 'to be ascertained' may well apply to a case which i have indicated earlier where the pecuniary liability cannot be ascertained without accounts being taken or some other process being gone through. but the whole basis of suit for damages is that at the date of the suit there is no pecuniary liability upon the defendant and the plaintiff has come to court in order to establish a pecuniary liability'.(emphasis supplied)this is followed by a division bench of allahabad high court in mirza javed murtaza v. uttar pradesh financial corporation, kanpur. 12. the supreme court in union of india v raman iron foundry, reiterated the principle thus: 'it therefore makes no difference in the present case that the claim of the appellant is for liquidated damages. it stands on the same footing as a claim for unliquidated damages. 'now the law is well-settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a court or other adjudicatory authority. when there is a breach of contract, the party who commits the breach does not eo instant incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. the only right which the party aggrieved by the breach of the contract has is the right to sue for damages'.(emphasis supplied) 13. the position is the same whether the claim is for unliquidated damages under section 73 of the contract act or for liquidated damages under section 74 of the contract act. while there may be difference in regard to ascertainment of loss or the quantum of damages awardable under sections 73 and 74, the basic requirement for both is a finding by a competent court (or arbitrator) that the person against whom the claim is made, has committed breach and has incurred a pecuniary liability. this is clear from the decisions of the supreme court in sir chunilal v. mehta and sons limited v century spinning and manufacturing company limited and in raman iron foundry's case, supra. in chunilal's case, supra, the supreme court held: 'where parties name in a contract reduced to writing, a sum of money to be paid as liquidated damages they must be deemed to exclude the right to claim an unascertained sum of money as damages. the right to claim liquidated damages is enforceable under section 74 of the contract act and where such a right is found to exist no question of ascertaining damages really arises. where the parties have deliberately specified the amount of liquidated damages there can be no presumption that they, at thesame time, intended to allow the party who has suffered by the breach to give a go by to the sum specified and claim instead a sum of money which was not ascertained or ascertainable at the date of the breach'.in raman iron foundry's case, supra, the supreme court observed: 'so far as the law in india is concerned, there is no qualitative difference in the nature of the claim, whether it be for liquidated damages or for unliquidated damages..... section 74 of the indian contract act eliminates the somewhat elaborate refinements made under the english common law in distinguishing between stipulations providing for payment of liquidated damages and stipulations in the nature of penalty. under the common law a genuine pre-estimate of damage by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the court refuses to enforce it, awarding to the aggrieved party, only reasonable compensation. the indian legislature has sought to cut across the web of rules and presumptions under the english common law. by enacting a uniform principle applicable to all stipulations naming amounts to he paid in case of breach, and stipulations by way of penalty, and according to this principle, even if there is a stipulation by way of liquidated damages, a party complaining of breach of contract can recover only reasonable compensation for the injury sustained by him, the stipulated amount being merely the outside limit'.(note.--the decision in raman iron foundry's case, supra, continues to be good law in regard to the principles relating to damages, even though it is dissented/impliedly overruled on another point in m/s. h.m. kamaluddin ansari and company v union of india ). 14. we will now cull out the principles for ready reference: (i) a 'debt' is a sum of money which is now payable or will become payable in future by reason of a present obligation. the existing obligation to pay a sum of money is the sine qua nan of a debt. 'damages' is money claimed by, or ordered to be paid to, a person as compensation for loss or injury. it merely remains as a claim till adjudication by a court and becomes a 'debt' when a court awards it. (ii) in regard to a claim for damages (whether liquidated or unliquidated), there is no 'existing obligation' to pay any amount. no pecuniary liability in regard to a claim for damages, arises till a court adjudicates upon the claim for damages and holds that the defendant has committed breach and has incurred a liability to compensate the plaintiff for the loss and then assesses thequantum of such liability. an alleged default or breach gives rise only to a right to sue for damages and not to claim any 'debt'. a claim for damages becomes a 'debt due', not when the loss is quantified by the party complaining of breach, but when a competent court holds on enquiry, that the person against whom the claim for damages is made, has committed breach and incurred a pecuniary liability towards the party complaining of breach and assesses the quantum of loss and awards damages. damages are payable on account of a fiat of the court and not on account of quantification by the person alleging breach. (iii) when the contract does not stipulate the quantum of damages, the court will assess and award compensation in accordance with the principles laid down in section 73. where the contract stipulates the quantum of damages or amounts to be recovered as damages, then the party complaining of breach can recover reasonable compensation, the stipulated amount being merely the outside limit. (iv) when a contract provides that on default by a buyer to pay for and take delivery of goods, the seller is entitled to recover the loss incurred on resale, interest on delayed recovery of the price, godown charges, insurance charges and other expenses incurred by the seller till resale, it cannot be said the buyer incurs the liability to pay those amounts automatically, when he fails to take delivery. failure to take delivery may be due to several valid or lawful reasons which may show that the failure to take delivery is not a 'default' or 'breach' in which event, no pecuniary liability may fasten on him. (v) even if the loss is ascertainable and the amount claimed as damages has been calculated and ascertained in the manner stipulated in the contract, by the party claiming damages, that will not convert a claim for damages into a claim for an ascertained sum due. liability to pay damages arises only when a party is found to have committed breach. ascertainment of the amount awardable as damages is only consequential. 15. in this case there is no adjudication by either a civil court (or by any arbitrator) that the company committed breach and incurred pecuniary liability. as noticed above, the amount claimed by the board is not in regard to either loan advanced or as price of any goods supplied nor on account of failure to pay any sum which was agreed to be paid by the company. on the other hand, the amounts claimed are by way of reimbursement of several losses allegedly incurred by the respondent-board as a consequence of breach committed by the appellant-company. 15.1 the first claim is loss incurred on resale, that is the difference between contract price and resale price. this is nothing but a claim for damages, as per clause 16, based on alleged breach by the company. 15.2 the second part of the claim is interest on the sale price from the respective dates of auction sales till the date of resale by the board.this again is a claim for damages. the basis for the claim is that if the buyer had paid the sale price on the date of sale, the seller would have had the benefit of such amount; and as the buyer did not pay the price, and the goods were resold much later, until realisation of the price on resale, the buyer should make good the loss on account of non-availability of the money (that is sale price) by way of interest. this is based on clause 15. this is also a claim for damages, based on breach. in fact the said clause contemplates payment of interest for a period not exceeding 60 days and not for a period of about one and half to two years which is now claimed. neither the exact periods for which the interest is claimed nor the rate at which interest is claimed is disclosed. the claim presupposes that there was a breach by the appellant-company in not paying the price and taking delivery of goods. on the other hand, the appellants' contention that it could not take delivery and pay for the goods for reasons which do not amount to breach. thus entitlement to interest will depend on a decision whether the appellant committed breach. 15.3 the claim for insurance charges and godown rent are referableto clause 16. the claim for extension charges for non-shipment is not based on any specific provision in the terms and conditions of sale. these are claimed on the assumption that there is breach. whether there is a breach by the company, and whether there was loss and if so to what extent and whether the board took steps to mitigate the loss are all matters which will have to be decided by a competent civil court in a suit for damages. 15.4 even if the claims on account of godown rent or insurance charges are to be assumed to be not in the nature of damages, but ascertained sums due, it is seen that they aggregate to rs. 3,87,142.87. the board has already encashed the bank guarantee for rs. 7.50 lakhs and adjusted the amount towards the said dues. 15.5 we have referred to the above aspects, only to show that the claim of the board is a seriously disputed claim for damages on account of alleged breach, and not to recover a 'debt'. 16. in the absence of a decision by a competent civil court (or arbitrator, as the case may be) that the appellant has committed breach and has incurred a pecuniary liability, no amount can be said to be due to the board merely on its claim that the company has committed breach and that it (the board) has quantified the loss in terms of the contract. as the amount claimed is not a 'debt' but damages, we hold that the petition for winding up of a company is not maintainable, even though the amount claimed is calculated in terms of the contract. the only ground urged by the board was that the company is unable to pay its debts. no other ground is urged. 17. in the result, we allow this appeal and set aside the order dated 13-2-1997 passed in company petition no. 96 of 1992 admitting the petition. as a consequence company petition no. 96 of 1992 stands dismissed. no costs.