Naresh Nath Mukherjee (Shipping) P. Ltd. Vs. Triton Container International Ltd. - Court Judgment

Excerpt:
- surinder singh nijjar, c.j.1. this letters patent appeal has been filed against the judgment of the learned single judge dated february 23, 2004, admitting the winding up petition to the extent us $ 95,659.54 equivalent to rs. 45,10,347.30 with interest at the rate of 9 per cent, per annum from the date of winding up notice until payment is made.2. the petitioning creditor is carrying on business of leasing out, inter alia, various types of dry-van containers. it claims that at the request of the company, the petitioner agreed to grant and the company agreed to take on lease for an initial period of one year commencing from july 1, 1997, dry-van containers of different specifications. the terms and conditions of such leasing were recorded in writing subsequently in an agreement executed on january 30, 1998. the agreement was, however, given retrospective effect from july 1, 1997. the agreement was renewed from time to time and is still in force which would appear from dealings and transactions and the course of conduct by and between the parties. the petitioner had in the course of dealings and transactions raised its invoices for lease rentals in respect of the containers, which were duly accepted by the company without any objection. the company was bound and liable to pay lease rentals and other dues to the petitioner on monthly basis within 30 days from the date of submission of the invoices. after giving credit to the company for all sums paid by and/or received on its behalf and/or credited to have been paid, a sum of us $ 77,667.07 became due and payable by the company to the petitioner as on april 30, 2001. thereafter, the company had approached the petitioner to allow it to pay the outstanding amount in instalments. at the request of the company, the petitioner had agreed to accept the payment of the amount due by monthly instalments of not less than us $ 4,750 together with interest at the rate of 8 per cent, per annum from may 1, 2001. the terms and conditions between the parties were recorded in an agreement dated may 11, 2001. this agreement is alleged to have been signed by and/or on behalf of the company on may 11, 2001. the agreement specifically acknowledges that it is indebted to the petitioner as claimed. the company, however, failed, neglected and refused to pay any instalments in terms of the agreement or otherwise.3. this apart, the petitioner had also raised invoices for service charges and/or interest during a period between may 1, 2001 and april 30, 2002. these invoices had also been accepted by the company without raising any objection thereto. the company has failed and neglected and/or refused to pay the sums due or any part and/or portion thereof. petitioner also claims future interest on the outstanding at the agreed rate of 8 per cent, per annum from may 1, 2002, until realisation. the petitioner claims to have made demands on the company from time to time. copies of the letters is attached with the petition as annexed 'e' collectively. the company, however, did not respond to the aforesaid letters. there is now due and owing by the company to the petitioner a sum of us $ 95,659.54 on april 30, 2002. not receiving any response from the company a statutory notice under section 434 of the companies act, 1956, was served by the petitioner through a letter dated april 8, 2002. the notice was duly sent to the petitioner at the registered office of the company through a special messenger. this was duly received by the company on april 8, 2002. it is pointed out in the petition that inadvertently the petitioner had wrongly mentioned that total claim us $ 111,372.99 up to and including february 28, 2002. the notice was duly accepted by the company by letter dated april 29, 2002, through its solicitor. in this letter the company expressed its surprise to read the contents of the letter and the petition dated april 8, 2002. the company was requested to send copies of the alleged agreement before any reply is given to the statutory notice. the petitioner claims to have offered inspection to the company. since, the company has failed or neglected to pay the sums due, the petitioning creditor had moved for winding up of the company before the company court.4. the petitioner in its affidavit-in-opposition disputed the allegations contained in paragraphs 6 to 8. thus, the existence of the claim, i.e., the lease agreement dated july 1, 1997 and the subsequent amendments thereto have been denied. it claims that the signatures on behalf of the company on the agreement have been fraudulently obtained. it further states that sri saileshwar ghosh was never a director of the company as alleged. the company denies that the petitioner ever raised any bills on the company from time to time for the lease renewals. the acceptance of the invoices is also denied. the company also states that there was no occasion for the petitioner to raise any bills on the company as there was no business transaction between the company and the petitioner. the invoices were always raised on astra marine pvt. ltd. of singapore. the company also denies the averments made in paragraphs 11 to 13 which relate to the amount due and the request made by the company for payment of the outstanding amount in instalments. the statements of accounts attached to the company petition are also denied by the company.5. the petitioner in its affidavit-in-reply claims that all along the company was represented by mr. saileswar ghosh, mr. b. chatterjee and mr. j. chatterjee. saileshwar ghosh and b. chatterjee represented themselves to be as directors of the company. mr. j. chatterjee held himself out to be the executive of the company. the petitioner relied upon and acted on the basis of the aforesaid representation and entered into business transactions with the company. this is evident from the agreement dated january 30, 1998, which has been signed by saileswar ghosh on behalf of the company and simon vernon on behalf of the petitioning creditor. the agreement dated may 11, 2001, was also signed by sri saileshwar ghosh on behalf of the company. it is further stated that sri saileshwar ghosh is presently in control of all the group companies of the company. one such group company is astra marine pvt. ltd. sri saileshwar ghosh is also a director of the company. this company in its profile has claimed itself to be 'one of the leading shipping agents in india operating successfully for the past eight years'. it also claims that 'although this (astra marine) was established in the year 1985, its parent organisation, naresh nath mukherjee (shipping) private limited has been in the field since the inception in the year 1928'. thus, the relationship of saileswar ghosh with the company is clearly established from these documents.6. after hearing learned counsel for the parties and upon examination of the entire materials, the learned single judge holds that there was an agreement entered into between the company and the petitioning creditor. it is also held that from the documents it is evident that astra marine pvt. ltd. has something to do in the matter. the learned single judge observed that whether or not saileswar ghosh is the director of the company in question, he did act with the knowledge of the company. therefore, following the principle of law laid down in the case of freeman & lockyer (a firm) v. buckhurst park properties (mangal) ltd. [1964] 34 comp cas 405 (ca) : [1964] 1 all er 630, it is held that the company is liable to pay all the amounts due to the petitioning creditor. thus, the petition has been admitted. the company has been given a chance to pay all the dues in 10 equal instalments commencing from april 2, 2004. hence, this letters patent appeal, by the company.7. we have heard learned counsel for the parties and perused the paperbook.8. mr. anindya mitra, learned senior counsel appearing for the appellant submitted that all four pillars of the judgment of the learned single judge are non-existent. the agreement on the basis of which business transactions between the company and the petitioner are sought to be established is denied. the signatures on the agreement of admission of liability are denied. it is also denied that sri saileshwar ghosh was at any stage is a director of the company. any link between astra marine pvt. ltd. and astra marine ppe is denied. the receipt as well as the acceptance of invoices is denied. the signatures on the agreements are stated to have been forged on behalf of the company. the seal of the company is not authentic. sri saileshwar ghosh had no authority to execute any agreement on behalf of the company. in such circumstances, the learned single judge erred in concluding that any admission made by saileswar ghosh would bind the company. the principle of law laid down in freeman & lockyer's case (supra) would not be applicable in the facts of this case.9. on the other hand, mr. ahin choudhury, learned senior counsel appearing for the respondent, submitted that the petitioner had entered into business transactions with the company after taking into consideration the profile of the company in which the company had held itself out to be a group of company. naresh nath mukherjee (shipping) pvt. ltd. is stated to be the parent company. the lease agreement was entered into with the company. it was duly signed by the representative of the petitioner, viz., mr. simon vernon and sri saileshwar ghosh, director of the company. the invoices were sent to astra marine ppe ltd. in terms of the agreement dated july 1, 1997. all the documents were signed by sri saileshwar ghosh on behalf of the company. the company cannot be permitted to claim that sri saileshwar ghosh was not authorised to execute the documents on behalf of the company. the agreement dated may 11, 2001, requesting for instalments clearly admits the liability. the company, therefore, has no defence in view of the law laid down in freeman & lockyer's case (supra). the learned single judge has correctly admitted the petition and, therefore, the appeal ought to be dismissed.10. we have considered the submissions made by learned counsel for the parties. to fasten liability on the company, the learned single judge has placed reliance on the judgment in freeman & lockyer's case (supra), wherein it has been held as under (page 644 of [1964] 1 all er):'an 'actual' authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. its scope is to be ascertained by applying ordinary principles of construction of contracts, including any proper implications from the express words used, the usages of the trade, or the course of business between the parties. to this agreement the contractor is a stranger; he may be totally ignorant of the existence of any authority on the part of the agent. nevertheless, if the agent does enter into a contract pursuant to the 'actual' authority, it does create contractual rights and liabilities between the principal and the contractor. it may be that this rule relating to 'undisclosed principles', which is peculiar to english law, can be rationalised as avoiding circuity of action, for the principal could in equity compel the agent to lend his name in an action to enforce the contract against the contractor, and would at common law be liable to indemnify the agent in respect of the performance of the obligations assumed by the agent under the contract.an 'apparent' or 'ostensible' authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted on by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority, so as to render the principal liable to perform any obligations imposed on him by such contract. to the relationship so created the agent is a stranger. he need not be (although he generally is) aware of the existence of the representation. the representation, when acted on by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. it is irrelevant whether the agent had actual authority to enter into the contract...11. these principles have been applied by the learned single judge to the facts of the present case. we are of the considered opinion that the aforesaid proposition of law would not be applicable in the facts and circumstances of this case. in the aforesaid case willmer, l. j sets out in detail the sequence of events by which mr. kapoor was seen as the visible face of the company. it was observed that although mr. kapoor had never been appointed as the managing director, he had throughout been acting as such in employing agents and taking other steps to find a purchaser, and this was well-known to the board, i.e., the company. voluminous evidence was considered by the trial court to conclude that mr. kapoor was accepted as acting on behalf of the company; even though he may not have had the actual authority to act. it was accepted by the appeal court that even though mr. kapoor may not having the actual authority to employ the plaintiffs (architect engaged to re-develop the estate) but in doing so, he was acting within the scope of his ostensible authority. upon further consideration it is observed as follows:the real question to be determined is whether the judge was right in finding that the second defendant had ostensible authority to engage the plaintiffs. this is partly a question of fact and partly one of law. so far as the facts are concerned, counsel for the defendant company has attacked the judge's finding that the second defendant acted throughout as managing director to the knowledge of the board. he has argued that there is no evidence to support this finding. i find myself unable to accept this submission. in my judgment there was abundant evidence; indeed, when the realities of the case are examined, i think that it is the only inference that could properly be drawn (emphasis supplied)lastly, i would refer to the fact that it was the defendant company's own case (and indeed a subject-matter of complaint on their part) that the second defendant was acting throughout as if he were himself the owner of the property. thus, it was complained that he appeared on television and behaved as if he were the owner. reliance was also placed on the fact that the second defendant dealt with the plaintiffs themselves as if he were the owner of the property. all this, as it seems to me, goes to support the view that the second defendant was acting throughout as managing director... having regard to all these considerations i can see no good ground for interfering with the judge's finding of fact that the second defendant throughout was, to the knowledge of the board, acting as managing director of the defendant company.12. the analysis of the evidence of willmer, l.j. was also accepted by diplock, l.j. the proposition of law laid down by diplock, l.j. would be applicable only in cases where there is clear evidence leading to the only inference that the agent is acting on behalf of the principal to the knowledge of the principal. in our opinion, the pleadings as well as the documents presented in this case do not lead to the inference that saileswar ghosh had the actual or ostensible authority to admit the liability on behalf of the company. the entire evidence presented before us has been disputed. the signatures of saileswar ghosh on behalf of the company have been disputed. the receipt of the invoices by the company has been disputed. the authenticity of the accounts presented by the petitioner company have been disputed. on the material presented, sitting in appeal against a judgment and order passed by a learned single judge, exercising jurisdiction under the companies act, 1956, for winding up of a company, it is, therefore, not possible to hold that sri saileshwar ghosh had the actual or ostensible authority to execute the agreement dated may 11, 2001. there seem to be too many uncertainties in the evidence presented by the petitioner, to be accepted in a summary proceedings, before the company court. there also seems to be hardly any cogent material for this court to come to a firm finding that sri saileswar ghosh was acting on behalf of the company and it was to be within the knowledge of the company. in the freeman & lockyer's case (supra), the trial court came to the conclusion on evaluation of evidence that kapoor was acting as if he owned the property. this finding was affirmed by the court of appeal. we are of the opinion that the evidence led by the petitioner in this case would not measure up to the standard of evidence presented in the aforesaid case of freeman & lockyer. we would therefore, decline to apply the principle in the aforesaid case. moreover, the judgment in freeman & lockyer's case (supra) was rendered in the backdrop of a civil dispute which was adjudicated by trial-on-evidence before a learned judge of a county court. therefore, we are of the opinion that the judgment in the case of welsh, in re (supra) is of no assistance to the petitioning creditor.13. in our opinion, there is substance in the submissions of mr. mitra that the entire edifice upon which the company petition is sought to be founded is missing. the defence put forward by the company, in our opinion, does not fall within the realm of a sham or a bogus defence. it certainly cannot be defined as moonshine. such a defence therefore, cannot be ignored. such being the position we are unable to hold that there is a clear debt due and that the company is unable to pay the same. the principles to be followed by the company court in examining the petition for winding up are well-known and have been reiterated by the supreme court on numerous occasions. we may notice here only the judgment in the case of mediqup systems p. ltd. v. proxima medical system gmbh : [2005] 124 comp cas 473 : [2005] 7 scc 42 in which the supreme court clearly stated the principle with regard to exercise of discretion by the company court while considering a petition for winding up under sections 433(e) and 434(a) of the companies act, 1956. in order to make the matter absolutely clear we may produce here the relevant observations of the supreme court:18. this court in a catena of decisions has held that an order under section 433(e) of the companies act is discretionary. there must be a debt due and the company must be unable to pay the same. a debt under this section must be a determined or a definite sum of money payable immediately or at a future date and that the inability referred to in the expression 'unable to pay its debts' in section 433(e) of the companies act should be taken in the commercial sense and that the machinery for winding up will not be allowed to be utilised merely as a means for realising debts due from a company...21. the debt under section 433 of the companies act must be a determined or a definite sum of money payable immediately or at a future date. we are informed that the financial position of the appellant is sound...25. the rules as regards the disposal of winding up petition based on disputed claims are thus stated by this court in madhusudan gordhan-das and co. v. madhu woollen industries p. ltd. [1972] 42 comp cas 125 (sc). this court has held that if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. the principles on which the court acts are:(i) that the defence of the company is in good faith and one of substance;(ii) the defence is likely to succeed in point of law; and (iii) the company adduces prima facie proof of the facts on which the defence depends.14. we, therefore, find merit in the appeal.15. the judgment of the learned single judge is set aside. the petitioner shall be at liberty to pursue its normal remedies in accordance with law. any observations made herein are clearly intended only for the disposal of these proceedings.biswanath somadder, j.16. i agreelater:17. it is now brought to our notice that pursuant to the order dated april 1, 2004, advocate-on-record of the appellant is holding a sum of rs. 4,50,000 and the same is lying invested in a short term fixed deposit.18. in view of the fact that the appeal has been allowed, the aforesaid amount is directed to be released to the appellant with all accrued interest.19. prayer for stay of operation of the judgment is declined.