(Prayer: Company Application has been filed under Order XIV Rule 8 of Original Side Rules read with Rule 9, 11(b) of the Companies (Court) Rules, 1959, praying to direct the respondent to produce the following:-
(a)Business Transfer Agreement dated 05.08.2011;
(c)Balance sheet for the period 2009- till 2014 maintained by the respondent for transactions with the applicant/petitioner accompanied by an affidavit stating on oath the correctness of the contents of the same.
Company Application has been filed under Order XIV Rule 8 of Original Side Rules read with Rule 9, 11(b) of the Companies (Court) Rules, 1959, praying to permit the delivery of interrogatories, as annexed to this affidavit to the respondent, consequently, direct the respondent to respond to the same within a time period as may be directed by this Hon'ble Court.)
1. Alleging that the respondent company owing a sum of Rs.7,35,27,663.27/- and it is unable to pay the said debt, the company petition is filed for winding up is filed under Section 433 (e) and (f), 434(1)(a) and 439(1)(b) of the Companies Act, 1956. The petitioner herein has taken out these applications under Order XI, Rules 1 and 2 and 12 of the Code of Civil Procedure 1908 to put forth interrogatories to the respondent company and for an order directing the respondent to produce certain specific documents within its possession, so as to obtain certain vital facts for material decision of this case.
2. According to the applicant, the respondent sought supplies from the applicant's company for the purpose of submitting a joint bid for construction of Four Hundred (400) KV D/C Neyveli-Sriperumbudur transmission line and Four Hundred (400) KV S/C Neyveli TS-II (Expansion) Line Associated with Neyveli (Expansion) project in the Southern Region, as per the tender floated by the Power Grid Corporation of India Limited. Consequently, the respondent placed purchase order on the applicant on 21.10.2005, which was later modified/amended in the year 2009 and the total value of the purchase order was Rs.45,23,88,717.88. The applicant has raised 15 invoices on the respondent. Except few payments in instalments, still balance of Rs.7,35,27,663/- is pending due and payable. On 1.06.2010, the respondent addressed a letter to the applicant requesting to send Auditors to confirm the amount due and payable as per their books of account as on 31.03.2010. The respondent has admitted in the said letter that, a sum of Rs.4,89,13,725/- is due and payable to the applicant/ petitioner. The applicant on received of their letter of confirmation of debt, informed the respondent in the very same communication that a sum of Rs.7,35,27,663/- is the outstanding. Thus, as per the letter dated 28.06.2010 signed by the respondent, admittedly, they are liable to pay Rs.4,89,13,725/- Whereas the respondent claims Rs.7,27,663/-.
3. Hence, after issuance of statutory notice for winding up, claiming outstanding of Rs.7,35,27,663/-, the company petition for winding up has been filed and the present applications are filed seeking leave of this Court to put forth interrogatories and the documents to be produced form part of the petition as annexure.
4. The respondent herein has filed a common counter wherein, it is stated that, in the Company Court jurisdiction, Order XI, Rule 1 of the Civil Procedure Code is not applicable. Especially, when the respondent is denying the liability, the application filed to determine the liability by making roving enquiry is not maintainable. The respondent cannot fish out evidence by abusing the process of law. By filing this application, the applicant is trying to convert the company petition into a Civil Recovery Suit.
5. Learned Senior Counsel appearing for the applicant/petitioner submitted that, on 21.10.2005, the respondent-SPIC-SMO placed purchase order for supply of power parts and earthing strips setting out the terms and conditions. The said purchaser order was subsequently amended vide, letter dated 28.02.2009. In the course of the said transaction, the respondent/ SPIC-SMO failed to discharge a sum of Rs.7,35,27,663.27. On 28.06.2010, the respondent/SPIC-SMO sent a letter to the petitioner seeking confirmation of outstanding as on 31.03.2010. As per the said letter, even according to the respondent/SPIC-SMO, the respondent has to pay Rs.4,89,13,725/- as on 31.03.2010. The statement of account was also attached in support of the said admission. However, as per the books maintained by the petitioner, the balance payable by the respondent/SPIC-SMO was Rs.7,35,27,663.27. Therefore, the petitioner herein reverted back to the respondent stating that the balance payable is Rs.7,35,27,663.27.
6. During the month of October 2011, the applicant was informed that the respondent/SPIC-SMO has undergone the name change and hereinafter known as Morador Commercial Private Limited (in short “MCPL”). This re-structuring took place in exercise of transferring SPIC-SMO Division, pursuant to the Tender Transfer Agreement dated 05.08.2011 between SPIC-SMO and MCPL. The applicant was informed that MCPL has acquired the entire SPIC-SMO Division, as per the agreement dated 22.09.2011 and MCPL has stepped in replacing SPIC, with effect from 22nd September 2011.
7. When the statutory notice dated 15.04.2013 for winding up caused to the respondent calling upon the respondent to pay the outstanding amount of Rs.11,53,41,118.27, which is inclusive of interest on delay payment, the respondent replied vide, letter dated 25.04.2013 intimating the applicant that the said transaction was in a relation to the project during the period from 2006 to 2009. The persons, who were handling the division to the material time, have moved out. Therefore, requested the applicant to provide entire details of bill raised and payment made thereon along with supporting documents to enable them to scrutinise the alleged claim. As a reply, a detailed notice was sent by the applicant through the counsel on 02.05.2013 and 11.06.2013. Therefore, the respondent themselves have admitted the liability of Rs.4,89,13,725/-as on 31.03.2010, it is just and necessary for them to answer the interrogatories and produce the documents listed.
8. Per contra, the learned Senior Counsel appearing for the respondent would vehemently opposed these applications on the ground that, the company petition itself is not maintainable. The debt claimed is not a bona fide debt and in fact, there is a counter claim against the petitioner by the respondent herein. A disputed fact over the debt cannot be brought within the scope of winding of. That apart, the applications under Order XI, issued for interrogatories and for production of documents clearly show that, the applicant has no records to substantiate that there is an enforcible debt against the respondent. By issuing the interrogatories, the applicant is trying to make a roving enquiry and fish out the evidence. The very filing of the petition clearly show that there is no material evidence with the applicant to prove the debt. Furthermore, the provisions of the Civil Procedure Code are not applicable to the winding up petition filed under the Companies Act. Particularly, in the case of creditors winding up, the applicant is bound to prove the debt and disability to pay the debt. In the present case, the debt itself is not ascertained and the claim cannot be tested on the pleadings. Therefore, the interrogatories called for to be dismissed.
9. Referring the letter dated 28.06.2010, the learned counsel submitted that it is not confirmation of debt. Even according to the applicant, the amount shown in the letter is disputed by the applicant. Furthermore, even assuming the letter dated 28.06.2010 acknowledged the existing debt, the company petition filed in the year 2014 is hopelessly barred by limitation.
10. On perusal of the interrogatories, this Court finds that, the information sought are not privileged or secret information, which need to be screened from the public in the interest of the company. They are very general in nature and pertains to transfer of business from SPIC-SMO to MCPL. The persons to whom the interrogatory address, is the present Director of the SPIC Company, which was holding the SPIC-SMO as a division and later transferred it to MCPL during the year 2011.
11. It is to be noted that the applicant herein was informed about the transfer of business by MCPL on 10.10.2011. The statutory notice for winding up was issued on 15.04.2013. The company petition was filed in the year 2014. While transferring the division to the third party, it is assumed that the assets and liabilities of the party should have been meticulously disclosed and exchanged between the parties. When the demand for payment of outstanding made by the applicant herein by way of statutory notice dated 15.04.2013, the respondent herein vide, reply dated 25.04.3013 has sought the details of bills raised and the payment made along with the supporting documents. Immediately the applicant herein had sent a notice dated 02.05.2013 and had furnished the date, reference number of invoice and the amount due. Even thereafter the respondent has not denied the liability, but has only reiterated in its letter dated 14.05.2013 to furnish details. So, without prejudice to the earlier notices, the applicant has caused other notice dated 11.06.2013 again listed out the date, reference number of invoice and the money due. In this letter, the applicant has made a basic claim of Rs.7,35,27,663.27 and other claim of Rs.4,18,13,455.00. Totally a sum of Rs.11,53,41,118.27 has been claimed. The books of account in the ledger of SPIC-SMO also annexed along with the notice dated 11.06.2013, which was caused without prejudice before instituting the winding up petition.
12. From these materials, this Court is of the view that, the respondent herein cannot hide the material facts and claim that the applicant is making roving enquiry. Since the details of invoice and payments have already been disclosed to the respondent through the notices dated 02.05.2013 and 11.06.2013, it is for the respondent herein to reconcile their accounts and produce the documents sought and answer the interrogatories.
13. In Aluminium Corporation of India Limited v. Lakshmi Ratan Cotton Mills Co. Ltd., reported [(1968) SCC Online All 311], the Court has categorically held that the procedural provisions of the Code of Civil Procedure may be utilised for effectively and expeditiously deciding the winding up the petition and no party can claim that the provisions of the Civil Procedure Code apply to the winding up proceedings as a matter of right. A winding up petition also differs from an ordinary civil suit. The applicant has to show the preponderating weight of justice and equity in favour of the winding up. This can be generally done by evidence given through affidavits on broad questions rather than by weighing up evidence of both sides in golden scales.
14. As far as the present case is concerned, the applicant herein through the letter of the respondent dated 28.06.2010, had demonstrated before this Court that SPIC-SMO the division of the respondent had admitted balance of Rs.4,89,13,725/- payable to the applicant as on 31.03.2010. The SPIC-SMO, vide, letter dated 16.09.2011 has stated that the balance due to Bajaj Electricals Limited (applicant) had Neyveli Account is Rs.34 lakhs only.
15. As far as creditors winding up, if the debt is bonafidely disputed and the defence is a substantial dispute, the Court will not wind up the company. Contrarily, if the debt is undisputed or not a bonafide dispute, the Court will not act upon the defence that the company has ability to pay the debt but choose not to pay the particular debt. To decide either way, these applications are bound to be allowed for the Court to arrive at a right conclusion whether the liability admitted vide letter dated 28.06.2010, later disputed, is a bona fide dispute or not.
16. In opinion of this Court, these applications are not fish expenditure or roving enquiry but strongly pegged on the admission of liability by the respondent. When the respondent asked for details of invoices and debts payable, the applicant herein has meticulously furnished the details and the statement of ledger accounts. Inspite of furnishing details sought, the respondent has not come forward to share the statement of accounts maintained by the respondent. This has prompted the applicant herein to take out the letter of interrogatories and the application to produce the documents. Even if the provisions of the Civil Procedure Code is
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not a strict-o-sense applicable in the application for winding up, there is no legal impediment to follow the principles of Civil Procedure Code for complete adjudication. Therefore, by all force the objections raised by the respondent are bound to fall on the ground. 17. If really there is any bona fide dispute over the liability, even in the interest of the company sought to be wound up, the interrogatories and the documents are to be answered and produced. Withholding the details and documents will not be in the interest of the company and it may lead to adverse inference. In law the refusal to interrogatories (or) refusal to produce documents (or) non-compliance with the order for discovery is by the applicant, he shall have the suit dismissed for want of prosecution and if it is by the respondent, his defence will be struck off and will be placed in the position as if he is not defended. 18. Therefore, (i) Application No.49 of 2021 is allowed. The respondent is directed to produce the schedule mentioned documents within a period of 14 days from the date of receipt of a copy of this order. (ii)Application No.50 of 2021 is allowed. The respondent is directed to answer the interrogatories enlisted in the company application No.50 of 2021 within a period of 14 days from the date of receipt of a copy of this order. Call the matter on 09.11.2021 for further proceedings.