$~CP-25 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: November 20, 2018 + CO.PET. 660/2014 MAGEBA BRIDGE PRODUCTS PVT. LTD. Petitioner Through Mr.[ENTITY], Mr.[ENTITY] and Ms.[ENTITY], Advs. versus DSC ENGINEERING PRIVATE LIMITED Respondent Through Mr.[ENTITY], Adv. CORAM: HON'BLE MR. JUSTICE [ENTITY] [ENTITY], J (ORAL)
1. This petition is filed under [SECTION], [SECTION] and [SECTION] of the [ACT] referred to as 'the Act') seeking winding up of the respondent company.
2. It is the case of the petitioner that the petitioner is one of the subsidiary companies of a Swiss enterprise and is one of the worlds leading bridge parts suppliers. In 2002, the petitioner and M/s DSC Limited, the predecessor-in-interest of the respondent shared a business relationship. From 03.11.2009 to 19.07.2011, the predecessor-in-interest of the respondent placed purchase orders on the petitioner for supply of the Bridge Bearing and Expansion Joints in respect of its several projects sights including, Barapullah Nallah Elevated Corridor Project, Gwalior Jhasni Expressway Project, Kundli-Maneswar-Palwal Expressway Project etc. The petitioner has on receipt of purchase orders duly supplied the materials to the predecessor-in-interest of the respondent and raised invoices for the materials supplied. The aggregate value of the material supplied amounts to Rs.12,12,01,709/-. Upon receipt of the invoices, the predecessor-in-interest of the respondent has made several part payments aggregating to Rs.9,42,67,485/-. However, a total of Rs.3,95,39,326/- remained as arrears due and payable by the predecessor-in-interest of the respondent as on 20.06.2012. It is clarified by the learned counsel for the petitioner that as on 31.03.2014, a sum of Rs.2,69,34,224/- is due and payable by the predecessor-in-interest of the respondent.
3. A statutory demand notice was sent on 22.06.2012 upon the predecessor-in-interest of the respondent. The same was duly received by the predecessor-in-interest of the respondent but the predecessor-in-interest of the respondent failed to acknowledge the same.
4. Accordingly, the petitioner filed a winding up petition being [CASE NUMBER] against the predecessor-in-interest of the respondent. However, the predecessor-in-interest of the respondent in its counter affidavit dated 01.07.2013 stated that dues and liability of the petitioner relates to its Engineering Procurement Construction (in short EPC) undertaking which was transferred/demerged from the predecessor-in-interest of the respondent to the present respondent company, namely, DSC Engineering Pvt. Ltd. w.e.f. the appointed date of scheme of arrangement. The scheme of arrangement had been accorded sanction by this court vide order dated 16.12.2011 in [CASE NUMBER]. In view of the said submission made by the predecessor-in-interest of the respondent, the company petition being [CASE NUMBER] filed by the petitioner was dismissed as there was no liability of the predecessor-in-interest of the respondent. However, in an affidavit that was filed in the said company petition, the predecessor-in-interest of the respondent had confirmed that as per books of account, a sum of Rs.3,32,24,718/- was due and payable to the petitioner as on 31.07.2011. On 5.04.2014, the respondent had issued a letter to the petitioner where it is pleaded by the respondent that fictitious and frivolous submissions were being made by the respondent. On 10.04.2014, the petitioner sent a statutory notice to the respondent demanding to Rs.2,69,34,224/-. The petitioner on 15.04.2014 denied the allegations made by the respondent. Hence, the present winding up petition.
5. The learned counsel for the respondent has opposed the petition. The main contention that has been raised by the learned counsel for the respondent is that the debt of the petitioner is barred by limitation. He admits that when the scheme for demerger was passed by this court on 16.12.2011, in the scheme there was an acknowledgment for the period up- to-date i.e. July, 2011 where the dues of the petitioner were acknowledged. He, however, submits that all the invoices in question relate to the period from 2009 to 2011. However, on the date of filing of the petition he submits that limitation had expired. He further submits that reliance of the learned counsel for the petitioner on [SECTION] of the [ACT] is misplaced. He submits that the acknowledgement which was filed by the predecessor-in-interest of the respondent in the company petition being [CASE NUMBER] does not and cannot bind the respondent herein under [SECTION] of the [ACT]. He relies upon the various judgments in this regard including that of Full Bench Judgment of the Madras High Court in [PRECEDENT].
6. The learned counsel appearing for the petitioner has however relied upon the affidavit acknowledging the liability that was filed by the predecessor-in-interest of the respondent in [CASE NUMBER] to contend that there is a clear acknowledgement of liability. He further submits that in 2012 payments have been received from the respondent which shows acknowledgement of liability within the meaning of [SECTION] of the [ACT].
7. In the course of arguments, it was put to the learned counsel for the respondent as to whether under the scheme that was filed before this court for demerger of the respondent company from its parent company, there is an acknowledgement of dues payable to the petitioner. The answer was in affirmative. Hence, it has been accepted that in the scheme of demerger, there is an acknowledgement of debt payable to the petitioner as on July, 2011. Under the scheme of demerger, all liabilities regarding business and execution of constructions project are transferred to the demerged company i.e. respondent.
8. The company petition for approval of the scheme of demerger was filed sometimes in 2011. This court has approved the scheme on 16.12.2011. A perusal of the scheme shows that there was an appointed date which was fixed as 30th November, 2011. As per the scheme, with effect from the said appointed date, all the debts, liabilities etc. became the obligation of the new entity DSC Engineering Pvt. Ltd i.e. the respondent. The demerger took place on account of the said order dated 16.12.2011. The Court approved the Scheme on that date. The respondent took over the assets and liabilities as per the Scheme pursuant to the said order. As on 16.12.2011 the scheme of demerger and the balance sheets of the respondent accept the liability of the respondent. Hence, the winding up petition filed on 21.08.2014 was within the period of limitation.
9. That apart, it is admitted fact that on 25.01.2012, a sum of Rs.13,94,257.98/- has been paid by the predecessor-in-interest of the respondent to the petitioner. On that date the predecessor-in-interest of the respondent was dealing with the assets and liability of the respondent. This payment would be an acknowledgement of the debt.
10. [SECTION] of the [ACT] reads as follows:
"19. Effect of payment on account of debt or of interest on legacy. Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made: 19. Effect of payment on account of debt or of interest on legacy. Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made\:"
Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment. Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment." Explanation. For the purposes of this section, Explanation. For the purposes of this section, "
(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment; (a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;"
(b) "debt" does not include money payable under a decree or order of a court. (b) "debt" does not include money payable under a decree or order of a court."
11. Hence, where payment on account of a debt is made before the expiration of the period of limitation to pay the debt, a fresh period of limitation is computed from the time when the payment was made. In the present case respondent made payment on 25.01.2012 for a sum of Rs.13,94,257.98/- towards pending invoices. This payment is a clear acknowledgement of the debt payable by the respondent to the petitioner and in terms of [SECTION] of the [ACT] would extend the period of limitation
12. The respondent has relied upon the judgment of the Madras High Court in [PRECEDENT]), to contend that the acknowledgement of debt by the predecessor-in-interest of the respondent in the earlier petition i.e. [CASE NUMBER], does not amount to an acknowledgement of debt by the Respondent. The court in the said case held as follows:
"15. In Pavayi v. Palanivelu Gounden, ILR (1940) Mad 872:
AIR 1940 Mad 470 a Full Bench of this Court held that a mortgagor who had lost all interest in the mortgaged property and who had ceased to be personally liable for the mortgage debt could not validly by any acknowledgment of liability within the meaning of [SECTION], bind the person on whom his interest had devolved. That was no doubt a case where even at the time of the suit the mortgagor was not liable, but that, however, cannot make any real distinction. An acknowledgment of liability, as we have indicated above, presupposes that the person acknowledging possesses some interest which can be bound by his statement. If he has no such interest, it will be a misnomer to call his statement, an acknowledgment of liability. No debtor, for example, can be held to be bound by a mere acknowledgment by a stranger. Again, it is a well-settled rule that an acknowledgment of liability must involve an admission of a subsisting jural relationship between the parties and a consciousness and an intention of continuing such a relationship until it is lawfully terminated. In [PRECEDENT], [ENTITY], J. in considering what an acknowledgment Under [SECTION] should be said:
"It is, therefore, necessary that upon a reasonable construction of the language used by the debtor in writing the relation of debtor and creditor must appear to be distinctly admitted, that it must be admitted also to be a subsisting jural relationship and that an intention to continue it until it is lawfully determined must also be evident."
That it is essential that there should be such a jural relationship, has been pointed out in a recent judgment of the Supreme Court in [PRECEDENT], , where [ENTITY], J. observed:
"The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of a jural relationship between the parties such as that of a debtor and creditor and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission and need not be expressed in words."
Where the person making an admission of liability is not a debtor, there can possibly be no jural relationship between him and the person to whom he is making the admission. If, therefore, in the present case at the time when [ENTITY] made the statement as to the subsistence of the mortgage in his plaint as he was not a mortgagee, there could be no jural relationship between him and the other party so as to constitute his statement, as an acknowledgment of liability on the part of the mortgagee as to the subsistence of the mortgage. Secondly the kind of jura relationship that should exist is that the person making the acknowledgment should be under an existing liability to the other party.
17. The requirement that the person acknowledging should have an interest which would suffer by that acknowledgment at the time when it is made is a real one and not based merely upon any principle of estoppel similar to the one contained in [SECTION] of the [ACT]."
13. As per the above judgment the person acknowledging should have an interest which would suffer by the acknowledgement at the time it is made. There should be a jural relationship between him and the person who is making the admission. An acknowledgement by a stranger does not amount to acknowledgement of debt. This judgment would not help the respondent in view of what I have held above i.e. the Acknowledgement of debt is vide the Scheme of demerger approved on 16.12.2011 and the payment received by the petitioner on 25.1.2012.
14. Hence, the debt is due and payable by the respondent company to the petitioner.
15. At this stage, I may note the submission of the respondent that the products that were delivered/supplied by the petitioner were rusted and defective and hence on merit also no debt is due and payable to the petitioner.
16. In my opinion, this plea is baseless keeping in view the clear cut acknowledgement made as noted above, the respondent/ the predecessor-in- interest of the respondent who would not have been acknowledging the debt due if defective products have been supplied. There is no merit in the defence of the respondent.
17. Reference in this context may be had to the judgement of the Supreme Court in [PRECEDENT] where the Supreme Court held as follows:-
"17. The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding-up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding-up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding-up petition as a means of forcing the company to pay a bona fide disputed debt."
There is no bona fide debt in the facts of this case.
18. Accordingly, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers Statesman (English) and [ENTITY] (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing. The cost of publication is to be borne by the petitioner who shall deposit a sum Rs.75,000/- with the Official Liquidator within 2 weeks, subject to any further amounts that may be called for by the liquidator for this purpose, if required. The Official Liquidator shall also endeavour to prepare a complete inventory of all the assets of the respondent-company when the same are taken over; and the premises in which they are kept shall be sealed by him. At the same time, he may also seek the assistance of a valuer to value all assets to facilitate the process of winding up. It will also be open to the Official Liquidator to seek police help in the discharge of his duties, if he considers it appropriate to do so. The Official Liquidator to take all further steps that may be necessary in this regard to protect the premises and assets of the respondent-company.
19. However, in the interest of justice, I suspend the order appointing the OL as the liquidator for a period of four weeks, in case, the respondent pays to the petitioner a sum of Rs.2,69,34,224/-, the present order appointing the Official Liquidator shall stand revoked.
20. At this stage, the learned counsel for the petitioner asks for interest. I am not awarding any interest to the petitioner keening in view the own conduct of the petitioner in delaying the filing of this winding up petition and taking effective steps against the respondent.
21. List on 6.3.2019.
[ENTITY], J.
NOVEMBER 20, 2018/v Corrected and released on 06.12.2018