1 cp-222-10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi COMPANY PETITION NO. 222 OF 2010. M/s. J. Maheshkumar Petrochemicals Private Limited. ..Petitioners. vs. Supreme Printers and Laminators Private Limited. ..Respondent. .... Mr.Shailesh Shah, a/w. U.L.Shah, for Petitioners. Mr. Ashish Agarwal, a/w. Mr. D.S. Joshi, for Respondent. .... CORAM : S.J. KATHAWALLA, J. DATE : 19TH OCTOBER 2010. P.C. By this Company Petition, the Petitioners are seeking winding up of the Respondent Company – Supreme Printers and Laminators Private Limited (the said Company). The Company Petition is at the stage of admission. 2. The Petitioners had earlier filed Company Petition No. 110 of 2009 seeking winding up of the Company on the same cause of action. However, the said Company Petition was withdrawn by the Petitioners as the statutory notice was not served upon the Company at its registered office, with liberty to adopt appropriate proceedings in accordance with law after service of a fresh notice. 2 cp-222-10 The order dated 13th November 2009 (Coram : Dr. D.Y. Chandrachud, J.) to this effect is annexed as Exhibit-B to the Petition. 3. According to the Petitioners, they are Del Credre Agents of the Reliance Industries Limited (RIL) and Indian Petrochemicals Corporation Limited (IPCL) for plastic raw materials manufactured by RIL and IPCL. The Petitioners have supplied the plastic raw materials to the Company through RIL and IPCL for which RIL and IPCL have raised their invoices and submitted to the Company. According to the Petitioners, as per the business policy of RIL and IPCL since the goods were dispatched to the Company, immediately the bank account of the Petitioners was debited as the price of the said goods were automatically paid to RIL and IPCL through Internet Banking. Thus, the Petitioners were to recover the payment of the said invoices from the Company. 4. The Petitioners have set out in clause 7(A) of the Petition that the said goods were supplied by RIL to the Company on cash on delivery basis and the Company was required to pay interest at the rate of 18% per annum on delayed payment from 21st April 2006 onwards. It is further submitted that in respect of the RIL invoices an amount of Rs.63,31,183.22 is due and payable by the Company to the Petitioners as on 30th November 2009. Similarly, the Petitioners have set out in paragraph 7(C) of the Petition that an amount of 3 cp-222-10 Rs.37,17,789/- is due and payable by the Company to the Petitioners as on 30th November 2009 towards the goods supplied through IPCL. Thus, according to the Petitioners, an amount of Rs.1,02,97,418.84 is due and payable by the Company to the Petitioners. 5. According to the Petitioners, the Company had earlier furnished a cheque of Rs.65,66,503.84 dated 23rd April 2006 to the Petitioners. However, when the Petitioners deposited the said cheque for encashment in their bank account on 21st April, 2006, the same was dishonoured. At the request of the Director of the Company, the said cheque was redeposited after a few days but was again dishonoured. The Petitioners have instituted proceedings against the Company under section 138 of the Negotiable Instruments Act, which proceedings are pending before the 38th Court of Metropolitan Magistrate at Ballard Pier, Mumbai. 6. According to the Petitioners, the Company had paid to the Petitioners a sum of Rs.25,000/- on account, by cheque no. 390220 dated 19th April 2006 towards the outstanding amount. However, since the Company failed and neglected to make any further payments due to the Petitioners, the Petitioners issued a statutory notice to the Company dated 25th April 2008. The same was replied to by the Company by its letter dated 29th May 2008 which reads thus : 4 cp-222-10 “Your notice is not legal & proper. Contents therein are not correct and not admitted. Contents about selling goods through Reliance Ind & IPCL on cash on delivery basis and liability to pay interest are not correct. There is no question of interest. Your calculation of interest is not legal and not admitted. We are not liable to pay the said amount. Your calculations about debit notes are false. We have not received the same. We are not liable to pay Rs. 65,66,503.84 to you. We have not issued the cheque of Rs.65,66,503.84. We are not liable to pay Rs. 86,19,616.84 to you. You are also aware that Sandeep Bansal is not the director and there is huge loan of bank on the company and its director. Please do not take any action.” 6. The Petitioners thereafter, admittedly withdrew the earlier statutory notice dated 25th April, 2008 and issued a fresh statutory notice dated 17th November 2008 and thereafter filed Company Petition No. 110 of 2009 which was withdrawn on 13th September 2009 on the ground that the notice dated 17th November 2008 was not served at the registered address of the Company. The Petitioners thereafter issued a fresh statutory notice dated 8th February 2010 calling upon the Company to pay an amount of Rs. 1,02,97,418.84 within three weeks from the date of receipt of the said notice. The present Petition is thereafter, filed by the Petitioners 5 cp-222-10 on 12th May 2010. The Company has filed its Affidavit in reply wherein they have raised several defenses including the defense that the claim of the Petitioners is barred by the Law of Limitation. The Petitioners have filed their rejoinder inter alia disputing that their claim against the Company is barred by the Law of Limitation to which the Company has filed its sur-rejoinder. The Petitioners have submitted that as on 30th November 2010, the Company is indebted to the Petitioners in the sum of Rs.1,02,97,418.84. The Company is, therefore, unable to pay its debts and deserves to be would up. 7. Since the RIL invoices are raised during the period 24th April 2005 to 10th September 2005 and IPCL invoices are raised during the period 3rd May 2005 to 24th October 2005 and the present Company Petition is filed on 12th May 2010, this Court called upon Mr. Shailesh Shah, the learned Advocate for the Petitioners to explain why the claim of the Petitioners is not barred by the Law of Limitation as contended by the Company. Mr. Shah initially submitted that since the cheque of Rs.65,66,503.84 was issued by the Company to the Petitioners on 28th April 2006 and since an amount of Rs.25,000/- was paid by the Company to the Petitioners on 19th April 2006, the claim of the Petitioners is within time and not barred by the Law of Limitation. When this Court pointed out to Mr. Shah that though the Company has disputed having issued the 6 cp-222-10 said cheque, even if it is presumed for the sake of argument that the said cheque was issued by the Company to the Petitioners on 28th April 2006 and that an amount of Rs.25,000/- is paid by the Company to the Petitioners on 19th April 2006, the same would not help the Petitioners in saving the claim of the Petitioners from being barred under the Law of Limitation since the Company Petition is filed as late as on 12th May 2010. Mr. Shah, thereafter, relying on the contents of the reply letter dated 29th May, 2008 of the Company set out in paragraph 5 above submitted that by the said letter, the Company has admitted the jural relationship of a debtor and a creditor between itself and the Petitioners and since the Company Petition is filed within three years from the date of the said letter, the claim of the Petitioners is saved from being time barred. To support this contention, Mr. Shah has relied on the decision of the Hon’ble Supreme Court in M/s. Lakshmiratan Cotton Mills Company Limited vs. The Aluminium Corporation of India, reported in AIR 1971 SC 1482. 8. I have considered the submissions of Mr. Shah, the learned Advocate appearing for the Petitioners on the issue of limitation. As set out earlier, issuance of a cheque by the Company on 28th April 2006 and payment of Rs.25,000/- on 19th April 2006 would in no way save the claim of the Petitioners from being barred 7 cp-222-10 under the Law of Limitation since the Company Petition is filed only on 12th May 2010, i.e. more than four years after the cheque was issued and the said payment of Rs.25,000/- was made by the Company to the Petitioners. 9. As regards the letter dated 29th May 2008 written by the Company, it is not the case of the Petitioners in the Petition or in the rejoinder of the Petitioners that the letter written by the Company dated 29th May 2008 indicates existence of jural relationship between the parties of a debtor and a creditor and hence extend the period of limitation so as to save the claim of the Petitioners from being time barred. The only submission made in the Petition as well as in the rejoinder filed by the Petitioners as regards the letter of the Company dated 29th May, 2008, is that the statement made by the Company in the said letter that there is a huge loan of bank on the Company and its Directors and the concluding line / statement in the letter “Please do not take any action” very clearly shows that the Company is not in a position to repay its debts. 10. In the case of L.C. Mills vs. Aluminium Corporation of India (supra), the letter (Exhibit-1) relied on as an acknowledgment was written to the Appellant Company by one Mr. Subramanyam signing it “for Aluminium Corporation of India Ltd.” and consisted of several paragraphs dealing with diverse items relating to different 8 cp-222-10 amounts claimed by the Appellant Company in a statement of claim previously sent by it to the Corporation, some of which were refuted by the writer while the others were accepted. The penultimate paragraph which is said to contain the admission reads thus : “ After all the above adjustments, the position will be as per statement attached. Interest has been provided on some balances and on others it has not been provided. We request you to confirm the balance of Rs.1,07,477,13.11, so that we may proceed with the calculation of interest and settle your claim once and for all immediately. Kindly acknowledge this letter and favour us with an immediate reply.”. The High Court at the time of hearing and final disposal of the Suit framed an issue whether the said Exhibit-1 amounted to an acknowledgment and would extend the period of limitation so as to save the claim made by the Appellants from being barred and, came to the conclusion that the letter (Exhibit-1) and the statement of account enclosed therewith were merely explanatory and did not amount to an admission of the jural relationship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation. The Hon’ble Supreme Court in order to inquire into the correctness of the High Court’s view in regard to the letter at Exhibit-1 felt it necessary to examine the correspondence 9 cp-222-10 previously ensued between the parties and the surrounding circumstances which lead to that letter. Considering the earlier correspondence and the surrounding circumstances at great length and after analyzing the same in paragraph 19 of its judgment, the Hon’ble Supreme Court has in paragraph 20 of its judgment held as under : “20. It must follow from these facts that there was a subsisting account in the name of the appellant- company in the books of the corporation in which interest on the balance shown therein from time to time was being credited and in which amounts in respect of items passed during the course of reconcilation were also being credited. The statement in the letter (Ex.1) that “after all the above adjustments the position will be as per statement attached,” that is to say, that there was a balance of Rs.1,07,447.13.11 due and payable to the appellant- company, must clearly amount to an acknowledgment within the meaning of Section 19(1). In our view if the letter (Ex.1) were to be looked at in the background of the controversy between the parties which controversy was, as aforesaid, limited to the question as to the correctness of the amount claimed by the appellant-company as also the correspondence which ensued in regard to it, it would be impossible to say that the letter (ex.1) and the statement of account enclosed therewith were merely explanatory and did 10 cp-222-10 not amount to an admission of the jural relationship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation.” 9. In the instant case, the letter dated 29th May 2008 is written by the Company in response to the statutory notice dated 25th April 2008 addressed by the Petitioners to the Company. Apart from the fact that the said statutory notice dated 25th April 2008 itself is subsequently withdrawn by the Petitioners by its fresh statutory notice dated 17th November 2008, in the said reply letter, the Company has categorically stated that they do not admit the transaction of selling goods through reliance Industries and IPCL on cash and delivery basis. The entire claim of Rs. 86,19,616.84 of the Petitioners as demanded in the said notice is denied/disputed by the Company. Payment of interest as alleged is also disputed. It is denied that the Company had issued a cheque of Rs.65,66,503.84 to the Petitioners. In view of the categorical denials by the Company in its letter dated 29th May 2008, in my view, only because it is mentioned in the letter that there is a huge loan of the bank on the Company and its Directors and the last statement in the letter “Please do not take any action” does not indicate any acknowledgment or admission of liability by the Company and there is nothing to indicate the existence of jural relationship between the 11 cp-222-10 parties as alleged. In view thereof, the decision of the Hon’ble Supreme Court in the case of L.C. Mills vs. Aluminium Corporation of India (supra) is of no assistance to the Petitioners. 10. In view thereof, though the Company has raised several defenses to the above Company Petition, without going into the same, the Company Petition is being dismissed only on the ground that the claim of the Petitioners appears to be time barred. Needless to add that in the event of the Petitioners filing a Civil Suit against the Company in the matter in issue, the same will be disposed of on its own merits without taking into consideration any of the observations made in this order which are prima-facie and not upon a detailed adjudication of the disputes between the parties. [ S.J. KATHAWALLA, J. ]