1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 706 of 1998 WITH COMPANY APPLICATION NO. 1074 of 2007 1. Mrs. Sarita Pawankumar Goenka 2. Mr. Avinash Pawankumar Goenka 3. Miss Anvita Pawankumar Goenka All adults, Indian Inhabitants carrying on business at Raka Chambers, Navi Peth, Opp. Natwar Cinema, Jalgaon-425 001. 4. Mrs. Avanti Nishant Desai an adult, Indian Inhabitant R/at: E-7, Gaytri Apartment, Laxmi Nagar, Carter Road No. 3, Borivali (E), Mumbai-400 066. ...Petitioners v/s. M/s. Jai Prakash Strips Ltd. ...Respondents Shri M.S.Bhandari a/w. H.V.Chande for the Petitioners. Shri Satish Shetty, Sandeep Parikh a/w. Ms. Shruti Kelji & Ramesh Saraogi for the Respondents. CORAM:- A.M.KHANWILKAR, J. DATED:- December 17, 2009. 2 JUDGMENT: By this Petition, it is prayed that the Respondent Company be wound up under the provisions of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) on the ground that the Company is unable to pay its debts. 2. The case of the Original Petitioner, who claimed to be the creditor of the Respondent Company, a sole Proprietor of M/s. Pragati Enterprises, is that, he had sold, delivered and supplied goods to the Respondent Company as per their request from time to time which were valued at about Rs.30,05,385/-. According to him, the Respondent Company accepted the said goods without any demurer. No grievance was made about short supply or of substandard quality of goods. However, the Respondent Company failed and neglected to pay the dues. The fact that the goods were supplied to the Respondent Company is substantiated by the invoices-some of which are appended to the Company Petition being Invoice No. 38 to 49 as Exhibit A to Exhibit L. It is stated that a Statement of Account in respect of amount due and payable to the original Petitioner was sent by him alongwith his letter dated 2nd September, 1997 mentioning the outstanding amount of Rs. 30,05,387/- The Respondent 3 Company in reply neither disputed the factum of receipt of goods nor the outstanding amount. However, in reply dated 4th September, 1997 it was merely alleged that the claim of interest of the Petitioner was untenable. In other words, the Respondent Company merely raised dispute regarding the claim of interest. The original Petitioner by its letter dated 11th September, 1997 immediately placed on record that the amount referred to in the respective invoice was payable not later than a month, failing which it would bear interest as printed in the invoice for late payment. Since no response was received from the Respondent Company, the original Petitioner sent letter dated 13th October, 1997, once again requesting the Respondent to immediately pay the outstanding amount alongwith interest without any further delay. Eventually, the original Petitioner sent legal notice through his Advocate dated 25th October, 1997 purported to be under Section 434 of the Companies Act calling upon the Respondent Company to pay sum of Rs. 30,05,385/- alongwith interest at the rate of 30% per annum within three weeks from the receipt of the notice. It is stated that the said notice was returned with postal remarks “not claimed”. Therefore, the said notice was once again sent by registered AD as well as under postal certificate on 25th November, 1997. The Registered AD letter was again returned with postal endorsement “not claimed”. In so 4 far as notice sent under postal certificate was duly delivered to the Respondent Company as a consequence whereof, the Company paid a sum of Rs. 20,00,000/- without any direction for appropriation, by four separate payments of Rs. 5,00,000/- each on 20th January, 1998, 23rd January, 1998, 27th January, 1998 and 29th January, 1998. The original Petitioner appropriated the said amount towards Invoice Nos. 15 to 37, and balance amount of Rs. 89,577/- towards Invoice No. 38 thereby leaving the balance amount of Rs. 10,05,385/- due and payable by the Respondent Company. It is stated by the original Petitioner that inspite of repeated reminders, the Respondent Company failed and neglected to remit the balance amount of Rs. 10,05,385/- or part thereof. Therefore, a legal notice through Advocate was issued on 6th March, 1998 to be treated as statutory notice under Section 434 of the Act calling upon the Respondent to pay balance amount of Rs. 10,05,385/- together with interest at the rate of 30% per annum within 21 days from the receipt of the notice failing which action of winding up will be initiated against the Company. The said legal notice was sent by speed post AD on the registered office of the Respondent Company which was returned back with postal endorsement “intimation”. Further, copy of the statutory notice was sent by registered AD, which was also returned with postal 5 endorsement “intimation, not claimed”. In the circumstances, the original Petitioner sent another legal notice dated 26th June, 1998, on this occasion by telegraphic mode through post. It was a telegraphic notice sent through Advocate stating that it was a statutory notice under Section 434 of the Act calling upon the Respondent to pay the aforesaid outstanding amount of Rs. 10,05,385/- alongwith interest at the rate of 30% per annum within 21 days from the receipt of notice, failing which winding up action of the Respondent Company would be initiated. It is stated that the Petitioner through Advocate addressed a letter dated 18th July, 1998 to the Superintendent, Central Telegraphic Office mentioning that a telegraphic notice was sent to the Respondent Company on the registered office of the company to furnish a certified copy of the telegram and also clarify whether the telegram has been received by the addressee or not as that information will have to be mentioned in the proposed Company Petition to be filed in this Court against the company. In response to the said communication, the Office Incharge of Central TO, Mumbai replied as follows: “ DEPARTMENT OF TELECOMMUNICATIONS I beg to inform you that your attached telegram No.N163/27-6 handed in on the 27-6 addressed to M/s Jai 6 Prakash Strips Limited at 17, Dehbanoo Commercial Complex, Opp. Vidyut Bhavan Nasik Road 422 101 cannot be delivered owing to refused by addressee. Office stamp Office Incharge Dated 22-7-1998 Sd/- Central T.O.Mumbai CORRECTION ON AMPLIFICATION OF ADDRESS. If any alteration in the address is necessary it can only be made by means of a paid service advice(See Telegraph Guide), delete, if necessary.” (emphasis supplied) 3. In view of the said communication and refusal to accept statutory notice by the Respondent Company, the Petitioner had no other option but to file the present Petition for winding up of the Respondent Company on the assertion that the Respondent Company is unable to pay its debts. This Petition was filed on 3rd August, 1998. The Petition was accepted and notice was issued to the Respondent Company on 3rd September, 1998. As per the order, it is noticed that Advocate for Respondent Company appeared before the Court on 25th November,1998, however, when the matter appeared for admission on 30th November, 1998, no appearance was made on behalf of the Respondent Company. On the other hand, the Petitioner tendered the affidavit of service stating that the 7 notice sent to the Respondent Company was refused by the company. On that basis, the Court proceeded to admit the Petition and ordered advertisement of admission of the Petition in two local newspapers. It is noticed that the direction given by the Court of advertisement was complied with. During the pendency of this Petition, the original Petitioner expired on 26th April, 2005, as a result, his heirs and legal representatives were brought on record to continue the action against the Respondent Company in respect of the outstanding amount payable by the Respondent Company. The Petition eventually reached for final hearing on 14th February, 2007 till then no efforts were made by the Respondent Company to enter appearance in the Company Petition. No one appeared for the Respondent Company before the Court. However, before proceeding to pass any drastic order, the Court deferred the hearing of Petition to 28th February, 2007 as it noticed that one Advocate Navinchomal had appeared for the Company on 30th March, 1999. Advocate for the Petitioner duly served notice to Advocate Navinchomal on 20th February, 2007 informing that the matter would proceed for further hearing on 28th February, 2007. Inspite of that notice, no appearance was made before the Court on 28th February, 2007. As a result, considering the facts of the case, the Company Judge proceeded to allow the Petition 8 in terms of prayer clauses (a)&(b) and accordingly ordered winding up of the Respondent Company as also appointed Official Liquidator to proceed in accordance with law. 4. The Respondent Company thereafter moved application being Company Application No. 1074/2007 asserting that they were not aware about the continuation of proceedings as no communication was received by them from their Advocate Mr. Navinchomal after 1999. Essentially, the blame was put on the inaction of the Advocate on record to justify non- appearance on behalf of the Company on 28th February, 2007. Suffice it to observe that the Company Judge by order dated 17th April, 2008 allowed the said Company Application on condition that the Company shall deposit sum of Rs. 5,00,000/- within a period of four weeks from the date of the said order. Upon compliance of the said condition, the Company Petition stood restored and was proceeded further. The matter appeared for hearing on 18th October, 2008. The Respondent did not file separate reply affidavit to controvert the assertions made in the present Company Petition. Presumably, the Respondent Company was content with the affidavit filed in support of the Company Application which not only makes out cause for non-appearance before the Court on 28th 9 February, 2007 but also answers the issues on merits raised in the original Petition. In that affidavit, the factum of receipt of any notice has been denied. It is asserted on behalf of the Respondent that it was not aware of any notice dispatched by the Petitioner and at no point of time refused to accept the same. The Respondent has also challenged the stand taken by the Petitioners on the ground that the petitioners have failed to file postal proof of dispatch of the notice. According to the Respondent, in fact, full and final settlement was arrived at between the parties in January 1998 pursuant to which the Respondent issued four cheques of Rs. 5,00,000/- each amounting to Rs. 20,00,000/-. It is stated that as per the Books of the Respondent Company, only a balance amount of Rs. 13,524/- remained to be paid by the Company. Besides, the Respondent has asserted that the settlement was reached keeping in mind the quality and quantity of goods supplied by the Original Petitioner. Accordingly, the Respondent claimed that the action of winding up against the Respondent Company was devoid of merits. The Petition came up for arguments on 18th October, 2008. After considering the submissions, the Court had occasion to record tentative opinion in the context of the issue of service of statutory notice on the Respondent Company. Following order was passed while deferring the hearing to enable the Petitioner to seek 10 instructions:- “P.C. The moot question that needs to be answered in this Petition is whether the statutory notice attempted to be served on the Respondent has been duly served in law, in view of the endorsement recorded on the envelope “returned unclaimed”. This Court in the case of Lalmani Ramnath Tiwari v/s. Bhimrao Govind Pawar reported in 2001 (3) Bom.C.R.21 has taken the view that endorsement of “not claimed” cannot be treated as refusal as such, so as to draw adverse interference. Relying on the decision of the Apex Court, it has been observed that it is enough for the addressee to deny the receipt of notice on oath, which can be treated as sufficient rebuttal to the presumption of service. In the Judgment reported in A.I.R. 1996 Bombay 192, it is observed that if the addressee denies receipt of service of notice, onus is on the Plaintiff to prove to the contrary by examining postman who tendered the letter containing the notice to the defendant or by adducing some other evidence. Applying the principle stated therein, the Petitioner was expected to either produce evidence of postman or some other evidence to dispel the claim of the Respondent regarding service of notice and the endorsement occurring on the envelop as “not claimed”. 2. Counsel for the Petitioner seeks time to consider this aspect and if required to file further affidavit and material in support of their claim that the statutory notice be treated as duly served on the Respondent. Stand over to 24th November, 2008. Further affidavit and relevant material be filed by the Petitioner on or before 11th November, 2008. 3. It will be open to the Respondent to file further reply to the proposed affidavit, which will have to be filed on or before 17th November, 2008.” 11 5. The matter then appeared on 4th December, 2008 when the Court considered the further affidavits filed and deferred the hearing at the request of the Petitioner to take out formal application for reliefs as may be advised. The order reads thus: “P.C. 1. In terms of order dated 18th October 2008, both sides have filed further affidavits. As is noted in the said order, whether statutory notice attempted to be served on the Respondents has been duly served in law, is the moot question that needs to be addressed at the outset. 2. The Petitioners claim to have served statutory notice by two different modes. The first mode is by R.P.A.D. However, insofar as service by R.P.A.D. is concerned, the Petitioner is merely relying on the receipt which would indicate that R.P.A.D. was sent to the Managing Director of M/s.Jaiprakash Strips Ltd., Nasik Road-422 101 from Kukreja & Co., Mumbai-400 001. No contemporaneous document is relied by the Petitioners to show that the Postal Authority made attempt to serve the said letter on the correct address furnished by the Petitioners. The Petitioners have neither produced the acknowledgment nor endorsement on the envelope which has been returned to the Petitioners. In absence thereof, it is difficult to accept the case of the Petitioners that the Petitioners have substantiated the fact that the statutory notice was forwarded to the Respondent Company on the correct postal address of the registered Office and more so, the Postal Authority did made attempt to effect service on that address of the 12 Respondent Company. The latter fact could have been established by the Petitioners either by producing the endorsement on the envelope which has been returned to the Petitioners as unserved with the remark "not claimed". However, that is not forthcoming nor any Certificate from the Postal Authority in that behalf has been produced by the Petitioners. 3. It is in this context, the Petitioners rely on the fact that the statutory notice dated 26th June 1998 was sent by telegram. The Petitioners have produced Certificate issued by the Department of Telecommunications at Exhibit ‘U’ which records that the subject telegram No.N163/27-6 handed in on 27th June 1998 addressed to M/s.Jaiprakash Strips Ltd. at 17 Debhanoo Commercial Complex, Opp.Vidyut Bhavan, Nasik Road 422 101 has not been delivered owing to refusal by the addressee. This communication is dated 22nd July 1998. However, the Petitioners have not produced copy of the original communication received by the Department of the Telecommunication but are relying on typed copy thereof. 4. In the affidavit now filed, the Petitioners assert that the original copy of the said communication is lost and cannot be produced and the Petitioners be permitted to rely on the typed copy as secondary evidence. This request could have been considered, however, the Respondents, in additional reply filed, have produced communication sent to the Superintendent, Central Telegraphic Office on 20th October 2008 calling upon the said Office to issue certified copy of communication dated 22nd July 1998 at Exhibit ‘U’ of the Petition. In response to the said request, the Sub-Divisional Engineer, G-II, C.T.O.,Mumbai - 400 001 by his letter dated 23rd October 2008 has informed the Respondents that the 13 relevant records for period dated 22nd July 1998 is no more available since destroyed on due date, for which reason, certified copy of communication dated 22nd July 1998 cannot be issued. Needless to mention that in the reply affidavit filed by the Respondents, it is stoutly denied that any telegram or R.P.A.D. was served on the registered office of the Respondents. In view of this position, it will be unsafe to proceed on the basis of the typed copy of the document at Exhibit ‘U’ produced by the Petitioners which records that copy of the telegram could not be delivered on account of refusal by the addressee. 5. The onus is on the Petitioners to establish the fact that the telegram was not only sent but also the fact that communication Exhibit ‘U’ which is relied upon by the Petitioners has in fact been issued by the Postal Authority. That can be done by examining the concerned officials of the Postal Department. Inspite of liberty given in order dated 18th October 2008, the Petitioners have not produced the same. 6. Oral request is now made by the Counsel for the Petitioners to permit the Petitioners to take steps to summon the concerned Official of the Postal Department or to file affidavit of the said Official. 7. The Petitioners may take out formal application for that purpose, which will be considered on its own merits. If no such application is filed or no steps are taken by the Petitioners on or before 15th December 2008, the Petition to stand dismissed for non-prosecution without further reference to the Court. 8. If steps are taken in time, Petition be listed along with proposed application on 18th December 2008 under caption ‘directions’.” 14 6. Pursuant to the liberty, the Petitioners filed Company Application No. 1681/2008 which was listed alongwith Company Petition on 18th December, 2008. After hearing the parties the Court proceeded to pass the following order: “P.C. 1. Prima facie, I am in agreement with the argument canvassed on behalf of Respondents that no fruitful purpose would be served to straightaway issue summons to the Officials of the concerned Post Office, unless there is some material to indicate that the concerned post office is expected or obliged to maintain register which will contain entry relating to movement of the concerned records dated 22nd July 1998. This is so because the communication sent by the Sub-Divisional Engineer, G-II, C.T.O., Mumbai dated 23rd October 2008 clearly records that relevant records dated 22nd July 1998 are not available and are destroyed on due date. 2. Therefore, it is not necessary to straightaway issue summons to the witnesses. Instead, the Applicants are at liberty to make good the fact that such Registers are maintained and required to be preserved from 1998. It is only then the Court may think it appropriate to issue summons to the Officials of the concerned Post Office. The Applicants may do so on or before 15th January 2009. 3. Place this matter on 16th January 2009. 15 4. At this stage, Counsel for the Applicants invited my attention to the observation in Paragraph 5 of my earlier order dated 4th December 2008 passed in Company Petition No.706 of 1998 to contend that the Court was conscious when it observed that it will be open to the Applicants to take appropriate steps and the present Application is in deference to the said observations. The argument clearly overlooks the reason recorded in the earlier part of the same order that unless there is something on record to indicate that Registers regarding movement of record are maintained and available in the office, it is not possible to straightaway issue summons to the Officials of the Post Office.” 7. On 16th January, 2009, the Petitioners requested the Court to issue letter of request for the same directions as noticed in the Judges Summons. The Court vide order dated 19th January, 2009 issued letter of request pursuant to which one Mr. P.S. Kandekar-Public Relation Inspector in Department of Post, Nashik Road Post Office appeared before the Court on 25th June, 2009. Besides him, two other officials from Postal Department, Mumbai were also stated to be present in Court on 7th May, 2009 as well as on 25th June, 2009. As per the letter of request, the Court proceeded to record the version of Shri P.S.Kandekar on oath as follows:- “ Witness on solemn affirmation states that: 16 Name: Shri P.S. Kandekar Occupation: PRI (P) Nashik Road Post Office, Public Relation Inspector (Postal). Age: 58 years Address: Sandesh Colony Shivajinagar, Sinnar 422103. Nashik. I have been authorised by the Post Master having office at Nashik Road PO -422 101. I hereby produce letter of authority. (The same is marked as Exhibit 1). I also produce the extract of the relevant rules relating to maintenance of official record, marked as Exhibit 2. As per the Rules, Register of delivery/dispatch; delivery/dispatch list, such records are to be maintained upto maximum 18 months. The registered letter pertaining to this case is stated to be of 1998. No register for that period is available in the office as the same is destroyed. In the circumstances, I am not able to produce any register concerning the case. No cross-examination. Witness is discharged.” 8. In view of the position stated by the said Official, notice issued to other two officials was discharged. The matter was then proceeded further for hearing. 9. According to the Petitioners, the fact that goods were sold, delivered 17 and supplied to the Respondent Company under stated invoices was not in dispute at all. No grievance about the quality or quantity of goods was ever made by the Respondent Company at any stage. The grievance about the quality and quantity for the first time has been mentioned in the affidavit filed before this Court in support of the application for setting aside order dated 28th February, 2007. That the statutory notices were sent to the Respondent Company from time to time by different modes. From the postal endorsement it was amply clear that the Respondent Company was avoiding to receive the statutory notices so dispatched. It was contended that the Respondent Company made part payment of the outstanding dues in January 1998 only after receipt of statutory notice dated 25th October, 1997 which was not only sent by RPAD but also under postal certificate. The said payment was only part payment of the outstanding dues. However, since the Respondent Company failed to pay the balance outstanding dues, statutory notice was sent on 6th March, 1998 by speed post AD and later on RPAD, but both the notices were returned with postal remarks “intimation” and “intimation not claimed” respectively. According to the Petitioners, legal presumption of service of the said notices on the Respondent is attracted. Nevertheless, the Respondent Company failed and neglected to pay the balance amount 18 demanded in the said notice, in the sum of Rs. 10,05,385/-. The Petitioners in any case sent another statutory notice by telegram on 26th June, 1998. As per the communication issued by the Authorised Officer of the postal department, that notice when attempted to be delivered to the Respondent Company was refused by the addressee. Further, mere denial of receipt or refusal of service by the Respondent on affidavit is not enough. Burden was on the Respondent to not only deny but also support its stand by other material that the notice was never served nor refused by the Respondents. To buttress this submission, reliance is placed on several decisions by the Counsel for the Petitioners to which reference will be made a little later. Therefore, there is no manner of doubt that statutory notice was duly served on the Respondent Company and the Respondent Company failed and neglected to pay the balance amount. In this backdrop it