Case: Spedag East Africa Limited Vs. Surendra Engineering Corporation Private Limited

was that the invoices which it initially raised on Shark Logistics was on the instructions of the Respondent. This was specifically noted in a communication dated 21 April 2008 addressed by the Appellant to the Respondent. Originally, the invoices were raised on Shark Logistics and upon its failure to honour them, the Appellant demanded payment from the Respondent on 21 April 2008. The Respondent did not address any communication in response to this letter. Significantly, on 4 October 2007 an e-mail was addressed to Brijen Parikh by the Appellant asking for payment of an outstanding amount of U.S.$ 438,377.34. This was followed by a further communication dated 19 October 2007 rectifying the amount claimed to U.S.$ 397,443.67. On 26 October 2007, Brijen Parikh, who was a partner in the erstwhile partnership and is admittedly a Director of the Respondent, addressed an e-mail to the Appellant. The subject in the e-mail is stated in the reference as Payment to Spedag East Africa (the Appellant before the Court). The e-mail is in the following terms:RE: Payment to Spedag East AfricaDear Sir,With reference to the below mail, please be informed that as per our record, the balance payment is Amount U.S.$206,403.67 not U.S.D 397,143.67.We will remit Amount: U.S.$206,403.67 as per our record.Thanks & Regards,BrijenParikh. (emphasis supplied)The e-mail contains a clear admission of liability on the part of the Respondent. The admission of liability is clearly of the payment due to the Appellant because the subject of the e-mail is not an amount which is due in the abstract, but a specified amount (US$ 206,403.67) which was due and owing to the Appellant. The Respondent clearly stated that it would remit that amount as per our record. This admission of liability displaces the defence which was sought to be raised to the effect that there was no privity of contract between the Respondent and the Appellant and that there was an outstanding due by the Respondent to Shark Logistics with which the Respondent dealt on a principal to principal basis. If there was no privity of contract between the Respondent and the Appellant, there would have been no occasion for the Respondent to address an e-mail to the Appellant specifically confirming the amount outstanding in the sum of U.S.$ 206,403.67 and to state that the amount would be remitted. It may be noted that the communication dated 26 October 2007 was addressed by the Respondent in response to an e-mail of the Appellant seeking a confirmation of liability.9. In the affidavit in reply that was filed to the Company Petition for winding up, the Respondent stated that prior to its incorporation on 8 September 2008, the Respondent was a partnership firm constituted under a Deed of Partnership dated 2 April 1994 in the name and style of Surendra Engineering Corporation. Upon the incorporation of the Company, the assets and liabilities of the partnership firm, it is stated, were to the tune of U.S.$ 206,403.67. The Respondent has stated that this is on account of the Respondents contract dated 8 March 2006 with Shark Logistics. The Respondent has specifically averred that in correspondence, it had brought to the notice of the Appellant that the amount due and payable, according to its books of account, was only U.S.$ 206,403.67 and hence, a larger claim of the Appellant in the amount of U.S.$ 453,838.05 against the Company was denied. The acknowledgement dated 26 October 2007 was sought to be explained by stating that it was based on bills received by and authorised for payment by Shark Logistics. If as is now submitted before the Court, the dealings between the Respondent and Shark Logistics were on a principal to principal basis, there would have been no occasion for Shark Logistics to authorise the payment of the aforesaid sum to the Appellant.10. Considering the matter in its entirety and after having examined the documents upon which the rival submissions have been founded, we are of the view that there is a debt due and payable by the Respondent to the Appellant in the amount of U.S.$ 206,403.67. The defence of Respondent that there was no privity of contract with the Appellant was thoroughly lacking in bona fides and was spurious, speculative, illusory and misconceived as explained in the judgment of the Supreme Court in IBA Health (supra). The defence clearly runs in the teeth of a clear admission of liability contained in the Respondents e-mail dated 26 October 2007. This, as noted earlier, must also be weighed together with other contemporaneous material on record. That includes the fact that there was no denial of liability when the Appellant addressed a communication to the Respondent on 21 April 2008 specifically stating that the invoices which were initially raised on Shark Logistics were on the instructions of the Respondent. Admittedly, there was no reply to the statutory notice for winding up. The Learned Single Judge was, with respect, in error in accepting the defence that there was no privity of contract between the Appellant and the Respondent and in holding that a bona fide dispute arose.11. In these circumstances, an order for the admission of the Petition for winding up would have been warranted. However, it would be appropriate to furnish an opportunity to the Respondent to deposit an amount equivalent to U.S.$ 206,403.67 to the credit of the Summary Suit which has been instituted in this Court by the Appellant, to establish its bona fides. Such an opportunity should, in our view, be granted in the interests of justice in order to obviate the consequence of the admission of a Company Petition for winding up. The amount upon deposit would lie to the credit of the suit and abide by such further order that may be passed by the Learned Single Judge at the hearing of the Summons for Judgment. The Court has been informed that the Summons for Judgment has been adjourned by the Learned Single Judge on the Original Side, in view of the admission of this appeal.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]10. Considering the matter in its entirety and after having examined the documents upon which the rival submissions have been founded, we are of the view that there is a debt due and payable by the Respondent to the Appellant in the amount of U.S.$ 206,403.67. The defence of Respondent that there was no privity of contract with the Appellant was thoroughly lacking in bona fides and was spurious, speculative, illusory and misconceived as explained in the judgment of the Supreme Court in IBA Health (supra). The defence clearly runs in the teeth of a clear admission of liability contained in the Respondentsdated 26 October 2007. This, as noted earlier, must also be weighed together with other contemporaneous material on record. That includes the fact that there was no denial of liability when the Appellant addressed a communication to the Respondent on 21 April 2008 specifically stating that the invoices which were initially raised on Shark Logistics were on the instructions of the Respondent. Admittedly, there was no reply to the statutory notice for winding up. The Learned Single Judge was, with respect, in error in accepting the defence that there was no privity of contract between the Appellant and the Respondent and in holding that a bona fide dispute arose.11. In these circumstances, an order for the admission of the Petition for winding up would have been warranted. However, it would be appropriate to furnish an opportunity to the Respondent to deposit an amount equivalent to U.S.$ 206,403.67 to the credit of the Summary Suit which has been instituted in this Court by the Appellant, to establish its bona fides. Such an opportunity should, in our view, be granted in the interests of justice in order to obviate the consequence of the admission of a Company Petition for winding up.