Case: Chhaparia Industries Private Limited Vs. Overseas Polymers Private Limited

in the material supplied by the respondent and thus this plea as taken by the appellant was purely an afterthought, with an intention to avoid its liability of making payment of the outstanding amount.8. As regards the contention on behalf of the appellant in regard to the provisions of Section 22 of the SICA, learned Counsel for the respondent has made two fold submissions. Firstly, the letter dated 2 January 2015 was tendered across the bar, it was not a part of the pleadings before the learned Single Judge, and secondly the letter was only a covering letter and not a reference within the meaning of Section 22 of the SICA, so as to create any bar before the learned Single Judge to proceed with the hearing of the winding up petition and pass the impugned order. It is her submission that this letter of the appellant cannot be construed to mean that a reference under Section 16(1) of the SICA is registered with the BIFR so as to create a bar under Section 22 of the proceedings of the Company Petition. In support of her submission, learned Counsel for the respondent has relied on the decision of the Supreme Court in the case of "Real Value Appliances Ltd. Vs. Canara Bank & Ors." (1998)5 SCC 554) .9. Having considered the rival submissions and after going through the relevant documents and the impugned order with the assistance of the learned Counsel for the parties, we find that there is no merit in the contention as raised on behalf of the appellant. As regards the contention of the appellant that the material as supplied by the respondent was defective, we find that there is no document to support this contention of the appellant, in respect of the supplies under the invoices in question, except Bill No.1665 corresponding to invoice dated 18 January 2013 of an amount of Rs.2,25,748.19. Even in regard to this invoice the respondent had informed the appellant to rectify the defects but before the same could be done, the appellants client viz. SIEMENS had already utilised the material and thereafter, no grievance whatsoever in that regard was made. However, in respect of the supplies under other invoices, there is nothing on record to show that there was any defect in regard to the supplies under these bills. The correspondence also do not reveal any action on the part of the appellant to dispute the quality of the material and/or any reference not to accept and/or return the material. What we find is that the appellant had in fact issued cheques to the respondent for amount of Rs.6,09,769/- and 7,27,125/- on 15 April 2013 and 22 March 2013. Thus clearly the contention in regard to the defect in the material, is taken by the appellant for the first time in defending the winding up petition filed by the respondent. It is significant that the appellant did not even bother to respond to the statutory notice where this plea if bonafide could have been taken by the appellant. We are, therefore, of the clear opinion that the stand of the appellant regarding defective material supplied by the respondent, was without any basis and rightly rejected by the learned Single Judge.10. As regards the contention of the appellant in regard to the application of Section 22 of the SICA, we find that there is no merit in this submission. This is for the reason that apart from a solitary letter dated 2 January 2015 which was tendered across the bar which was merely a covering letter addressed to the Registrar of BIFR for filing of reference, there was nothing brought on record by the appellant to show that a reference has been registered and the same is pending before the BIFR. The Supreme Court in the case of "Real Value Appliances Ltd." (supra) has held that the inquiry under Section 16(1) of the SICA can be said to have commenced as soon as registration of reference is completed after scrutiny and from that time the provisions of Section 22 of the SICA would stand to operate. A useful reference can be made to the observations of the Supreme Court in paragraphs 23 and 30 of this judgment, wherein the Supreme Court has observed thus:"... ... ... Therefore, in our view, the High Court of Allahabad in Industrial Finance Corporation vs. Maharashtra Steels Ltd. (1990) 67 Comp. Cas 412 (All), the High Court of Andhra Pradesh in Sponge Iron India Ltd. vs. Neelima Steels Ltd. (1990) 68 Comp. Cas 201 (AP), the High Court of Himachal Pradesh in Orissa Sponge Iron Ltd. vs. Rishab Ispat Ltd. (1993) 78 Comp. Cas 264 (HP), are right in rejecting such a contention and in holding that the inquiry must be treated as having commenced as soon as the registration of the reference is completed after scrutiny and that from that time, action against the Companys assets must remain stayed as stated in section 22 till final decisions are taken by the BIFR.30. There can, therefore, be no difficulty in holding that after the amendment to Regulation 19 w.e.f. 24.3.1994, once the reference is registered and when once it is mandatory simultaneously to call for information/documents from the informant and such a direction is given, then inquiry under section 16(1) must for the purposes of section 22 be deemed to have commenced. Section 22 and the prohibitions contained in it shall immediately come into play." (emphasis supplied)11. In the light of the observations of the Supreme Court in the decision in "Real Value Appliances Ltd." (supra), the learned Single Judge has thus appropriately observed that an inquiry under Section 16 of the SICA so as to attract bar under Section 22 of the SICA, is deemed to have commenced upon registration of a reference and only thereafter the provisions of Section 22 of the SICA would apply.12. In these circumstances and for the reasons we have indicated, we do not find any merit in this appeal.

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

Explanation:
0[ds]9. Having considered the rival submissions and after going through the relevant documents and the impugned order with the assistance of the learned Counsel for the parties, we find that there is no merit in the contention as raised on behalf of the appellant. As regards the contention of the appellant that the material as supplied by the respondent was defective, we find that there is no document to support this contention of the appellant, in respect of the supplies under the invoices in question, except Bill No.1665 corresponding to invoice dated 18 January 2013 of an amount of Rs.2,25,748.19. Even in regard to this invoice the respondent had informed the appellant to rectify the defects but before the same could be done, the appellants client viz. SIEMENS had already utilised the material and thereafter, no grievance whatsoever in that regard was made. However, in respect of the supplies under other invoices, there is nothing on record to show that there was any defect in regard to the supplies under these bills. The correspondence also do not reveal any action on the part of the appellant to dispute the quality of the material and/or any reference not to accept and/or return the material. What we find is that the appellant had in fact issued cheques to the respondent for amount of Rs.6,09,769/on 15 April 2013 and 22 March 2013. Thus clearly the contention in regard to the defect in the material, is taken by the appellant for the first time in defending the winding up petition filed by the respondent. It is significant that the appellant did not even bother to respond to the statutory notice where this plea if bonafide could have been taken by the appellant. We are, therefore, of the clear opinion that the stand of the appellant regarding defective material supplied by the respondent, was without any basis and rightly rejected by the learned Single Judge.10. As regards the contention of the appellant in regard to the application of Section 22 of the SICA, we find that there is no merit in this submission.There can, therefore, be no difficulty in holding that after the amendment to Regulation 19 w.e.f. 24.3.1994, once the reference is registered and when once it is mandatory simultaneously to call for information/documents from the informant and such a direction is given, then inquiry under section 16(1) must for the purposes of section 22 be deemed to have commenced. Section 22 and the prohibitions contained in it shall immediately come into play." (emphasis supplied)11. In the light of the observations of the Supreme Court in the decision in "Real Value Appliances Ltd." (supra), the learned Single Judge has thus appropriately observed that an inquiry under Section 16 of the SICA so as to attract bar under Section 22 of the SICA, is deemed to have commenced upon registration of a reference and only thereafter the provisions of Section 22 of the SICA would apply.12. In these circumstances and for the reasons we have indicated, we do not find any merit in this appeal.