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

2. The Respondent entered into an agreement on 10 February 2006 with a Company based in Uganda, by the name of Kakira Sugar Works (1985) Ltd., (Kakira) under which the Respondent sold and supplied machinery and equipment. The case of the Appellant is that it was providing regular freight forwarding services to Kakira. Kakira had suggested that the Respondent use the services of the Appellant for shipment of the goods from India to Uganda. The Respondent requested that Shark Logistics Pvt. Ltd. (Shark Logistics) be appointed as its agent. According to the Appellant, the Respondent requested the Appellants office in Switzerland to raise invoices on Shark Logistics for expediency, to which the Appellant agreed. Accordingly, invoices in the sum of U.S. $ 438,377.34 were raised upon Shark Logistics for goods shipped and delivered to Kakira. Shark Logistics failed to make payment upon which invoices were raised upon the Respondent. By andated 26 October 2007, the Respondent confirmed to the Appellant that a balance of U.S.$ 206,403.67 was due and payable to it (and not U.S.$ 397,143.67 as claimed by the Appellant). Thewas addressed by a partner of an erstwhile partnership firm, who became a Director of the Respondent, after the partnership was converted into a corporate body. Subsequently, notices of winding up were addressed to the Respondent to which there was no reply.3. The defence before the Company Judge was that there was no privity of contract between the Appellant and the Respondent. This defence has been accepted in the impugned order dated 11 February 2011 as a ground for holding that the Company Petition for winding up raises a bona fide dispute which could not be resolved in that jurisdiction.

Court's reasoning:
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.