Full Text
HIGH COURT OF DELHI
Date of Decision: 25.05.2018
JIANGSU TRIGIANT TECHNOLOGY CO. LTD...... Petitioner
Through Mr.Preet Pal Singh, Adv.
Through Mr. Rajesh Kumar, Adv.
JUDGMENT
1. This petition is filed under Sections 433(e) and 434 of the Companies Act, 1956 seeking winding up of the respondent Company.
2. The case of the petitioner is that the petitioner is a supplier of feeder cables. The respondent approached the petitioner with an offer to purchase the said goods on a credit of 60 days from the bill of lading. The offer of the respondent was accepted. The respondent placed three purchase orders on the petitioner between 08.01.2014 to 11.02.2014 for a total of USD 224,960. It is the case of the petitioner that they have sold, supplied and delivered the said goods to the respondent in accordance with the respondent‟s specifications. Petitioner raised three invoices i.e. Invoice No. TG-13022 dated 10.01.2014, Invoice No. TG-13025 dated 14.01.2014 and Invoice No. TG-14001 dated 27.02.2014. It is pleaded that despite delivery of the goods, the respondent failed and neglected to clear the outstanding amount. 2018:DHC:3505
3. Reliance is placed on an e-mail dated 01.07.2014 received from the respondent whereby the respondent has stated that they have not got the shipment cleared from the Customs due to some internal issues, though one shipment got cleared last week. They promised to pay for all the three shipments. Reliance is place on another e-mail dated 26.09.2014 whereby the respondent promised to pay the dues. Thereafter, the petitioner sent a statutory legal notice under Sections 433 and 434 of the Companies Act on 07.11.2014. As there was no response from the respondent, the present winding up petition has been filed.
4. In the reply that was filed by the respondent it has taken a stand that the debt is a bona fide disputed and the present winding up petition cannot be used as a mechanism for recovery of the amount. It has been pleaded that only the goods pertaining to Invoice No.TG-14001 dated 27.02.2014 have been delivered to the respondent Company and the goods pertaining to other two invoices have not been delivered. It is pleaded that the respondent has already paid a sum of USD 10,000. It is also stated that the respondent is willing to pay the balance amount regarding the third invoice No. TG-14001 dated 27.02.2014 as the goods regarding the said invoice only have been received by the respondent.
5. I have heard learned counsel for the parties.
6. Learned counsel for the respondent has strongly urged that the goods have not been received for the other two invoices and the respondent is only liable to pay for invoice No. TG-14001 dated 27.02.2014 and is willing to pay the said amount. It is further pleaded that the financial health of the respondent Company is sound as reflected from the balance sheet. The petitioner cannot use the mechanism of winding up for a recovery process. It is thirdly pleaded that in the entire pleadings, the petitioner has claimed USD 224,960 whereas in the rejoinder it admits that USD 214,960 is payable.
7. I may look at the purchase orders that were placed by the respondent on the petitioner. Clause 1 of the terms and conditions of the purchase order states “Price Basis-FOB Shanghai”. The Supreme Court in the case of Contship Container Lines Ltd. vs. D.K. Lall & Ors., AIR 2010 SC 1704 has noted that as follows:- “21. Coming to the case at hand, the contract of sale was on F.O.B. basis even when the contract of insurance proceeded on the basis that the transactions between the seller and the purchaser and meant to be covered by the policy would be on C.I.F. basis. The distinction between C.I.F. (cost, insurance and freight) and F.O.B. (free on board) contracts is well recognised in the commercial world. While in the case of C.I.F. contract the seller in the absence of any special contract is bound to do certain things like making an invoice of the goods sold, shipping the goods at the port of shipment, procuring a contract of insurance under which the goods will be delivered at the destination etc., in the case of F.O.B. contracts the goods are delivered free on board the ship. Once the seller has placed the goods safely on board at his cost and thereby handed over the possession of the goods to the ship in terms of the bill of lading or other documents, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete. The goods are from that stage onwards at the risk of the buyer.”
8. Hence, in case of FOB contracts, the goods are delivered free on board the ship. Once the seller has placed the goods on board, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete. The goods from that stage onwards are at the risk of the buyer.
9. In the present case, the admitted fact is that the goods have been despatched by the petitioner. This is quite clear from e-mail dated 01.07.2014 sent by the respondent. The same e-mail reads as follows:- “Dear Mr Rajeev As discussed we haven't got shipment cleared till date from customs due to some internal issues and custom issues, only one shipment got cleared thereto last week only. We will pay you for all three shipments from last week of this month with a gap of a week in every payment.”
10. As per this e-mail one shipment has been received by the respondent and two shipments are stuck with the Customs “due to some internal issues and custom issues”.
11. A question was posed to the learned counsel for the respondent as to where the goods are? He was unable to give an answer. Later on, this was changed to say that the goods are still lying at the ports/customs. No explanation is given as to why the goods are still lying at the ports/customs.
12. Keeping in view the purchase order, the title to the goods had passed to the respondent once the goods were loaded on the ship.
13. In this context, I may also look the e-mail dated 26.09.2014 which reads as follows: “Dear Rajeev/Jincy It was nice talking to you, as per discussion with you we were under financial crunch due to some realization issues from our customers. As discussed after so holidays we will give you swift copy of first invoice i.e. on 8th or 9th October without any further delay and for remaining container we will come back to you with our payment plan in October.”
14. The above is a clear admission of the respondent that it has to pay full amount to the petitioner. It is clear that the respondent have the received the goods. They are liable to pay to the petitioner for the goods.
15. Regarding the plea that the respondent is financially sound, this plea cannot be used as an excuse to deny dues of the petitioner.
16. The third contention about an error of USD 10,000 is rejected. The error is obvious. USD10,000 were admitted by the petitioner having received. The claim of the petitioner is only USD 214,960.
17. Reference may be had to the judgment of the Supreme Court in Madhusudan Gordhandas & Co. vs. Madhu Wollen Industries Pvt. Ltd., AIR 1971 SC 2600/ (MANU/ SC/0033 /1971), held as follows: “21.Two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed.
22. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debt precisely. The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends.”
18. In my opinion, there is no defence or bona fide defence raised by the respondent in the facts of this case.
19. Accordingly, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the newspapers „The Statesman‟ (English) and „Veer Arjun‟ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing. The cost of publication is to be borne by the petitioner who shall deposit a sum Rs.75,000/- with the Official Liquidator within 2 weeks, subject to any further amounts that may be called for by the liquidator for this purpose, if required. The Official Liquidator shall also endeavour to prepare a complete inventory of all the assets of the respondent-company when the same are taken over; and the premises in which they are kept shall be sealed by him. At the same time, he may also seek the assistance of a valuer to value all assets to facilitate the process of winding up. It will also be open to the Official Liquidator to seek police help in the discharge of his duties, if he considers it appropriate to do so. The Official Liquidator to take all further steps that may be necessary in this regard to protect the premises and assets of the respondent-company.
20. At this stage, learned counsel for the respondent says that he would like to take instructions from his client. The above order admitting the petition and appointing the OL as the Provisional Liquidator is kept under suspension for a period of six weeks from today. In case, the respondent makes the necessary payment to the petitioner, the aforesaid order shall stand recalled.
21. List on 27.09.2018.
JAYANT NATH, J MAY 25, 2018 rb