ARROW ENTERPRISE COMPUTING SOLUTIONS INDIA PRIVATE LIMITED v. F-1 INFOTECH PRIVATE LIMITED

1. Present petition is filed under section 433(e), 434 and 439 of the Companies Act, 1956 seeking winding up of the respondent company. The case of the petitioner is that the respondent company contacted the petitioner in March 2015 and placed three separate purchase order dated 25.3.2015 with payments of 15% advance and balance against Letter of Credit (LC) back to back. The respondent then made advance payment of Rs.15,79,078/-. On 20.7.2015 the respondent made part payment of Rs.18,96,399/-. For the balance outstanding amount of Rs.82,56,322 the respondent issued a Letter of Credit from Yes Bank Limited, Kirti Nagar Branch, New Delhi. It is pleaded that thereafter tax invoices were raised and the products were delivered to the respondent. It is pleaded that on 29.7.2015 the products were duly delivered at the destination which was acknowledged by the respondent. The respondent company is said to have requested to cancel the LC and has instead issued a post dated cheque to the 2018:DHC:3387 Co.Pet.356/2016 Page 2 petitioner of Rs.82,56,322/-. It is stated that the respondent informed the petitioner that they were was facing financial crunch and requested the petitioner not to deposit the aforesaid cheque on due date i.e. 20.8.2015. On 18.11.2015 under intimation to the respondent company the petitioner presented the aforesaid cheque drawn on Yes Bank, New Delhi with its banker HSBC Bank, Fort Branch, Mumbai since the validity of the cheque was about to lapse. However, the cheque was returned with the reason “payment stopped by the drawer”. Thereafter the petitioner has also issued a notice to the respondent under section 138 of the N.I Act. Winding up notice has been issued on 2.2.2016. It is pleaded that despite receipt of notice there is no response from the respondent.

2. Respondents have entered appearance and have filed their reply. It has been sought to be argued in the reply that initially there was a delay in delivery of the goods. Thereafter it is pleaded that what was to be supplied was the software along with the hardware. The hardware was of no use without the software licences. Hence, it is pleaded that as supply was not completed the respondent issued “stop payment” instructions to its bankers regarding the cheque that had been issued to the petitioner. It is pleaded that now the licenses have been received by the respondent from different sources.

3. I have heard learned counsel for the parties. Learned counsel for the petitioner has reiterated her submissions as stated out in the aforesaid winding up petition. She has pointed out that in the reply/counter-affidavit filed by the respondents they admit of having received the full licenses. She pleads that there is no bona fide defence against the winding up petition. Learned counsel for the Respondent, submits that goods were actually Co.Pet.356/2016 Page 3 delivered on 3.8.2015. He has drawn my attention to a communication dated 4.8.2015 where the respondents have pointed out that the software licenses have not been received. Learned counsel has also pointed out that the petitioner is actually a distributor on behalf of Checkpoint Software Technologies Ltd. It is for this reason that the respondent had placed a purchase order on the petitioner. This was done as the respondent had received back to back order from OmniTel Technologies Pvt.Ltd. This Omn Tel Technologies Pvt.Ltd. had received an order from NICSI. It is pleaded that the respondent himself has not received his full payment from Omnitel. Further, it is pleaded that on account of the losses suffered by the respondent a legal notice has been sent to M/s. Checkpoint Software Technologies Pvt. Ltd..

4. Some of the facts are not in dispute. Three purchase orders had been placed on the petitioner by the respondent on 25.3.2015. The total amount payable by the respondent was Rs.1,05,27,188/-. Two payments have been made, namely, Rs.15,79,078 as advance payment. Part payment before supply of the goods was of Rs.18,96,399. The respondent has issued letter of credit for payment of the balance amount to Rs.82,56,322/-. Goods were supplied to the respondent on 3.8.2015 as per the respondent. However, the letter of credit was cancelled. Instead a post dated cheque dated 20.8.2015 has been handed over to the petitioner for Rs.82,56,322/- As per the respondent at the petitioner’s request the cheque was presented sometimes in November 2015 on the alleged request of the respondent but the same was returned as “payment has been stopped by the drawer”. The essential plea raised by the respondent is that licenses have not been supplied by the petitioner for the hardware and hence the respondent issued “stop payment” Co.Pet.356/2016 Page 4 instructions.

5. I may look at the reply filed by the respondent. The respondent in para 2 of his reply states that the petitioner failed to follow up with Check Point to complete the supply of license. Hence, the respondent was shocked with the non completion and inaction on the part of the petitioner. After follow up with Checkpoint the respondent got the licenses completed as per requirement of the customer which is evident from email dated 26.8.2015 and 3.9.2015 sent by Check Point to the respondent. The relevant part of the reply being para Q reads as follows:-

6. It is manifest from the said reply and the submissions of the respondent that the respondent admits that the petitioner is the distributor of Check Point. Thereafter it is the case of the respondent that there were some deficiencies in the supply of licenses. However, the respondent managed to get the licences from Checkpoint Software Technologies Ltd. There is no averment in the reply that any additional payment had to be made by respondent while getting these licenses from Checkpoint Software Technologies Ltd. It is also noteworthy that the goods had been supplied to the respondent on 3.8.2015. The licences have been received from Checkpoint Software Technologies Ltd in August 2015 as is evident from the reply itself. It is manifest that from the above that there clearly appears to be no reason as to why the respondent has allegedly withheld payments due to the petitioner. At best some inconvenience was caused to the Respondent in getting the Software licenses.

7. I may note that a plea has been raised that Omnitel has not released payment of the respondent. There is no privity of contract between the petitioner and the said OmniTel. Hence if any problems have arisen between the dealings of the Respondent and OmniTel the dues of the Petitioner cannot be withheld. Even the respondent has not been able to show if any legal steps have been taken against Omnitel for recovery of its dues. The goods have been supplied in August 2015 and the period of limitation is now virtually expiring. I may also note that belatedly on 10.7.2017 a legal notice has been sent to Checkpoint Software Technologies Ltd. The said legal notice also threatens legal action against Checkpoint Software Technologies Ltd. It is quite obvious that no bona fide defence has been raised by the respondent. Co.Pet.356/2016 Page 6

8. Accordingly, I admit the winding up petition. The official liquidator is appointed as the Provisional Liquidator. I, however, suspend the aforesaid order appointing the OL as the Provisional Liquidator for a period of six weeks. In case the respondent makes the payment to the petitioner of a sum of Rs.82,56,322/- within six weeks the aforesaid order would stand recalled.

9. Reliance may be had to the judgment of the Supreme Court in Madhusudan Gordhandas & amp; Co. vs. Madhu Wollen Industries Pvt. Ltd., AIR 1971 SC 2600/ (MANU/SC/0033/1971), where the court 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.”

10. Keeping in view the above, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Liquidator. He is Co.Pet.356/2016 Page 7 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 „Statesman‟ (English) and „Veer Arjun‟ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of hearing. Costs of Rs.75,000/- for the publication will be paid by the petitioner to the OL. 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. OL is also authorised to break open the locks of the office of the respondent company in case the need arises. 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.

11. List on 26.9.2018.