IN THE HIGH COURT OF DELHI 

ROHIT CHAUDHARY and ALOK SINGH, Advocates, for the petitioner. 

ANUPAM LAL DASS, Advocate, for the respondent. 

JUDGMENT 

DALVEER BHANDARI, J. - The petitioner filed a petition under section 433 (e), section 434 and section 439 of the Companies Act, 1956, against the respondent. The petitioner vide its letter, dated 11.4.1997 has offered certain quotations for costume jewellery items to the respondent company alongwith its terms and conditions. The respondent company placed an order, dated 15.4.1997 for the supply of various items of costume jewellery, which was duly accepted by the petitioner. According to the letter, dated 15.4.1997, some specified jewellery items were to be supplied to the petitioner within 90 days, i.e., on or before 19.7.1997. The respondent was to be paid a commission of US $ 58,000. 

2. It is the case of the petitioner that the respondent was paid the commission amount. It is also mentioned in the petition that the petitioner sought an extension of time for supplying the goods, vide letter, dated 4.7.1997 and the respondent company had agreed to extend the time up to 6.8.1997 and informed the respondent on telephone. Thereafter, the petitioner was ready with the consignment for despatch within a week after seeking an extension from the respondent. The petitioner thereafter requested the respondent to arrange for an inspection of the same by Mr. Aamir Hatim Nakhoda as per the terms of the letter of credit. The respondent had represented to the petitioner that the pre-shipment inspection shall be done by Mr. Naresh Baluni, in his capacity as the agent, and it was further stated that Mr. Naresh Baluni shall also organise for the pre-shipment inspection certificate. As such, on 20.7.1997, an inspection was carried out by the said Mr. Naresh Baluni, who accepted that the goods were in order and perfect condition, and had also signed all the cartons containing the consignment. 

3. According to the petitioner, the respondent company assured the petitioner that they shall arrange for the fresh letter of credit in the petitioner's favour by 13.8.1997, but they failed and neglected to do the same. As such, the petitioner once again vide its letter, dated 8.8.1997 requested both the respondent and the buyer to arrange for the letter of credit. Again, a similar request was sent on 19.8.1997. On 20.8.1997, the petitioner served a notice, calling upon the respondent company to arrange for the letter of credit within seven days and make the payment. 

4. The petitioner served a notice, dated 16.9.1997 under sections 433 (e), section 434 and section 439 of the Companies Act which was duly received by the respondent calling upon the respondent to make the payment for the despatch of goods. In reply to the notice, dated 16.9.1997, the respondent refused to admit having received the total commission of Rs. 5,25,000 for which they had issued receipt. They also denied that the said goods could be inspected by one Mr. Naresh Baluni according to the agreement. 

5. The respondent replied to the said notice which was duly received by the petitioner company but they chose not to give any reply. In these circumstances, according to the petitioner, the respondent company is indebted to the petitioner for a sum of Rs. 5,25,000 alongwith interest at the rate of 24%. 

6. It is also mentioned that, according to the petitioner, the respondent company is using the modus operandi of collecting the commission in advance by inducing innocent exporters by promising orders in capacity as agents to prospective buyers in the form of lucrative advertisements and thereafter demanding advance commission. Once the commission is paid, they do not perform their duties and buy the contracted goods and in a manner thereof cheat the unwary exporters like the petitioner. 

7. This court issued notice to the respondent. The reply has been filed. Preliminary submissions have been made that the respondent is a commercially solvent company and is able to pay off all its debts. Further, the existing realisable assets of the company are sufficient to meet all the liabilities, if any, of the respondents, the market value of such assets being more than Rs.50 lakhs. According to the petitioner, there is no debt which the respondent is liable to pay to the petitioner. It is also mentioned that whatever money was received by the respondent was pursuant to an agreement with the petitioner which contemplated that the respondent would give an export order for costume jewellery to the petitioner and on receipt of letter of credit, the petitioner paid a commission to the respondent for procuring and giving the said export order to the petitioner. 

8. Thereafter, in terms of the agreement, the respondent duly performed its obligations by ensuring that a letter of credit was issued in favour of the petitioner. The petitioner in terms of the agreement paid the just and due commission to the respondent. It is also mentioned that once the letter of credit was received by the petitioner for supply of costume jewellery, there came into existence a distinct and independent contract between the petitioner and the buyer. One of the terms of the letter of credit was that delivery had to be effected within 90 days including negotiation time. The petitioner failed to make the said delivery within the stipulated period and the letter of credit expired. 

9. The letter, dated 4.7.1997 was written by the petitioner to the buyer, F. M. Noordin and Co., which reads as under : 

"527/97-98 Dated 4 July, 1997 M/s. F. M. Noordin and Co. 11, Collyer Quay, the Arcadehex, 06-04, Raffles Place, Singapore-049317 

Sub : L/C No. SIN/29697/97, dated 29.4.1997. 

Dear Sir, 

This has reference to the above mentioned letter of credit opened by you in our favour for supply of costume jewellery. We feel sorry and regret to inform you that due to social tension in cities where our suppliers are situated, our suppliers could not give required quantities in time. In order to complete the production, we require about 30 days extension. We promise that in case we are given extension, we would definitely give you material within extended period. 

Your early reply is awaited. 

Thanking you, 

Yours
faithfully, 
For Twinkle Exports 

Sd. ... (Nemi
Khandelwal)" 

10. According to this letter, because of the difficulty faced by the petitioner, the petitioner could not supply the goods within the stipulated time. 

11. Reliance has also been placed on the letter which has been written by the petitioner to the respondent on 2.8.1997. The said letter reads as under : 

"541/97-98 M/s. F. M. Noordin & Co. Dated 2 August, 1997 Singapore, 

Dear Sir 

Please refer to your L/C No. SIN/29691/97 for US $ 58,000 opened by you in our favour to cover despatch of material ordered by your Indian agent-Tartan Infomark Limited, New Delhi, on your behalf. As material is ready for despatch, you are requested to please depute your nominated person Mr. Aamir Hatim Nakhoda to carry out inspection so that we can arrange despatch of your ordered material. 

Please note that your Indian agent's representative, Mr. Naresh Baluni, has already inspected the material. But in order to negotiate the documents under the said L/C inspection certificate of Mr. Aamir is required. Hence, kindly arrange to depute Mr. Aamir for inspection at the earliest. Further, we had requested you for 30 days extension of delivery as well as negotiation period through your Indian agent which was agreed upon by him. 

Kindly amend the said L/C accordingly, so that the material could be despatched at the earliest. 

Kindly revert back your reply through fax immediately. Our fax No. is 0091113542488. 

Thanking you, 

For
Twinkle Exports 

Sd. ... (Nemi Khandelwal)". 

12. The learned counsel for the respondent has also placed reliance on the letter sent to the petitioner by the respondent on 6.8.1997. The letter reads as under : 

"Dated 6 August, 1997 M/s. Twinkle Exports, New Delhi 

Attn. : Mr. Nemi Khandelwal 

Re. : L/C No. SIN/29691 

Reference your letter, dated 2.8.1997, the shipment date is over long time back and L/C is expired. Due to your non-shipment timely, we have suffered heavily and lost face with the buyer who is angry and cannot do anything in this matter. 

Yours
faithfully, 

Sd. ... F. M.
Noordin & Co." 

13. It is clearly mentioned in the letter that the petitioner did not make the shipment within the stipulated period. Consequently, the letter of credit expired and the buyer sustained heavy loss, and then the buyer expressed his inability to do anything in the matter. 

14. According to the letter of credit, the nominated person for inspection was Mr. Aamir Hatim Nakhoda and the inspection could only be carried out by him. The inspection which was carried out by Mr. Naresh Baluni was contrary to the terms of the letter of credit. 

15. According to the respondent, it is not a case where the respondent is unable to pay its debts. The counsel for the respondent submitted that there is no question of admitted liability in this case. 

16. Learned counsel for the respondent submitted that the petitioner himself was guilty in not despatching the shipment within the stipulated period, i.e., according to the respondent, the petitioner is also guilty of not having got the material inspected by the nominated person in the letter of credit, Mr. Aamir Hatim Nakhoda. Instead of that, he got the inspection done through Mr. Naresh Baluni, which according to the respondent, is contrary to the terms of letter of credit. The petitioner was fully aware that the inspection had to be carried out only by Mr. Aamir Hatim Nakhoda because the petitioner himself had written a letter to the respondent on 2.8.1997 reproduced in the preceding paragraphs. 

17. Learned counsel for the respondent has placed reliance on a judgment of 1965, i.e., Amalgamated Commercial Traders (P) Ltd. v. A. C. K. Krishnaswami and Another reported in (1965) 35 Comp Cas 456 (SC). The relevant portion reads as under : 

"It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order, but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court. 

If a debt is bona fide disputed, there cannot be neglect to pay within the meaning of section 434 (1)(a) of the mp Companies Act, 1956." 

18. The learned counsel for the respondent has also cited judgment in I.T.C. Ltd. v. Fomento Resorts and Hotels Ltd. (1991) 2 Comp LJ 94 (Bom): (1991) 70 Comp Cas 459 (Bom). The relevant portion reads as under (para 13 at page 99 of Comp LJ) : 

"It is well settled that a winding up petition should not be allowed to be resorted to as a means to recover debts from a company. It is not a legitimate way to enforce payment of debts which are bona fide disputed by the company and cannot be used as a weapon to pressurise and coerce the company to make payments ..... The claim in a winding up petition should not be a running claim, but one which is crystallised." 

19. Reliance has also been placed on the judgment of Madras High Court, i.e., B. Viswanathan v. Seshasayee Paper and Boards Limited reported in (1997) 3 Comp LJ 209 (Mad) : (1992) 73 Comp Cas 136 (Mad). The relevant portion of the judgment reads as under (para 10 at page 214 of Comp LJ) : 

"The jurisdiction of the court entertaining a petition for winding up a company under section 433 of the Companies Act, 1956, is not that of a court which is essentially meant for settling money disputes between parties, but is to subserve the object of winding up of companies which have not paid their debts or which are unable to pay their debts. Where the debt is disputed, the proper forum to approach is the civil court. In summary proceedings such as proceedings for winding up a company, a detailed investigation and adjudication of the dispute should be avoided." 

20. The counsel for the respondent also placed reliance on the judgment of Punjab and Haryana High Court, i.e., Malhotra Steel Syndicate v. Punjab Chem-Plants Limited reported in (1989) 2 Comp LJ 261 (P&H) : (1989) 65 Comp Cas 546 (P&H). In this judgment, the court observed that if the Company Court comes to the conclusion that the debt is bona fide disputed by the company against whom the winding up petition has been filed, the winding up petition will not be the appropriate remedy and the petitioner has to be relegated to a civil suit. 

21. In the instant case, it is clearly established that petitioner himself failed to adhere to the time schedule and due to social tensions in cities where his suppliers were located, he could not supply the shipment within the stipulated period and sought 30 days extension. 

22. The buyer had sent a cable, dated 6.8.1997 in which he clearly mentioned that the shipment date was over a long time ago and the letter of credit had expired and on that account the buyer himself sustained heavy losses. 

23. According to the agreed terms, the petitioner before shipment had to get the goods inspected by Mr. Aamir Hatim Nakhoda and no one else but even then, the petitioner [got] the goods inspected from Mr. Naresh Baluni which was contrary to the terms of the letter of credit. The petitioner's letter to the respondent dated 2.8.1997 clearly reveals that the petitioner was aware of this condition of the agreement; even then, the petitioner acted contrary to the terms of agreement; therefore, the petitioner is not entitled to any relief in these proceedings. 

24. The debt of the petitioner is bona fide disputed by the respondent. In these circumstances, the winding up is not the appropriate remedy. This petition being devoid of any merit is accordingly dismissed; and in the facts and circumstances of this case, parties are directed to bear their own costs.