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High Court Of Calcutta
SANJIB BANERJEE, J.
DEEPIKA HOUSING PROJECTS PVT.LTD. - Appellant
Versus
STATE - Respondent
C. P. 285 Of 2006
Decided On : 07/16/2007
COMPANY - Winding up - Petition - Opposed on grounds of lack of bona fides and limitation - Acknowledgment of liability - Whether company's response to statutory notice amounts to acknowledgment of liability - Interpretation of Section 18 of the Limitation Act, 1963 - Effect of Explanation (a) to Section 18 - Whether denial of liability coupled with admission of receipt of payment can be considered an acknowledgment of liability - Held, company's response, despite denying liability, constitutes an acknowledgment of liability under Section 18 - Petition allowed, subject to conditions.
Fact of the Case:
Petitioner, a creditor, sought to wind up the respondent company on grounds of non-payment of a loan. The company resisted the petition, claiming lack of bona fides on the petitioner's part and limitation. The company admitted receiving the loan but claimed it was for advance against property, not a loan. The petitioner relied on the company's balance sheet, signed in 2002, which acknowledged the liability.
Finding of the Court:
The court found that the company's response to the statutory notice, though denying liability, acknowledged receipt of the sum claimed by the petitioner. The court held that such acknowledgment, coupled with the company's failure to provide any justification for the alleged forfeiture of the money, constituted an acknowledgment of liability under Section 18 of the Limitation Act, 1963.
Issues: 1. Whether the company's response to the statutory notice amounted to an acknowledgment of liability under Section 18 of the Limitation Act, 1963? 2. Whether the company's defense was adequate to resist the winding-up proceedings?
Ratio Decidendi: 1. The court interpreted Section 18 of the Limitation Act, 1963, and held that an acknowledgment of liability need not specify the exact nature of the property or right claimed and that a refusal to pay or a counter-claim would not affect the validity of the acknowledgment. 2. The court relied on Explanation (a) to Section 18, which states that an acknowledgment may be sufficient even if it is accompanied by a refusal to pay, and held that the company's denial of liability, without any justification, did not detract from the acknowledgment of receipt of payment.
Final Decision: The court allowed the petition for winding up, subject to conditions. The company was restrained from selling its Camac street property without the leave of the court that would receive the petitioner's suit, which was to be instituted within six weeks from the date of the order.
( 2 ) THE company accepts having received the payment from the petitioner though the parties are at variance as to the purpose of payment, a matter more of form than of substance. The petitioner claims that it gave a loan of Rs. 9,99,887. 96 to the company in six tranches beginning March, 1994 and april, 1996, the entire sum being repayable on demand with interest at the rate of 18 per cent. per annum. Though the petitioner is unable to produce any document evidencing such agreement, it cites the company having unfailingly acknowledged the liability to the petitioner in its successive balance sheets and relies on the last of such balance sheets for the year ended March 31, 2002 which was signed on the company's behalf on July 6, 2002. The petitioner is unable to establish the exact nature of the transaction, however, as the company acknowledges receipt of such sum on account of advance against property.
( 3 ) IN December, 2003 the petitioner demanded refund of the money it had allegedly made available to the company by way of loan. The company responded to the demand contained in the statutory, notice by its writing of February 5, 2004. It is the nature of the company's defence found in its response to the statutory notice that is the key issue in these proceedings as it is the defence found in such response which has been repeated and amplified in the company's affidavit :
"we object to your letter dated December 5, 2003 received by us on January 24, 2004. You have no authority to represent the company or issue any notice. As you are aware M/s. Carboxy Chemicals Pvt. Ltd. belongs to Sri Vinod Kumar jain, one of our directors. You have fraudulently purported to show his removal as a director together with his wife. You have also purported to illegally change the share holding. Such wrongful acts are the subject-matter of challenge in C. S. No. 249 of 2003 (Vinod Kumar Jain v. Pawan Kumar Jain)pending before the Hon'ble High Court, calcutta. Accordingly the letter is illegal, without authority, null and void. It is important in this context that Mr. Vinod Kumar Jain and his family members and supporters enjoy majority shareholding in Carboxy Chemicals Pvt. Ltd. Without prejudice to the above, we deny that loan was given by Carboxy Chemicals pvt. Ltd. as alleged. The sum of Rs. 9,99,887. 96 was advanced by you for the purpose of purchasing property as you are fully aware. Due to various breaches on your part, the said sum was forfeited of which also you are fully aware. Accordingly no amount is due or payable by us to you. "
( 4 ) ACCORDING to the company, it is now controlled by one Vinod Kumar Jain. The company claims that Vinod Jain was the principal person in control of the petitioner company and entitled, by virtue of his shareholding therein, to retain control of the petitioner. The company asserts that Pawan, a brother of Vinod, had usurped control of the petitioner and had made the demand on the petitioner's behalf. Vinod's right to control the petitioner has been asserted in the suit filed before this Court and referred to in the company's response to the statutory notice. The underlying insinuation of the company's charge is that it is Vinod's money from one company parked in another Vinod company, that Pawan is now attempting to collect upon removing Vinod from the petitioner company.
( 5 ) THE company submits that till such time that the disputes as to the control of the petitioner are resolved, these proceedings cannot be taken forward as it would be inequitable for the company being required to pay the petitioner for Pawan to effectively receive the money. The company urges that in the event Vinod succeeds in the suit filed against Pawan before this Court and gets his rightful control of the petitioner, the likeliest resul
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