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1999 Supreme(Del) 223
High Court Of Delhi
HINDUSTAN THERMO PRINTS LTD. - Appellant
Versus
D.R.G.(U.K.) LTD. - Respondent
COMPANY APPLICATION 1447 of 1993
Decided On : 03/19/1999
ABHINAV VASHISHT, ALOK SINGH, S.K.Luthra, Shalini Verma, V.N.KOURA
A litigant who obtains an order from the court by suppressing and concealing material facts can have the order recalled, and the principle of finality of litigation cannot be pressed into service in such circumstances.
Headnote:
COMPANY - WINDING UP - SUIT AGAINST COMPANY - LEAVE TO FILE - RECALL OF ORDER - LIMITATION - SALE OF ASSETS - AUCTION PURCHASER - RIGHTS OF - MORTGAGE OF ASSETS - VALIDITY OF - JURISDICTION OF COURT - COMPANIES ACT, 1956 - SS. 446, 511, 518 - COMPANIES (COURT) RULES, 1959 - RULES 6, 9, 147 - LIMITATION ACT, 1963 - ARTS. 15, 68, 69.
Fact of the Case:
The applicant, Official Liquidator of Hindustan Thermo Prints Ltd. (in liquidation), sought to recall an order granting leave to the first respondent, a foreign company, to file a suit against the company and the auction purchaser of its assets. The first respondent had supplied plant and machinery to the company, but payment for a portion of the goods was outstanding. The company was wound up in 1986, and its assets were sold by auction in 1987. The first respondent filed applications in 1988 seeking interim relief and restoration of possession of the machinery or payment of the outstanding amount. These applications were withdrawn with liberty to move again as a creditor of the company if it could satisfy the court that its claim was within time. In 1989, the first respondent filed a fresh application for leave to file a suit, which was granted. The Official Liquidator challenged this order, arguing that the first respondent had suppressed the fact of its earlier applications and the orders passed thereon, and that its claim was barred by limitation.
Finding of the Court:
The court held that the order granting leave to file the suit should be recalled. It found that the first respondent had failed to disclose its earlier applications and the orders passed thereon, and that it had not explained why it had not received payment for the machinery under the second letter of credit. The court also held that the first respondent's claim was barred by limitation, as it could have filed a suit to recover the outstanding amount within three years of the expiry of the payment terms specified in the invoices.
Issues: 1. Whether the order granting leave to file the suit should be recalled. 2. Whether the first respondent's claim was barred by limitation.
Ratio Decidendi: 1. The court held that the order granting leave to file the suit should be recalled because the first respondent had suppressed the fact of its earlier applications and the orders passed thereon, and because its claim was barred by limitation. 2. The court held that the first respondent's claim was barred by limitation because it could have filed a suit to recover the outstanding amount within three years of the expiry of the payment terms specified in the invoices.
Final Decision: The court recalled the order granting leave to file the suit and permitted the first respondent to file its claim as an unsecured creditor before the Official Liquidator.
( 2 ) THE applicant hindustan Thermo Prints Ltd. is a company in liquidation in respect of which winding up order was passed on February 24, 1986 in Company Petition No. 62 of 1983 filed by Thomas Cook India Ltd. , an unsecured creditor of the company .
( 3 ) THE first respondent is a company incorporated under the laws of England and has its registered office at Bristol, England. This respondent supplied plant and machinery to the company .
( 4 ) THE second respondent M/s. Polar Chem-Coats is the auction purchaser of the assets of the company . The third respondent is Grindlays Bank which gave a loan to the tune of Rs. 2,01,15,000. 00 to the company , like other financial institutions, namely, Bank of America, National Trust and Saving Association, the Pradeshiya Industrial Investment Corporation of Uttar Pradesh (PIC Up) and Vijaya Bank, the Grindlays Bank is also a secured creditor and a mortgagor in respect of the land, building, plant and machinery of the company .
( 5 ) THE company on December 23, 1980 is alleged to have entered into a contract with the first respondent whereby, the first respondent was to supply to the company various machines and accessories on the terms and conditions specified therein. The company was required to pay to the first respondent sterling pound 640. 143 for the supply of the machinery in the following manner :-
1. A confirmed letter of credit for sterling pound 581,940 to be opened by the company with a recognised London Bank against presentation of documents.
2. A second confirmed irrevocable letter of credit for sterling pound 29,097 to be opened by the company with a recognised London bank prior to the shipment of the above said articles from U. K. so that payment coincides with the arrival of the technical team in India for installation of the machinery.
3. Balance of 29,097 pounds to be paid by the company to the first respondent not later than December 31, 1982, the exact time to be agreed upon by both the parties around the middle of 1982.
( 6 ) THE first respondent claims that while it had received payment under the first letter of credit, the remaining payments in respect of two instalments of pound sterling 29,097 each pertaining to invoice No. 35191 dated 22nd December, 1981 and invoice No. 352061 dated December 24, 1981, were not made by the company . As per the first respondent, the company on November 14, 1981, earlier to the issue of above said two invoices, had informed the former that due to deficiency of rupees six million in the project cost the latter had been forced to defer the payment of two instalments to July 1982 and August 1982. Subsequently the first respondent by its letter dated September 28, 1982 reminded the company for settling the dues. The company by its letter dated October 6, 1982, however, informed the first respondent that the date of payment of the two instalments can be decided by the parties across the table. As per the stand of the first respondent, it made several oral as well as written requests to the company to pay the unpaid balance but without any tangible results.
( 7 ) ON May 25, 1983, Thomas Cook Ltd. , an unsecured creditor of the company , filed a company petition No. 62/83 under S. 434 (1) of the Companies Act, 1956 seeking winding up of the company with the allegation that the company was indebted to it in a sum of Rs. 1,06,039 along with interest accrued thereon at the rate of 18% per annum and the company had failed to pay the outstanding amount despite repeated demands. Besides, it was claimed that the company was insolvent and was not in a posi
