IN THE HIGH COURT OF DELHI AT NEW DELHI. Company Petition No.66/2006 and Co. App. No.508/2007. Judgment Reserved on :

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1 IN THE HIGH COURT OF DELHI AT NEW DELHI SUBJECT : Companies Act, 1956 Company Petition No.66/2006 and Co. App. No.508/2007 Judgment Reserved on : Judgment Delivered on : M/s Paharpur 3P (A Division of M/s Paharpur Cooling Towers Limited) Through: Mr.P.V. Kapur, Sr. Adv. with Mr. Amit Prasad and Chandra Shekhar, Advocates... Petitioner M/s Dalmia Consumer Care Private Limited Through: Mr. Harish Malhotra, Sr.Adv. with Mr.Sunil Kataria, Adv. VIPIN SANGHI, J. versus...respondent 1.The petitioner seeks the winding up of the respondent company by invoking Sections 433(e), 434 and 439 of the Companies Act, 1956 (hereinafter called the 'Act') on the ground that the respondent is indebted to the petitioner to the tune of Rs 57,42,572.41p. besides interest, which which the respondent company is unable to pay despite service of a statutory notice. 2.As per the averments contained in the petition, the petitioner M/s Paharpur 3P (hereinafter called the 'petitioner'), is a division of M/s Paharpur Cooling Towers Ltd. and is in the business of manufacturing, marketing and exporting Flexible Packaging laminates in Roll and Pouch form. The

2 respondent company, M/s Dalmia Consumer Care Pvt. Ltd. (hereinafter called the 'company'), placed various purchase orders from time to time on the petitioner for supply of flexible laminates and pouches, inter-alia, for its FMCG product Zing and Chabaaza. The petitioner supplied to the Company Flexible laminates and Pouches as per the terms of the purchase orders to the complete satisfaction of the company and raised the invoices amounting to Rs.1,91,51,367.55/-. Out of the said amount, an amount of Rs.57,42,572.41/- is outstanding, due and payable by the company. It is further averred that the petitioner sent numerous reminders and made personal visits to the office of the company but to no avail. The Company vide a ``Balance Confirmation Certificate'` dated (Annnexure P-1 to the petition), admitted Rs.56,97,300/- as outstanding due and payable to the petitioner as on The petitioner further states that a Statutory notice dated issued in compliance of Sections 433/434 of the Act was served on the company and was duly received at the registered office of the company on , but the company has neither replied to the said notice nor settled the aforesaid outstanding amount, due and payable to the petitioner. 3.In the reply filed by the respondent, it is averred that the petitioner represented itself to be the best supplier for packaging materials, and based upon such representations the respondent had agreed to purchase the materials. Between September 2004 and December 2004, various purchase orders were placed upon the petitioner apart from one order which was placed in May The reason for the short period, during which business transactions took place between the parties, is stated to be the inferior and defective quality of the packaging materials supplied by the petitioner, which was not fit for the intended use. It is further averred that the products of the respondent packed in inferior quality packaging materials supplied by the petitioner were damaged in various ways making the products unfit for human consumption and its intended use. Due to such results, the product of the company was not accepted in the market and the respondent company started getting complaints from its customers and dealers and the respondent was forced to stop taking regular supplies of the packaging materials from the petitioner. The solitary exception was the supply of packaging material in May, 2005 for a minuscule amount of Rs.4.24 Lacs, that too, after a lot of persuasion and assurances as to the quality of material given by the petitioner, but even then the packaging material was of inferior quality and suffered from all sorts of shortcomings which were noticed in earlier supplies. No order was placed upon the petitioner subsequent to May, 2005.

3 4.It is further averred that the product of the company was a 'mouth freshner' for human consumption and thus the inferior and defective quality of the product was intolerable. Since the petitioner supplied inferior quality material, the company suffered huge losses of goodwill and monetarily as well. Till , the respondent had received materials returned from 10 of its clearing and forwarding agents (CandF Agents) and the company has raised a debit note to the tune of Rs.68,00,985/- on the petitioner (Annexure A-1 to the reply). Detailed summary of materials allegedly returned to the company along with memos from CandF Agents, detailing the quantity of final product returned have been placed on record (Annexure A-2 and A-3 to the reply). 5.A demand notice dated was also allegedly served upon the petitioner whereby the respondent made a demand of Rs.10,58,413/- (Annexure A-4 to the reply), which according to the respondent, had not been replied to by the petitioner. It is also averred that a Civil Suit No.159/2006 filed by the respondent against the petitioner is also pending in the Court of Addl. District Judge, New Delhi, for recovery of the said amount. 6.With regard to demand raised by the petitioner, it is submitted that the company is not indebted to the petitioner and the petitioner is raising frivolous and false allegations and misleading the Court. It is further contended that the claim of the petitioner is belied by the fact that payment of Rs.70,47,432/- was already made to the petitioner, after whereas the claim of the petitioner to the tune of Rs.57,42,572/- is as on , thus, after the said payment, there ought not be any outstanding even if the claim of the petitioner is accepted. 7.In relation to the Balance Confirmation Certificate dated stated to have been issued by the company, it is argued that the said letter was never issued by the company and the same is a forged document. It is claimed that firstly, there is no person by the name of 'Sidhartha Nanda', the purported signatory of the letter, in the company. Moreover, there was no such designation of 'Senior Officer Accounts', in the company. Secondly, the company had shifted its address from Floor 4th, Tolstoy House, Tolstoy Marg, New Delhi , much prior to to the present address. Various documents in this regard are placed on record. (Annexures A-6, A-7 and A-8 (Collectively) to the reply.)

4 8.The petitioner has filed a detailed rejoinder controverting the aforesaid submissions of the respondent. It is stated that the respondent has made various averments which have no basis. The allegations of the respondent that the packaging material supplied by the petitioner was of inferior quality or was defective is belied by the fact that there is not a single correspondence placed on record by the respondent making any such allegation against the petitioner. With regard to the allegation of the respondent that the balance confirmation certificate dated is forged and fabricated, the petitioner has stated that the same is genuine. Reference is made to another letter dated bearing reference NO.DCC/ND/ /3 written by Shri Amar Sinha, director of the respondent company and two other letters dated and issued by the authorised signatory of the respondent company on similar type of letter head as the one on which the balance confirmation certificate was issued by the respondent. So far as the stand of the respondent that it never had any employee by the name of Sidharth Nanda is concerned, the petitioner states that this plea of the respondent is false. This is clear from a bare perusal of the sales tax form dated which has been issued on behalf of the respondent company by the same Mr. Sidharth Nanda. From this it appears that even before the Sales Tax Authorities, Mr. Sidharth Nanda is declared to be the authorised signatory of the respondent company. Copy of the said sales tax form dated has been filed on record with the rejoinder. In response to the stand of the respondent that there is no designation as Senior Officer-Accounts in the respondent company, the petitioner states that it is not aware of or concerned the internal management and arrangement of the respondent company, and that the balance confirmation certificate was issued by Mr.Sidharth Nanda stating himself to be Senior Officer- Accounts. In response to the stand of the company that it had shifted its registered office even before the so called issuance of the balance confirmation certificate, the petitioner submits that mere shifting of the registered office does not necessarily mean that the company cannot use its old letter heads. In any event, the petitioner is not responsible for the respondent using a letter head showing the earlier address of the company. The petitioner has also placed on record various communications exchanged with the company which, the petitioner states, completely belie the denial of liability by the respondent-company. 9.It is submitted that in these communications there is repeated acknowledgment of liability, apart from assurances and promises to pay the

5 same by the respondent company. The petitioner has also placed on record the copy of the TDS certificate issued by the respondent company which, the petitioner submits, clearly show that in so far as the payments for which tax has been deducted at source, are concerned, the respondent acknowledges that payments were due and payable which is why tax has been deducted at source. Even those amounts had not been paid. Copy of the TDS certificates have also been placed on record. The petitioner also denied the receipt of any debit note dated alleged to have been issued by the respondent company. The parties have also filed on record various documents with additional affidavits/reply to additional affidavits. I shall refer to and deal with them as well. The petitioner has also relied on various authorities, of which some are relevant would be referred to and dealt with a little later. 10.Having heard Mr. P.V. Kapur, learned senior counsel on behalf of the petitioner and Mr. Harish Malhotra, learned senior counsel on behalf of the respondent, I am satisfied that the petitioner has made out a case for admission of this petition for winding up against the respondent company. 11.The admitted position is that the petitioner has made supplies of packaging materials to the respondent. The receipt of the materials by the respondent for which the petitioner raised invoices is not in dispute. The justification given by the respondent for the non-payment of these invoices in full is that the materials supplied by the petitioner were defective and substandard, which resulted in the product packaged by the respondent from suffering various defects such as seepage of moisture into the product, loss of flavour and freshness, the product becoming rotten and sticking together thereby rendering it unfit for human consumption. 12.Therefore, it needs to be examined whether there is a bona fide dispute raised by the respondent company i.e. whether any material placed on record by the respondent to even prima facie conclude that the respondent has raised a defence which requires a trial i.e. whether any complicated and disputed questions of fact arise which may dissuade the Court from exercising its jurisdiction under Sections 433/434 of the Act. It also requires consideration whether there is any undisputed or undisputable debt owed by the company to the petitioner in excess of Rs.1 Lac, which the respondent has failed or neglected to pay despite service of a notice under Section 434 of the Act on the registered office of the respondent company.

6 13.A perusal of the correspondence exchanged between the parties filed on record by the petitioner as Annexure-R-A3 collectively with the rejoinder, and a few other documents filed on record belie the claim of the respondent with regard to the poor quality of the product supplied by the petitioner. On the respondent issued a communication to the petitioner with regard to clearance of dues stating that As per our records, balance outstanding to you as on March 31st, 2005 is Rs lakhs. We would appreciate your confirming this figure in the next 15 days. The respondent also suggested clearing the dues over a period of six months, i.e. between April and September, 2005 and gave a monthwise schedule for making payments. The respondent suggested that it would pay, in the months of April-August, 2005 Rs.13.5 lakhs each month and would pay in the month of September, 2005 Rs lakhs making a total of lakhs. The respondent further stated : Meanwhile, to help us maintain operation on a continuous basis, we would confirm that all purchases made from you from April onwards shall be as per the terms and conditions herein force. We trust you will be in a position to extend your cooperation as usual and provide the materials in time to allow us to get over the current situation at the earliest. 14. Admittedly, the materials were mainly supplied between the period September, 2004 to December, 2004 The case of the respondent is that it discovered the so called poor quality of the packaging material supplied by the petitioner and, therefore, did not take any further supplies after December, 2004 The communication dated , however, is clearly out of sync with this stand taken by the respondent. Firstly, the respondent would not have acknowledged any outstanding liability, much less of lakhs as on , had the packaging materials supplied by the petitioner in fact been of inferior quality which had caused losses and damages to the respondent. The respondent would have claimed those loss and damages from the petitioner by holding the petitioner responsible for causing those losses. Moreover there would have been no question of the respondent seeking further packaging materials from the petitioner, much less to allow them to get over the current situation at the earliest. 15.The petitioner responded to the aforesaid communicated dated on The petitioner stated that Rs lakhs was outstanding as on and not Rs lakhs as claimed by the respondent. A copy of the ledger pertaining to the respondent was also sent by the petitioner. The aforesaid amount of Rs lakhs was net of a credit of Rs.1.78 lakhs towards TDS, the certificates for which were also demanded by the

7 petitioner. The petitioner also stated that for future supplies they would need immediate payments and could not provide further credit to the respondent since their cash flow had been severely hit due to overdues of Rs lakhs, in addition to interest cost thereon. The respondent sent another communication dated to the petitioner by . The same was sent by Mr. Amar Sinha, Director of the respondent company. In this communication he, inter alia, stated: With regard to old outstanding, as I have explained to you earlier we are in the process of taking stock of our commitment and liabilities and once the process is completed we shall draw up a schedule for payment of our creditors. With regard to the current supplies he confirmed that the terms of payment, which have been discussed with you on the basis of 30 days for future supplies will be strictly adhere. This communication also shows that the respondent expressed its readiness to procure packaging material from the petitioner in future as well. This also belies the respondents stand that the materials supplied by the petitioner were defective or of inferior quality. 16.On the respondent issued another communication through Mr. Amar Sinha its Director. He, inter alia, stated: As you would know DCC has gone through a difficult phase in business in the recent past and having incurred huge losses we were almost on the verge of deciding whether to continue this business for the future. There has been no business transaction in DCC during the last 3 months, which we are sure that you are aware of. You will appreciate that if we do not revive the business of DCC, it may become very difficult for us to clear all market dues in the short term, and for this purpose we require your co-operation and support to bring the situation under control. 17.The respondent further offered that to settle its outstandings owed to its creditors it would make payment of amounts which are 25% more than the value of the purchase which could be adjusted against the overdue outstanding payable to the supplier. He further stated that in case there are supplier who do not want to continue business with the respondent, the respondent would be in a position to settle their claims/dues in instalments starting from January, He further stated: We do realize and admire the co-operation and support that business associates like you have extended to us in conducting the business. We hope, you will appreciate our problems and will bear with us considering the business association we have had in the past. We are committed to resolving all outstanding business issues with you

8 to your satisfaction. We are conscious of the inconvenience being caused to you, but at this stage we have no better option than to follow the above. Please bear with us till you hear further on the matter shortly. 18.The respondent sent another communicated dated to the petitioner, similar to the earlier communication dated These communications, far from accusing the petitioner of applying substandard or defective quality of packaging materials which allegedly caused losses and damages to the respondent, acknowledge and appreciate the cooperation extended by the petitioner to the company when it was going through difficult times. 20.From the communication dated and of Mr. Amar Sinha, the real reason for non-payment of the dues of the petitioner comes to the surface. The non payment of the dues owed by the respondent to the petitioner was not on account of inferior or defective quality of the packaging material supplied by the petitioner, but on account of respondent's own financial difficulties. It also appears from the entire correspondence that the non-supply of packaging materials by the petitioner to the respondent company after December, 2004, with the exception of one supply in May, 2005 was not on account of the respondent company not desiring to procure any further supplies from the petitioner, but on account of the respondent not being in a position to make payment on cash down basis, and the reluctance of the petitioner in taking any further exposure from the respondent company. 21.Let me now deal with the documents sought to be relied upon by the company to substantiate its claim with regard to the poor quality of the packaging materials supplied by the petitioner. Firstly, I may note that there is not a single communication from the respondent to the petitioner making any grievance with regard to the quality of the packaging materials supplied by the petitioner, and for the first time this stand come to be taken on , when a legal notice was sent by the respondent company to the petitioner, well after the notice for winding up dated had been issued and served on the company, and the present petition filed in March It was only after legal advice had poured in, that the respondent company took the said stand in its notice dated and soon thereafter in its reply to this petition. This demonstrates how hollow the stand of the respondent company is with regard to the quality of the

9 packaging material admittedly supplied by the petitioner. The respondent claims to have issued a debit note for Rs.68,00,985/- dated However, nothing has been placed on record to show how and when this debit note was sent to and received by the petitioner. The petitioner has denied the receipt of the said debit note. The respondent has also placed on record certain documents as Annexure-A3 to show that from time to time its products were returned on account of their poor quality. A perusal of these documents shows that out of 12 delivery challans filed on record, 10 merely show the transportation/return of some goods. The reason for the said transportation/return of some goods is not even indicated in 10 out of the 12 documents filed on record. Only two documents dated and state that the material is damaged/ rejected and is not for sale. However, these documents by themselves do not indicate either the date of manufacture of the goods or the name of the supplier from whom the packaging material was procured for packing these goods. It is not even disclosed as to what is the defect or damage, much less the cause for the said defect or damage in the goods. The total value of the goods covered by these two return/delivery challans is stated to be Rs.6,31,750/- and Rs.38,520/-, respectively. 22.From the aforesaid, it is not possible to jump to any conclusion that the goods covered by the 12 delivery/return challans filed on record were all defective; were all packaged in packaging material supplied by the petitioner; were all damaged and defective on account of the inferior quality of the packaging material supplied by the petitioner. No independent report of any examiner or expert in the field has ever been produced by the respondent to substantiate its highly belatedly taken stand that the packaging materials supplied by the petitioner were defective or of inferior quality. In this regard reference may also be made to the solemn statement made by Shri Yogender Goel son of Shri Gopal Das Goel in his cross-examination in a suit filed by the respondent against the petitioner for recovery of an amount of Rs.10,58,413/-. The petitioner has filed on record an additional affidavit dated along with a copy of the said statement of Shri Gopal Das Goel. During his cross- examination Shri Yogender Goel has stated that he was appointed as Senior Account Executive with the respondent company in July, 2003 and was subsequently promoted to Chief Account Executive. In his cross-examination Mr. Goel, inter alia, states that the company's quality control staff has informed him about the defects in the lamination/packaging material supplied by the petitioner herein. He stated that he is not a technical person and, therefore, he could not explain the

10 defects in the lamination. The staff of the company had informed in writing that the material supplied by the petitioner herein was defective. However, the company had not placed any such document on record, nor Mr.Goel produced any such document at the time of his cross-examination. Pertinently, even in these proceedings no report of any technical person, independent or otherwise, has been placed on record by the respondent. He also states that there is no order for packaging material placed by the company to which he is not a party, meaning thereby, that he is aware of each and every purchase order placed by the company for procurement of packaging material. He further states that there was no order for packaging material from any vendor from till This statement belies the claim of the respondent company that it had stopped procurement of packaging material from the petitioner on account of its inferior quality or defective nature. Had that been the case, the respondent company would have procured the packaging materials from other suppliers. However, it appears that the respondent was, in fact, not in need of packaging material after December, 2004 and such need arose only in May, He also stated that in the purchase orders, the quality parameters of the packaging material were not specified and that they were defined in a pro-note, a copy of which is supplied to the vendor and the vendor is expected to adhere the quality parameters described in the pro-note. However, the so-called pro-note was not produced before the Court with the plaint, nor was it produced at the time of his cross-examination by Mr. Goel. Even in these proceedings the so called pro-note has not been produced to demonstrate as to what were the specifications of the raw material that the petitioner was required to supply, and how the petitioner failed to meet those specifications. He also admitted that the company had not got the material supplied by the petitioner herein checked from any independent quality checking institute. He states that the petitioner was informed about the inferior quality of the packaging material for the first time in May, He admits that the company had not produced any document to this effect. He states that the company had informed the petitioner about the poor quality of the packaging material verbally. With regard to the issuance of the debit note Mr. Goel stated that the same has been sent through courier, but admitted that the courier receipt had not been placed on record. Pertinently, the same had not been placed on record even in these proceedings. He admits that the amount payable to the petitioner herein by the company was Rs.57,42,572/-. However, the cost of the defective goods to the tune of Rs.68,00,985/- had been debited to the petitioner and consequently, he claimed that the company was entitled to

11 receive Rs.10,68,413/- from the petitioner. He admits that mishandling of packaging machine leads to defective packaging. 23.The respondent company filed company application No.574/2007 under Rule 9 of the Companies (Court) Rules, 1959, to place on record 4 confirmation letters from CandF Agents in support of its defence with regard to the inferior quality and defective packaging material supplied by the petitioner. The 4 letters placed on record are dated , , nil and Firstly, it appears that all these letters are of dates well after the filing of the winding up petition. Secondly, and even more importantly, what is striking is that all these letters are more or less identically worded. It, therefore, appears that these letters have been procured by the respondent company from its CandF Agents on a prescribed format only for the purpose of building up a defence in these proceedings. Moreover, the bald assertion made in all these communications that packaging of the aforesaid return Chabaaza was neither air proof nor moisture proof... is neither here nor there. It is not disclosed as to on what basis the authors of the said identical letters concluded that the packaging was neither air proof nor moisture proof. For all the aforesaid reasons and on the basis of the materials brought on record, I reject the submission of the respondent that the quality of the packaging materials supplied by the petitioner can be said to be defective or of inferior quality. I am satisfied that this defence has been raised by the respondent merely as an afterthought and with a view to ward of their liability owned to the petitioner as well as to defeat these proceedings. I also draw support from the following decisions relied upon by the petitioner, wherein it is held that such like highly belated disputes about the quality of goods supplied and received by the respondent would not give rise to a bona fide dispute. 1.Tarai Food Ltd. Vs. Wimpy International Pvt. Ltd VIII AD (Delhi) Shivalik Rasayan Ltd. Vs. Pesto Chem 124 (2005) DLT Durgapur Project Pvt. Ltd. In re [1983] 53 CC 320 (Cal) 4.Joti Prasad Bala Prasad Vs. ACT Developers Pvt. Ltd. [1990] 68 CC 601 (Delhi) 5.Straw Board Manufacturing Co. Ltd. Vs. Mahalaxmi Sugar Mills Co. Ltd. [1991] 71 CC 544 (PandH) 24.In all the above stated cases, the stand as to inferior quality of the goods supplied by the petitioner was taken by the company against whom the winding up proceedings were filed after service of statutory notice, and it was held by the different courts that the dispute as to quality was not effectively proved by the respondent and same was an afterthought, just to

12 produce a defence in the winding up proceedings. Also the counter claim by the respondent company was held to be just a sham defence to create a disputed debt. 25.Turning to the aspect of the alleged forgery and fabrication of the balance confirmation certificate dated attributed to the respondent company, once again I find that there is no reason for the Court to conclude that the same is forged and fabricated and that the same is not genuine. The petitioner has placed on record its communication dated issued to the respondent calling upon the respondent company to provide the balance confirmation certificate. From the copy of the said communication placed on record, it appears that the same was received and acknowledged with the seal of GTC Industries Limited at 8B, Vandana Building, 11 Tolstoy Marg, New Delhi To dispute the authenticity of the said balance confirmation certificate, the respondent has raised various pleas. Firstly, it is contended that the respondent never had any employee by the name of Sidharth Nanda at any point of time. In response to this averment, the petitioner has produced, along with its rejoinder, copy of the Sales Tax form supplied by the respondent company bearing serial No.MAH/01/ dated The said form has been signed on behalf of the company by Sh. Sidharth Nanda, who is described as the authorised signatory. Accompanying the form is a tabulation giving the details of the invoice/bill numbers, date of the invoice/bill and the amount thereof raised by the petitioner pertaining to the year The same has also been signed by Sh. Sidharth Nanda as the authorised signatory of the company. Faced with such damning evidence the respondent filed an affidavit in reply to the additional affidavit of the petitioner on The same is sworn by Sh. K.S. Anand. He states that Sh. Sidharth Nanda was never an employee of the respondent company. He was an employee of GTC Industries Ltd. and was based at Mumbai. That is a separate and independent entity. Copy of his appointment letter dated and Form No.16AA issued by the GTC Industries Ltd., Mumbai to Sh. Sidharth Nanda, claimed to have been obtained from him have been annexed to this affidavit. 26.Pertinently, there is no denial of the fact that Sh. Sidharth Nanda was acting as the authorised representative of the company and that he had, in fact, signed the Sales Tax forms in that capacity. The fact that Sh. Sidharth Nanda was acting for and on behalf of the company while he was shown to be an employee of GTC Industires Limited, shows the nexus between the

13 respondent company and M/s GTC Industries Limited. In case Sh. Sidharth Nanda had absolutely nothing to do with the respondent company, it is difficult to understand how the respondent company has been able to persuade Mr. Sidharth Nanda to part with his appointment letter issued by GTC Industries Limited as well as Form No.16AA, issued under the Income Tax Act by GTC Industries Limited. There is another interesting aspect which the appointment letter of Mr. Sidharth Nanda issued by GTC Industries Limited throws up. While it is claimed by the respondent company that it has no position with the designation Senior Officer Accounts, a perusal of the appointment letter of Mr. Sidharth Nanda shows that the designation given to him was Senior Officer Accounts. Pertinently, though the respondent has categorically and repeatedly denied the issuance of the balance confirmation certificate and has asserted that the same is forged and fabricated by the petitioner, it has failed to even place on record an affidavit sworn by Mr. Sidharth Nanda to say that the balance confirmation certificate dated attributed to him was not actually issued under his instructions, on his behalf and under his authority. If the respondent company had the requisite resource and influence to obtain Mr. Nanda's appointment letter and the Form No.16AA issued to him by GTC Industries Limited for the purpose of producing the same in these proceedings, it certainly could have obtained an affidavit to that effect from Mr. Nanda. When Mr. Nanda himself, to whom the document is attributed, is not disputing the fact that he had issued the same, it does not lie in the mouth of the respondent company to label the same as a forgery and fabrication. 27.The other contention of the respondent company to challenge the authenticity of the balance confirmation certificate is that the company which was a tenant in flat Nos , Tolstoy Marg, New Delhi, had vacated the same on and the said certificate is stated to have been issued on , on a letterhead, which contained the address of the company at Tolstoy Marg and, therefore, did not reflect the correct address of the respondent company. In support of this submission, a host of documents have been filed to show that the respondent company had, in fact, vacated the premises situated at fourth floor, Tolstoy House, 15-17, Tolstoy Marg, New Delhi, w.e.f In my view, there is no merit in this submission. It is wholly irrelevant whether or not the respondent was, in fact, occupying the premises situated in Tolstoy Marg on , when it issued the balance confirmation certificate. The balance confirmation certificate does not lose its authenticity merely because the respondent,

14 while issuing the same, may have used the some old stationery that may be lying with it. Had the petitioner designed to forge and fabricate the said balance confirmation certificate, it would have done so by fabricating the identical letterhead on which the respondent had been sending its communications off late, and would not have used an imaginary letterhead, which the respondent had never even used. In fact, it appears, that while issuing the balance confirmation certificate dated , the respondent may have deliberately resorted to using some old stationery and issued it in the name of Sh. Sidharth Nanda with some other officer signing for and on his behalf, so that such like defences could be raised when the same is relied upon by the petitioner in judicial proceedings. 28.The issue with regard to the authenticity of the said balance confirmation certificate has also to be viewed in the light of the other surrounding circumstances of the case. The respondent has not denied the factum of issuance of the communication dated by it wherein, even according to the respondent a sum of Rs Lacs was outstanding and payable to the petitioner, as on Thereafter, repeated communications were issued by the respondent beseeching the petitioner to cooperate with it to enable the respondent tide over its financial difficulties. It is also pertinent to note that the respondent company in its 10th annual report for the financial period ending showed an amount of Rs.80,74,925/- as being the trade credit owed to the petitioner as on The same is filed as Annexure-VII to the affidavit dated of Sh. Amar Sinha, Managing Director of the respondent company, filed in compliance to the order dated of this Court in these proceedings. Pertinently in the list of trade creditors as on , the name of the petitioner is conspicuous by its absence. It is not explained how the staggering liability of over Rs.80 Lacs, admittedly due as on came to be settled. Interestingly, in the balance sheet as at , neither the amount owed to the petitioner is reflected, nor the so- called amount claimed from the petitioner towards losses and damages to the tune over Rs.10 Lacs is reflected. Therefore, the name of the petitioner is not even reflected in the list of trade debtors as on From the aforesaid facts and circumstances, I am reasonably convinced that the balance confirmation certificate does not appear to be a forged and fabricated document and the same is genuine and has, in fact, been issued by the respondent company.

15 29.With regard to the issuance of the debit note of Rs.68,00,985/- by the respondent company on , learned counsel for the petitioner has brought to my notice another important and interesting aspect. The respondent has placed on record along with the said debit note of Rs.68,00,985/- what it claims to be a statement showing the details of the production of Chabaaza with the petitioner's laminates and their market return on record. A perusal of the said tabulation shows that there are 22 transactions which, according to the respondent company have taken place between the parties for supply of laminates by the petitioner to the respondent. It is claimed in the said tabulation that in respect of the products packaged by the respondent in the laminates supplied by the petitioner after i.e. w.e.f (at Sl. No.14 of the tabulation) the products were returned by the market between March 2006 and May The only exception shown in the tabulation is at Sl. No.19, according to which the raw materials were received by the respondent on and the finished products were returned by the market in September The value of the goods returned in respect of the laminates supplied w.e.f , which were returned between March 2006 and May 2006, as extracted from the said tabulation, is as follows: - SL. No. IGP NO. DATE OF RECEIPT OF MATERIAL RECEIVED QTY (IN KGS) QUANTITY OF RETURN IN CASES VALUE OF RETURN MONTH OF RETURN Apr Apr Apr Apr Mar May TOTAL From the aforesaid extract it would be seen that even though the goods allegedly returned after March, 2006, are alleged to be of a value of Rs.34,58,970/-, the respondent included even the said amounts in the alleged debit note dated How the respondent could have learnt about the value of products which were returned much later i.e. between March, April and May, 2006 has not been explained. This, in fact, completely belies the so- called debit note and its authenticity. It appears that the respondent has merely resorted to fudging data so as to mislead the Court and to weave a totally dishonest and false defence. 31.Learned senior counsel appearing for the petitioner has also drawn my attention to the auditors' report in respect of the balance sheet of the respondent company drawn up as at The auditors' M/s Batliboi

16 and Associates have stated that the company has incurred losses of Rs.40,61,13,000/- during the current year resulting in accumulated losses of Rs.44,28,27,000/- as at , which has eroded its entire net worth. In the same report it is also stated that the company's accumulated losses at the end of the financial year are 50% of its net worth. The company has incurred cash losses during the year and the immediately preceding financial year. The profit and loss account of the company for the year ended shows that the nominal value of its shares of Rs.10/- was only Rs.0.02 reflecting the extremely poor financial health of the respondent company. The auditors report for the year ending also discloses that the company has incurred losses of Rs.47,85,90,000/- during the current year resulting in even higher accumulated losses of Rs.92,14,17,000/- as at , which has eroded its net worth. Further the company projected cash loss for the year ended Considering of the aforesaid aspects, I am satisfied that the respondent company is unable to pay its debts since, despite the service of statutory notice under Section 434 of the Act by the petitioner, on the company at its registered office (proof of service whereof is also on record), the respondent has neglected to pay the amount admitted to be due or to secure or compound for it to the reasonable satisfaction of the petitioner within three weeks from the date of receipt of the notice. The petitioner has placed on record a copy of the notice dated sent through speed post item No.EE IN on as well as the certificate issued by the postal authorities certifying that the speed post article had been delivered on Even otherwise, there is no denial by the respondent in its reply to the specific averments with regard to the issuance and service of the notice by the petitioner. Reference may be made to paragraph 8 of the petition and the corresponding reply of the respondent in this regard. 33.I, therefore, admit this petition and direct that the respondent company be wound up. The official liquidator attached to this Court is appointed as the liquidator in respect of the respondent company. He shall forthwith take over all the assets and records of the respondent company and proceed according to law. Citation shall be published in the 'Statesman' (English) and 'Jansatta' (Hindi) for Petitioner may take steps accordingly. 34.List on

17 Sd/- VIPIN SANGHI, J.