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Kudremukh Iron Ore Co. Ltd. Vs. Kooky Roadways P. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKarnataka High Court
Decided On
Case NumberCompany Petition No. 46 of 1983
Judge
Reported in[1986]60CompCas1069(Kar)
ActsCompanies Act, 1956 - Sections 3, 6, 130, 433, 439 and 446
AppellantKudremukh Iron Ore Co. Ltd.
RespondentKooky Roadways P. Ltd.
Excerpt:
.....money it had received as sale consideration and also not being able to perfect the title to the plots sold by the company. that decision instead of assisting the petitioner really goes against the petitioner's contention, as the difference between the right to sue and the nature of the actionable claim is brought out more clearly. 11. for the reasons i have given, the petitioner has not satisfied this court that a debt is owed by the company to the petitioner and, therefore, the petitioner is not a creditor answering to that description in section 439 of the act......question were not insured while in transit before entrustment to the carrier. 6. the value of the goods claimed is unilaterally fixed by the petitioner company. while the managing director admitted short delivery as already pointed out, he did not admit liability to pay any sum by way of damages. therefore, the sum due by the respondent-company that requires to be paid to the petitioner-company as damages for non-delivery remains to be ascertained in accordance with law. if there is no ascertainment of the sum due on account of the short delivery in breach of the implied or express agreement of entrustment for carriage, this court cannot assume that a debt exists between the petitioner-company and the respondent-company. 7. however, learned counsel for the petitioner, relied upon the.....
Judgment:

1. This is a petition presented to this court under section 433(e) of the companies Act by M/s. Kudremukh Iron Ore Co. Ltd., a Govt. of India enterprise. The prayer is for an order of this court directing the winding up of the respondent - Kooky Roadways Private Limited, incorporated and registered under the Companies Act, 1956, having its registered office at Bangalore. The respondent-company is a private carrier of goods. In other words, its business was in transport. It is alleged by the petitioner that the respondent was entrusted to transport steel materials form Bangalore to Mangalore where the petitioner has an office at Panambur, D. K. Dist. In the course of such transportation, the petitioner discovered that the respondent had short delivered a quantity of 131.630 metric tonnes of the steel materials entrusted for carriage. When this was brought to the notice of the respondent-company, the managing director of the respondent-company, one Mr. Ismail, wrote back station that full responsibility was assumed by him as the steel materials were misplaced while loading and unloading and, therefore, could not be delivered at Mangalore. He further guaranteed that by January 24, 1983, he would arrange to transport and deliver a minimum of 40 tonnes of steel. He also undertook to report further progress in person in that regard on January 24, 1983. Except delivering a small quantity of about 9 tonnes, nothing happened thereafter despite numerous letter written by the chief commercial manager of the petitioner-company. It culminated in a notice being issued by the petitioner calling upon the respondent to pay Rs. 5,88,724.01 being the value of the steel materials short delivered. Even to that notice there was no response from the respondent-company. It is thereafter that the petitioner has presented in this court as already noticed this petition for a winding-up order under section 433(e) of the Act.

2. It is unfortunate that the matter was not examined in detail at the earliest stage by the court. Notice was mechanically ordered to the respondent on January 3, 1984. Respondent-company was served and it remained unrepresented. In that circumstance, the petition was admitted and the petitioner was directed to advertise in the Deccan Herald on or before April 19, 1984, fixing the date of hearing on June 4, 1984.

3. On June 4, 1984, paper publication was filed into court and the matter was heard. It was at the stage of the hearing that the court noticed that there was no clear admission by the respondent-company of any liability incurred by it in the manner claimed by the petitioner-company. The only document on which reliance was placed by the petitioner-company was annexure-A, the summary of which I have already extracted earlier in the course of this order whereby the managing director of the respondent-company acknowledged the fact of short supply and promised to see that the same was delivered before a specified date. In that letter, in whatever manner read, there is no acknowledgment of liability to pay any sum of money to the petitioner-company. Therefore, the question that arises is whether the petition was maintainable in the absence of there being an admitted debt due by the respondent-company to the petitioner-company in the matter of short delivery of about 140 metric tonnes of steel materials entrusted for transport. Despite the newspaper publication, the respondent-company has not entered appearance and this order is made ex parte the respondent-company.

4. However, what really falls for consideration in the circumstances stated above is whether this court has jurisdiction and whether the petitioner has the locus standi in terms of section 439 of the Act to prosecute this petition for the winding up of the respondent-company in the company court. One of the persons entitled to maintain a petition under section 433 of the Act mentioned in section 439 of that Act is a creditor. Petitioner can have no locus standi other than that of a creditor. That is fairly conceded by Mr. Iyenger, learned counsel for the petitioner. The facts stated earlier clearly indicate that what had happened was entrustment of steel material to the transporter and the transporter short delivering by about 140 tonnes of such material. In the circumstance, does the respondent-company become a debtor and the petitioner a creditor in respect of that debt

5. The term 'debt' is not defined under the Companies Act. Therefore, the court should construe the term as having the normal meaning assigned to it in the English language. The Concise Oxford Dictionary Vth edition, at page 313, gives the following meanings to the term 'debt' 'money, goods, or service, owing ....' Therefore, Mr. Iyenger contends for the petitioner that short delivery of goods having been admitted, the company's liability to pay the value of the same must be assumed by this court to be a debt and as the same has not been paid despite demand, the respondent-company is liable to be wound up. I find it extremely difficult to accept the contention advanced for the petitioner. What has happened is that there has been a breach of contract of the terms of carriage agreed to between the petitioner and the respondent-company for carrying the steel material. No specific contract in that behalf has been placed before court. By reason of that, the court must assume that the contract whether actually entered into between the petitioner and the respondent is covered by the provisions of the Carriers Act, 1865. In that case, the petitioner-company has two courses of action to pursue against the respondent. One is to seek possession of the steel materials short if the same can be located and found in the cost of the material short delivered in accordance with law. A possible third cause of action is to recover the value if the carriage was insured. But that is not the case here. In the event of insurance against theft or loss, the petitioner would not have come to this court as the insurer should have borne the liability. The fact that the petitioner has approached this court under section 433 of the Act compels me to believe that the goods in question were not insured while in transit before entrustment to the carrier.

6. The value of the goods claimed is unilaterally fixed by the petitioner company. While the managing director admitted short delivery as already pointed out, he did not admit liability to pay any sum by way of damages. Therefore, the sum due by the respondent-company that requires to be paid to the petitioner-company as damages for non-delivery remains to be ascertained in accordance with law. If there is no ascertainment of the sum due on account of the short delivery in breach of the implied or express agreement of entrustment for carriage, this court cannot assume that a debt exists between the petitioner-company and the respondent-company.

7. However, learned counsel for the petitioner, relied upon the definition of actionable claim in the Transfer of Property Act in section 3 of that Act. Actionable claim, according to that definition, means a claim of any debt of the claimant which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. The crux of the argument is that since word 'debt' is not defined in the Companies Act and actionable claim is a debt, then the company court should treat, as in the instant case, the claim of the petitioner for short delivery as a debt owed by the respondent-company to the petitioner. Section 130 of the Transfer of Property Act deals with transfer of actionable claims. In the 6th edition of Mulla on the Transfer of Property Act, at page 806, it is indicated that a debt is an obligation to pay a liquidated or certain sum of money. That appears to have been as a result of the decision in some of the English cases of the last century followed in Sabju Sahib v. Nooruddin [1899] ILR 22 Mad 139. That a debt is an obligation to pay money, is nearer to the dictionary meaning which I have extracted earlier. There is no doubt that an actionable claim is defined in the Transfer of Property Act for no other purpose than declaring such actionable claim to be property and no more. It cannot have the effect of altering the meaning of the work 'debt'. While logically all debts are actionable claims, all actionable claims need not be debts. What the definition under section 3 of the Transfer of Property Act provides for is the fact of a civil court recognising an actionable claim as affording grounds for relief. It is only when the civil court has either granted or refused the relief that one can positively state whether an actionable claim is a debt or not. If the relief is refused, then there is no debt. If the relief is granted, the relief in the form of the decree will certainly be a debt. Therefore, reliance placed by learned counsel on the decision of the Delhi High Court in the case of Ajai Johri v. Shingal Land and Finance Pvt. Ltd. [1985] 58 Comp Case 350 (Delhi) is not of much assistance to the petitioner. In that case, the respondent-company was sought to be wound up by some purchaser of plots who had failed to get proper title by virtue of the transaction they had entered into with the respondent-company therein as mutation was not effected. In that case what was claimed in the petition as debt was the money paid towards sale consideration which they wanted to be returned. In that circumstance, the court came to hold that the company was a debtor of the petitioners as the company was not in a position to return the money it had received as sale consideration and also not being able to perfect the title to the plots sold by the company. Similarly, in the case of Union of India v. Alliance Assurance Co. Ltd., : AIR1964Cal31 , a Division Bench of the Calcutta High Court dealt with what constitutes an assignment of an actionable claim. In that case, the insurance company had been assigned the right, title and interest in the goods entrusted for carriage to the Indian Railway by the consignor which was short delivered. The right, title and interest assigned was confined to the goods short delivered. The insurance company settled the claim with the consignee-consignor who had insured the goods against shortage or loss. In that circumstance, the court came to the conclusion that what was assigned was not the right to sue forbidden by section 6 of the Transfer of Property Act but only the actionable claim which the owner had against the Railways. That decision instead of assisting the petitioner really goes against the petitioner's contention, as the difference between the right to sue and the nature of the actionable claim is brought out more clearly.

8. In another case, the Calcutta High Court came to the conclusion that goods supplied to a canteen of a factory against deferred consideration was a liability of the factory owned by the company as it was the occupier of the factory premises in which the canteen was located and, therefore, it held that the money was owed by the company and, therefore, liable to be wound up if that debt remained unpaid. No one can quarrel with that proposition either. But the facts here in the case on hand are totally different.

9. Lastly, reliance was placed on the decision of the Madras High Court in Muttapukuntla Chinnapareddi v. Masineni Venkataramanappa AIR 1942 Mad 209. That decision does no more than declare the right of a bona fide purchaser to recover purchase money as an actionable claim.

10. By holding that under section 433 of the Act, this court cannot quantify or liquidate the damage and render the respondent-company a debtor and the petitioner a creditor and then pass a winding up order, this court will not be denying the rights the petitioner has under other laws to recover the loss from the respondent-company. This court under section 433(e) of the Act can only wind up a company. If a debt has remained unpaid, it has no power to decree a debt and then proceed to wind up the company. If that is done, then this court will be exceeding the jurisdiction conferred and convert itself into a civil court. I am firm in this conclusion having regard to the fact that the company court's power to adjudicate on claims arises only in accordance with the provisions contained in section 446 of the Act and not any other provision. This is not a claim against a company in liquidation or a company in respect of which, pending liquidation proceedings, a provisional liquidator has been appointed, when claims can be settled. This is a simple petition for winding up a company which is alleged not to have paid the debts due within the meaning of that word as occurring under section 433(e) of the Act.

11. For the reasons I have given, the petitioner has not satisfied this court that a debt is owed by the company to the petitioner and, therefore, the petitioner is not a creditor answering to that description in section 439 of the Act. Therefore, the petitioner is not entitled to the relief prayed for.

12. In the result, the petition is dismissed. However, it is made clear that the petitioner is at liberty to approach the civil court for whatever damages he may be entitled to.


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