IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction ORIGINAL SIDE BEFORE: The Hon’ble JUSTICE SOUMEN SEN C.P.No.657 Of 2013 Mehras Books Private Limited versus Random House Publishers India Private Limited.
For the Petitioner : Mr.Sarathi Dasgupta, Mr.Souvik Bhadra, Mr.Arijit Basu.
For the Respondent : Mr.Jishnu Chowdhury, Mr.Aritra Basu, Heard On : 13.03.2015, 27.03.2015, 10.04.2015, 08.05.2015, 05.06.2015, 19.06.2015, 24.07.2015, 07.08.2015, 14.08.2015.
21.08.2015, 28.08.2015, 04.09.2015, 11.09.2015.
Judgment On : 23rd September, 2015 Soumen Sen, J.:- Random House Publishers India PVT.Ltd., the petitioner, has filed this application praying for winding up of the Mehras Books PVT.LTD.(hereinafter referred to as the “said company”).The petitioner is engaged in publishing, printing, and marketing of books.
On September 4, 2009 the petitioner has entered into a ‘Distributorship Agreement’ with the said company whereby the said company was appointed as the non-exclusive distributor and reseller of books.
The agreement was to remain valid till December 31, 2010 with the provision that, in the absence of any situation to the contrary, there would be automatic renewal for the period of one year each and could be modified through Addendum.
Under the agreement the Company was obliged to make payment within 150 days of receipt of invoices (135 days+15 buffer days).Beyond this period, the Company would have to pay an interest of 1.5% per month.
In case of delay in timely payments, beyond this specified period, the contract allowed the petitioner the unrestricted right to stop any/ all pending supplies or order.
In or about May 6, 2011, the Petitioner and said company entered into another agreement.
The said company was appointed as the non-exclusive distributor and reseller of books under the ‘Princeton Review’ in addition to the other books mentioned in the previous agreement.
This agreement was termed as “Distributor Agreement-Princeton” with no change in scheme of payment.
The respective contracts were renewed every year till December, 2013 with modifications by Addendum were brought in the years 2010, 2011, 2012 and 2013.
The original payment structure, however, was retained and reiterated in every addendum.
The dispute between the parties arose during settlement of accounts.
Matter of unsettled accounts had been fiRs.intimated by the petitioner to the said company on February 26, 2013 and then further demands were made.
On March 6, 2013 the Company in its reply did not dispute its liability but only raises issues with regard to the credit notes.
According to the petitioner, towards the end of May 2013, the said company owed an amount of 1.38 crores approximately to the petitioner.
In view of failure to pay the outstanding dues, two demand notices were issued and served to the company on January 17, 2013 in respect of the aforesaid two agreements.
A combined reply to both the demand notices was given by the said company on July 3, 2013.
On August 7, 2013 the petitioner forwarded the statement of accounts for the Delhi and Kolkata businesses of the company, respectively, with the instruction that in case there is no reply within a week the respective accounts would be treated according to the terms agreed upon.
On August 12, 2013 petitioner issued notice to the said company to refer the matter for arbitration with respect to both the agreements and a reply to that has been made by the said company on August 13, 2013.
The petitioner served statutory notices upon the said company on August 26, 2013 and followed it up.
This was replied to by the Company on September 3, 2013 The petitioner is a creditor of the company.
It is submitted by the petitioner that repeated demands were made to the said company for the payment of the debt but the said company raised frivolous pleas in order to avoid and delay payment.
The petitioner contended that the company was not in a position to pay debt, even though on number of occasions, it had acknowledged the fact of unsettled accounts and its liability to make payment for the books sold and delivered.
Since the debt was not discharged, this application under Sections 433 read with 434 and 439 of the Companies Act, 1956 is filed praying for the winding up of the Company.
The company, on the other hand, contended that though the agreement contains a payment schedule, it was contingent upon the receipt of payment following the practice of the trade.
The company has also stated that the property in the goods did not pass on to them unless they were able to sell the goods.
The allegation put forth by the said company against the petitioner was that the quantities of books supplied were without the assent of the company.
It was also contended that the supply of books was not made according to the order placed inasmuch as the books, which had no market at all, used to be dumped in the warehouse of the company.
The company was compelled to accept front list books and books which had no such market.
The petitioners caused a breach of contract to the extent that it created a parallel supply of distributors in the north and the eastern zone (from where the said companies were mainly operating) and so their position was jeopardized.
On top of this, since the release date was delayed by 5 days the company was not able to compete with the competitors expeditiously.
These caused enormous loss or damage to the company.
Moreover, they claimed the untimely and delayed payment from the customers coupled with failure to resume the supply of books have seriously affected the business of the company.
The company submits that under such circumstances attempts were made by the company to return the books but there was either delay in confirming the return of books or failure to confirm at all that had resulted in failure to have the accounts reconciled.
It is submitted that if the accounts are reconciled and stocks of unsold books are taken into consideration then no amount would be found due and payable by the company to the petitioner.
The said company denied that it was liable to pay 1.38 crores (approx.) or any amount, including the interest amount, to RHI.
It denied the presence of any undisputed debt.
On the basis of the pleadings it needs to be examined if the said company has been able to raise a triable issue and there is a bona fide defence to the claim of the petitioner.
In the case of Mechelec Engineers and Manufacturers versus M/s Basic Equipments Corporation reported at AIR1977SC577the matter of grant to leave, under Order 37 of the Civil Procedure Court has been discussed.
In Mechelec (supra) the suit was filed by the Plaintiff, a partnership firm against the respondent, due to the dishonour of cheque, issued by the respondent towards consideration for the goods supplied.
The appellate court while discussing whether it would be appropriate for the High court to interfere with the order passed by the Additional District Judge of the Delhi granting unconditional leave to defend, examined the principles which are to be considered while granting leave to the defendant.
The court relied on the principles laid down in Smt.
Kiranmoyee Dassi & Anr.
versus Dr.J.Chatterjee reported at 49 C.W.N.246 which are:a) If the Said company satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the Said company is entitled to unconditional leave to defend.
(b) If the Said company raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Said company is entitled to unconditional leave to defend.
(c) If the Said company discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not en