Usha Jain vs Aditya Landcon Private Limited

Yogesh Khanna, J

The petitioner Smt.Usha Jain is the wife of late Shri D. K. Jain and is the sole beneficiary under the Will dated 11.12.2004 of her deceased husband

and as such has filed this company petition.

The respondent company had entered into an agreement to sale and purchase for total sale consideration of Rs. 16.09 Crore in respect of plot

bearing No.191, Block B, NOIDA, Phase â€" II, admeasuring 15000 square meters with the husband of the petitioner, who paid a sum of Rs. 5.40

Crore as an advance amount vide a cheque bearing No.486586 dated 20.09.2008 of Rs. 5 crore drawn on HDFC Bank and cash of Rs. 40 lakhs. The

respondent denied receipt of Rs. 40 lakh paid in cash. The deal could not be materialise as the respondent company did not give a clean title and in its

letter dated 03.02.2009 rather admitted that it had no transferrable title of the property, but it wrongly alleged that the husband of the petitioner had

agreed to purchase the property on ‘as is where is’ basis. The letter dated 03.02.2009 is annexure P-4 to the petition.

It is alleged due to close relations between the parties, the husband of the petitioner never escalated the matter as the respondent company agreed

to return the advance given but could not arrange the funds. The respondent company, under the column of current liability in its balance sheets has

reflected this amount as ‘advance against property sale’, thus admitting the liability towards the petitioner. The copies of the balance sheets for

the financial years 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, and 2014-15 along with profit and loss account statement have been filed with

petition as annexure P-5 colly. After the sad demise of Sh.D.K.Jain when the said amount was demanded from the respondent company it failed to

pay the amount and pleaded non-availability of funds. The petitioner then sent a notice dated 26.06.2014, but the respondent failed to reply. The

petitioner also sent a statutory notice dated 17.01.2015 under Section 433/434 of the Companies Act, 1956 calling upon the respondent to repay the

amount within 21 days.

It is alleged despite various requests made by the petitioner even through the notices, the respondents had neglected / failed to pay the admitted

outstanding debt and it is just and proper to pass an order of liquidation of the respondent company.

The respondent in its reply has raised two issues; (a) the debt for which this petition is filed has become time barred; and (b) the respondent has

forfeited the advance paid by the husband of the petitioner since her husband had allegedly failed to fulfill his part of promise as per the agreement.

Admittedly, none of the parties had filed the agreement to sell hence it can safely be assumed that it was an oral agreement to sell and purchase.

The two documents relevant for the purpose are (a) the cheque of Rs. 5 crore and (b) the receipt dated 20.09.2008 issued by the respondent which

runs as under:-

Received Rs.5.00 Crores from Shri D.K. Jain as advance against 15000 sq.mts. Plot No.B-91, Noida Phase-II, total consideration settled is

Rs.16.09 crores balance amount shall be paid on 31st Jan.2009.

For Aditya Landcon (P)Ltd

-sd-

Sushant Aggarwal D.K. Jainâ€​

The letter dated 30.01.2009 wherein husband of the petitioner had informed the respondent company that he had paid an advance only on the

assurance and representation that the respondent had a clean title to the said property and since it was found to be an encumbered property involved

in controversy, being auctioned by the Debt Recovery Tribunalâ€" I, subject to various claims and liabilities, the plaintiff demanded the refund. The

relevant portion of reply dated 03.02.2009 sent by the respondent to letter dated 30.01.2009 of Sh.D.K. Jain, late husband of petitioner is as under:-

“xxx

xxx

Please note that we are and have always been ready to execute the necessary documents for transferring our rights/ title in the property.

Having stated the above we must add that the documents must truly reflect our agreement and there is no question of any clause

indemnifying you against future claims.

There is no occasion to return the advance paid by you and you must honour your commitment by paying the balance payment which is

already delayed. You are requested to make the balance payment within 10 days, failing which, I will have to refer the matter to my lawyers

and take such action as I may be advised.â€​

In its reply the respondent showed its willingness to honour its commitment provided the balance payment is made within ten days and it rather

alleged that D.K. Jain was fully aware of the history and antecedents of the property and had agreed to purchase the same on ‘as is where is’

basis and it would be transferred to husband of petitioner on similar terms.

Now, with this background, I propose to decide the two contentions raised above.

Regarding the contention (a) if the debt is time barred, I may refer to the balance sheets of the respondent company filed with the Registrar of

Companies wherein an amount of Rs. 5.00 Crore taken as advance by the respondent company has been shown under the head current liability in its

balance sheets ranging from the financial years 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, and 2014-15. In fact the balance sheet as on

31.03.2010, shows an amount of Rs. 5.00 Crore as an advance against sale of land. Similarly, it is shown in the balance sheets as on 31.03.2011; as on

31.03.2012; as on 31.03.2013; and as on 31.03.2014. The respondent had also filed a compliance affidavit dated 14.09.2016 along with various

documents submitted by it with the ROC wherein for the first time, the said current liability of Rs. 5.00 Crore is not shown in the amended balance

sheet as on 31.03.2014. The reason for not showing the said amount in the balance sheet is given in note No.10 of accounts ending for the year

31/03/2014 of the independent auditor’s report prepared by Mr.Hitesh Ambani of M/s Amish Ambani & Company; which read as under:-

“10. Liabilities and Asset

Balance under sundry debtor, sundry creditors and advance recoverable in cash or in kind are confirmed from the respective parties.

(i) Advance of Rs.5.00 crores received from Sh.D.K. Jain against proposed sale of land owned by the company has been forfeited on 31st

March, 2014 for non fulfillment of obligations by the vendee. Resultantly amount of Rs.5.00 crores is not payable and hence the same has

been adjusted by reducing the cost of land by equivalent amount.â€​

Now showing an amount of Rs. 5 crore in all the balance sheets till 2014 as an advance against sale, if amounts to admission, is settled in various

judgments. In Rishi Pal Gupta vs M/s S.J.Knitting and Finishing Mills Pvt Ltd 73 (1998) DLT 593 the following was held :-

“14. The respondent in its balance sheet for the year ending 31.3.1990 has admitted that the petitioner is one of the sundry creditors of

the respondent company and its name is shown in the list of sundry creditors in the said balance sheet. The respondent has also admitted its

liability in its reply dated 22.11.1991 whereunder it has transmitted the said balance sheet to the Registrar of Companies. The Division

Bench of this court has also in its order dated 29.11.1995 recorded that there is an admission of liability by the respondent to the extent of

Rs. 6,89,870.76 and that the said liability was acknowledged by the respondent in its reply dated 22.11.1991. In view of the aforesaid

acknowledgement of debt in the balance sheet as also in the reply sent by the respondent through one of its Directors constituting

acknowledgement in writing within the meaning of Section 18 of the Limitation Act, the petition presented by the petitioner on 14.5.1992 to

enforce a liability of the company acknowledged in the balance sheet for the year ending 31.3.1990 is indisputably within time. Reference

may also be made to a decision of this court in Larsen & Toubro Ltd. v. Commercial Electrical Works and Ors., wherein this court referred

to the decision reported in ILR 33 Calcutta 1033 wherein it was held that a statement of accounts like balance sheet would constitute

acknowledgement of liability. The decisions relied upon by the counsel for the respondent also have taken the same view with which I

respectfully agree.â€​

In Bhajan Singh Samra vs. Wimpy International Ltd 185(2011) DLT 428 the following was held:-

“13. Having heard the parties, this Court is of the opinion that the petitioning-creditor has to satisfy the Court that the debt on which the

petition is based was due and payable on the date of the petition. Certainly a time barred debt cannot be the basis of a winding up petition.

However, admission of a debt either in a balance sheet or in the form of a letter duly signed by the respondent, would amount to an

acknowledgement, extending the period of limitation. Section 18(1) of the Limitation Act, 1963 incorporates the said principle. Section 18(1)

of the Limitation Act, 1963 reads as under:-

Effect of acknowledgment in writing.

(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment

of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed,

or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the

acknowledgment was so signed.

x x x

The Calcutta High Court in the case of Bengal Silk Mills Co. Vs. Ismail Golam Hossain Ariff, AIR 1962 Cal. 115 held that in an appeal

arising from a money decree against a company, even statement of a liability in the balance-sheet of the company amounted to admission/

acknowledgement of a debt giving rise to a fresh period of limitation, notwithstanding the fact that the balance-sheet was prepared under

'compulsions of statute and of the articles of association of the company'.â€​

Considering the amount having been shown under the heading current liabilities do show an admission on the part of the respondent qua the debt of

the petitioner as late as till 2014. Note No.10 (supra) clarify such amount was lying with the respondent till 31.03.2014 as an advance but was

forfeited on the said date. Since, the advance was allegedly forfeited only on 31.03.2014, the filing of this company petition in May, 2015 shall be well

within limitation, hence issue (a) needs to be decided in favour of the petitioner.

Now I come to contention (b) if the advance can be legally forfeited by a seller. As per the settled law only earnest money could be forfeited and

that too to a particular extent, may be 5% to 10% depending upon the earnest amount. However the advance or an amount of installment given cannot

be forfeited, especially when the respondent had not pleaded any loss allegedly suffered on account of such transaction. In this context reference can

be made to Kailash Nath Associates vs. Delhi Development Authority and Another (2015) 4 SCC 136; Manoj Tomar vs. Smt.Neena Khatter & Anr.

2015 SCC Online Del 12831; and Satish Batra vs. Sudhir Rawal Civil Appeal No.7588/2012 decided on 18.10.2012.

Further in Entrepreneurs Cooperative Group Housing Society vs. Schindler India Private Limited 2013 (137) DRJ 374 the following was

observed:-

“…… Per contra, amounts received as purchase price are advance in the hands of the seller, subject to fulfillment of the contract. The

defendant though a company, required in law to maintain accounts and have them audited, has not led any evidence of the treatment given

to the sum of Rs.19 lacs in its books of accounts. Adverse inference thus has to be drawn against the defendant that it is continuing to show

the amount of Rs.19 lacs in its books of accounts as advance.â€​

Since there was no justification to withhold the amount due to the petitioner, so there is no impediment as to why the petition be not admitted and

provisional liquidator be not appointed. In IBA Health (I) Pvt. Ltd vs. Info-Drive Systems Sdn. Bhd 2010 (10) SCALE 151 the Apex Court has

observed as under:-

“22. xxxxx

If the debt is an undisputedly owing, then it should be paid. If the company refuses to pay, without good reason, it should not be able to

avoid the statutory demand by proving, at the statutory demand stage, that it is solvent.â€​

Thus, while admitting liability in its financial accounts till the year 2014 and not paying a single penny to the petitioner or to her deceased husband,

despite issuance of notices dated 26.06.2014 and dated 17.01.2015, the respondent company has neglected to pay the just claims of the petitioner

without any reasonable cause or excuse.

Consequently, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to

take over all the assets, books of accounts and records of the respondent-company forthwith.

Citation be published in the ""Statesman"" (English edition) and ""Jansatta"" (Hindi edition) in accordance with Company (Court) Rules, 1959.

However, publication of the citation and appointment of the provisional liquidator is deferred and one opportunity is given to the respondent

company to pay the amount of Rs. 5.00 Crore, due and payable to the petitioner with interest at the rate of 8% per annum with effect from 17.01.2015

when the statutory notice was served on the respondent company. The amount be paid within one month failing which the petitioner shall be entitled to

publish the citation and apply for appointment of the Provisional Liquidator.

A copy of the petition along with annexures be supplied to the Official Liquidator.

In view of above, both CA Nos.1377-78/2015 stands disposed of.

List on 15.03.2018.