Salil Kumar Roy Chowdhury, J. - (1.) This is a winding-up petition which was presented on June 13, 1979, and on the returnable date, notice was directed to be served on the company along with a copy of the petition. The company appeared and took direction for filing an affidavit to show cause why the winding up petition should not be admitted. The petitioning creditor also filed an affidavit-in-reply. It may be noted that the petitioning creditor had to take several extensions of time to file the reply in view of the fact that the petitioning creditor is a foreign company. On January 2i, 1980, an injunction was issued against the petitioning creditor for filing suit or proceeding against the company till the disposal of the present application. From time to time, the matter was adjourned as it could not be taken up on the grounds that the counsel were not available at the time of hearing. Finally, the matter was taken up.
(2.) The claim of the petitioning creditor arises out of an export contract for supply of various qualities and quantities of A.C.S.R. conductors by the company to the foreign buyer in Pakistan being the Pakistan Water & Power Development Authority, hereinafter referred to as W.A.P.D.A. The said transaction for the supply to the foreign buyer by the company was routed through the petitioning creditor as the agent and also through the Industrial Import Private Limited, 34, Stephen House, 4, B.B.D. Bag (East), Calcutta 1, and Associated Commercial Agencies, Associate Chambers, 24/25, Patiala Ground Link, Mcleod Road, Lahore, who were acting as the Indian and Pakistani agent of the petitioning creditor. The said W.A.P.D.A. of Pakistan invited a global tender due on December 20, 1976, for the purchase of the said goods. Thereafter, the petitioning creditors' said agent in India invited offers from Indian Manufacturers of the said articles accordingly and the company submitted its offer together with quotation by its letter dated December 11, 1976, which is set out hereunder: JUDGEMENT_744_CC53_1983Html1.htm Schedule of prices, schedule of delivery and conditions of contract for export of the following ACSR conductors to Pakistan JUDGEMENT_744_CC53_1983Html2.htm Price : Prices quoted above are on FOB Calcutta basis. Rates quoted are based on the current rate of exchange, i.e., U.S. $ 11.40 Indian Rs. 100. If there be any adverse-fluctuation of dollar rate from the above that is to be borne by the purchasers. Validity : Our offer will remain valid for acceptance for a period of 45 (forty-five) days from the date of closing of the Tender (i.e. 20-12-1975); Delivery: Delivery of the conductors quoted will commence within 60 (sixty) days from the date of receipt of full, final and complete in all respects order together with the letter of credit at our end will be completed at the rate of 1,000 miles per month on an average of all the items taken together subject to availability of ship and Force Majeur. Payment: Payment will have to be effected by an irrevocable and unrestricted letter of credit to be opened in our favour by the importers for the full value of the contracted goods. Such letter of credit should be confirmed either by a first rate bank in U.K. or by the State Bank of India. Inspection: The Conductors offered will be subject to compulsory pre-shipment inspection by the Export Inspection Agency (A Govt. of India undertaking). However, if the purchasers desire to have independent inspection, it can be arranged at extra cost to their account. We shall provide all facilities to the Inspecting Engineer at our works for conducting the inspection and testing prior to shipment. Manufacture and Test: The conductors quoted will be manufactured in our factory at 47, Hide Road Extension, Calcutta 27, under close quality control checks in accordance with the specification. Prescribed tests shall be carried out at our Works Laboratory in accordance with the relevant standard which will strictly conform to the required specification. The Test Certificate against the consignment will be furnished. For Aluminium Cables & Conductors (UP) Limited. (Sd.) Directors On the basis of the said quotation of the company the petitioning creditors' said agent in Pakistan submitted the tender and/or quotation for supply df the said conductors manufactured by the company to the WAPDA in Pakistan supported by a bid bond issued by the petitioning creditors' banker. Thereafter, the deal was concluded due to the diligent and sincere efforts on the part of the petitioning creditors' said Pakistani agent and ultimately the order was procured for the supply of the said conductors manufactured by the company of a total value of $17,08,090.80 U.S. Dollars F.O.R. Wagha Border as per the letter of the WAPDA of Pakistan, dated the January 15, 1977, being Purchase Order No. 3419/ DBE/ADP-IV/20I4/1811 which is set out hereunder ; JUDGEMENT_744_CC53_1983Html3.htm The company by its letter dated January 22, 1977, confirmed the said contract and the arrangement for payment of the commission to the petitioning creditor at the rate of 2.75% of the F.O.B. value of the quantity that would be supplied under the said contract. Copy of the said letter is annexed to the petition and is set out hereunder : JUDGEMENT_744_CC53_1983Html4.htm It also appears that by a letter dated the 29th of April, 1978, the company intimated the petitioning creditors' said Indian agent as to the particulars of the invoices and the commission amount payable with a tentative date of remission of the same. The said letter is set out here-under: JUDGEMENT_744_CC53_1983Html5.htm JUDGEMENT_744_CC53_1983Html6.htm There were various other relevant correspondence between the parties and the said Indian and Pakistani agents and the buyer, WAPDA, which are annexed to the affidavit-in-opposition of one Rekhab Chand Jain affirmed on the 9th July, 1979, and the affidavit-in-reply, affirmed by one Kishore Himmat Lal Mehta, affirmed on the 30th August, 1979, from which it appears that the relationship between the parties being the petitioning creditor and the company is admitted being an agent for negotiating the said sale with the foreign buyer, WAPDA, of the materials manufactured by the company and the company agreed to pay the commission to the petitioning creditor and its said two agents at specified rates. It will be convenient to set out some of the relevant correspondence which clearly show the admission on the part of the company to pay he commission to the petitioning creditor in terms of the contract between them, through its said Indian and Pakistani agents. JUDGEMENT_744_CC53_1983Html7.htm For and on behalf of COUTINHO, CARO & CO. LTD. And a letter dated the 27th November, 1978, being the annexure to the said affidavit-in-reply at page 18 and is set out hereunder : JUDGEMENT_744_CC53_1983Html8.htm AO: 47, Hide Road Extension, CAL-27, PH. 45-7193 & 45-7695 Works: 4, Armed Mamoor Street, Liluah, Howrah, PH. 66.2780; IS 396 From the above correspondence which are admitted documents it appears that in no uncertain terms the company agreed to pay commission to the petitioning creditor who was the agent through which the said contract was negotiated and entered into between the said WAPDA and the company for the supply of the said goods. Not only that, it is also clear that the company by its letter dated the 22nd of April, 1978, admitted having issued invoice-wise credit notes in favour of the petitioning creditor covering their commission in respect of the supplies made by the company to WAPDA and also admitted in specific terms the amounts in US dollars being remitted, subject to the approval of the Reserve Bank of India, received by the company. In the said letter also, the tentative date of remittance has also been specified and the total amount appears to be 40,793.35 U.S. dollars for which the said credit notes were issued. In the present winding-up petition, the petitioning creditor in the statutory notice served on the company dated 3rd/4th January, 1979, demanded the said amount after specifying the circumstances under which the amount became payable as commission to the petitioning creditor as agent for negotiating and finalising the contract with WAPDA for the supply of the said goods.
(3.) Mr. R.C. Nag, appearing with Mr. Sudipta Sarkar for the petitioning creditor, placed the said correspondence chronologically and submitted that the petitioning creditor as the foreign agent of the company in respect of the said contract was entitled to the payment of the said amount subject to the Reserve Bank of India's permission which was to be obtained by the company as admitted in the letter dated the 29th of April, 1978. The company's contention that the said agreement for commission was without consideration has no substance and Mr. Nag referred to paras. 6, 9 and 10 of the winding-up petition and para. 10 of the affidavit-in-reply and submitted that consideration is clearly pleaded and also supported by the correspondence. In fact, the petitioning creditors sponsored for higher rates as would appear from pages 13 and 15 of the winding-up petition. The said contract was negotiated through the Pakistani agent and the Indian agent of the petitioning creditor as would appear from the correspondence. In Clause 9 of the letter dated the 15th of January, 1977, written by WAPDA through the Pakistani agent of the petitioning creditor, it is clearly admitted that the petitioning creditor is the principal of the Pakistani agent and the company's letter to the petitioning creditor dated the 22nd of January, 1977, has specifically referred to the said purchase order dated the 15th of January, 1977, and confirmed the agreement to pay the petitioning creditor's commission at the rate of 2'75% of the F.O.B. value of the quantity that would be supplied and the amount would be remitted subject to the Reserve Bank of India's approval and realisation by the company of the export proceeds in full and successful conclusion of the contract. It also appears that by mutual consent between the company and the WAPDA, the contract was obtained after it was executed leaving a portion unexecuted. It also appears from the letter dated the 11th of December, 1976, that the company requested the petitioning creditors' Indian agent to furnish the bid guarantee on their undertaking to pay the necessary bank charges. The company also tried to dispute the rate of commission in para. 7 of the affidavit-in-opposition at page 3, but Mr. Nag submitted that there is no substance in it as the same has been specifically admitted by the company in its correspondence as hereinbefore stated to be at the rate of 2.75% of the price of the goods supplied under the said contract. The company also took the objection under the F.E.R. Act, but Mr. Nag submitted that there is no ground for disputing the petitioning creditor's claim which is the commission admitted to be payable by the company to the petitioning creditor as hereinbefore stated. Moreover, the company was to obtain the Reserve Bank of India's permission as admitted in their said letter dated the 29th of April, 1978, and for their own default in not obtaining the necessary permission in compliance with the requirements of the F.E.R. Act, they cannot take advantage of their own wrong and default. Further, Mr. Nag referred to the Madras decision in Sreemannarayanamtwthy v. Arjanadu, AIR 1939 Mad 145, where it has been held by the Division Bench of the Madras High Court that the right, which the creditor, who files the insolvency petition against his debtor, is really seeking to exercise, is the right of a creditor who finds his debtor in insolvent circumstances, to have the assets of the debtor administered in insolvency and distributed for the benefit of the creditors as a body. This is a right which is conferred upon the creditors by statute and is not a right arising out of a particular contract of loan between the petitioning creditor and the debtor. The said decision is also noted in the Supreme Court decision in Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., where the Supreme Court approved the proposition that an insolvency petition is a right arising not out of a contract but from the statute and the same principle applies to the present case as admittedly the company has failed to pay the commission due to the petitioning creditor in respect of the said contract and the claim is admitted by the company in the correspondence and, in fact, the company issued the debit notes but remittance was subject to the permission of the Reserve Bank of India which was to be obtained by the company in due course and the company has failed to do so. Therefore, maintaining the present winding-up petition which is a right under the statute to declare a company to be insolvent and liable to be wound up, being unable to pay its debts, is a right under the statute and cannot be affected by the question of permission of the Reserve Bank of India, which the company has deliberately failed to obtain by their own default. Mr. Nag also referred to the Division Bench decision of this court in Bangasri Ice and Cold Storage Ltd. v. Kali Charan Banerjee, where it has been held that in a winding-up petition, the disputes sought to be raised as to the debt due to the petitioning creditor by the company where the said dispute has been manufactured in order to delay or defeat the realisation of the dues of the petitioning creditor and is merely a cloak for the inability of the company to pay its just debt, is a matter which the court would investigate and that will depend on the facts of each, particular case. Here admittedly, the company failed to pay the commission payable to the petitioning creditor after obtaining the necessary Reserve Bank of India's permission for a remission of the same to the petitioning creditor being a foreign agent through whom, the said contract was entered into, as would appear from the previous correspondence referred to in the pleadings in this proceeding. Mr. Nag rightly commented that it was only with a view to maintain the goodwill the said debit notes were issued as alleged by the company is nothing but a ruse and has been set up by the company for the purpose of amusing itself after having admitted its liability for the commission payable to the petitioning creditor for the said contract executed and performed and abandoned a part of it by mutual consent between the company and the WAPDA. Mr. Nag also submitted that there is no bar to a judgment being passed in a foreign currency and in support of the said proposition, he relied on the English Court decision in Federal Commerce & Navigation Co. Ltd, v. Tradax Export SA the Maratha Envoy [1977] 2 All ER 41 (CA), where a claim arose out of a charter party as to whether a judgment can be passed for payment of some money expressed in foreign currency. It was held that where a foreign currency was the currency of the contract but the proper law of the contract was English Law, the court had power to give judgment in foreign currency and should do so and, therefore, it was held that the shipowners was entitled to judgment for the demurrage in dollars. Relying on the said decision, Mr. Nag submitted that there is no bar on a court, under the contract between the company and the petitioning creditor as a foreign agent, for judgment in U.S. dollars which was stated in the contract itself and the company also issued debit notes in dollars as would appear from the said letter, dated the 29th of April, 1978, of the company referred to above. Mr. Nag also referred to Section 47 of the F.E.R. Act, and submitted that the company has not produced any document to show that it made any application to the Reserve Bank of India for remittance of the said amount to the petitioning creditor as per their letter dated the 22nd of January, 1977, and 29th of April, 1979. It was the petitioning creditor's duty to produce a document to show that such a permission has been refused and it can be safely presumed that the company has not done anything of that sort by way of application before the Reserve Bank of India for necessary permission to remit the said amount, admitted to be payable to the petitioning creditor under the contract as the commission due to the foreign agent. The petitioning creditor has served notice on the company to produce the necessary documents for F.E.R. Act, permission but the company has failed to produce any document whatsoever and, therefore, it should be inferred that the company has deliberately made no application for payment to enable it to pay to the petitioning creditor and, as such, it must be held that the company is unable to pay its debt and liable to be wound up and at this stage it cannot be said that the present application is an abuse of the process of the court. On the other hand, the disputes sought to be raised by the company is not bona fide and there is no substance in the defence sought to be raised either in law or in fact. In those circumstances Mr. Nag, in my view, rightly submitted that the winding-up petition should be admitted and directions for advertisement should be given.;