- (1.) The point involved in this company petition is whether the issuance of 'C' Form under the Central Sales Tax Act constitutes an acknowledgment of the subsisting liabilities as well as the jural relationship giving fresh life of limitation under Section 18 of the Limitation Act.
(2.) Admittedly on 08.10.2007 the Company placed in order upon the petitioning creditor to provide the automation system for Bar Rolling Mill, Wire Rod Mill and Garret Coiler including D.C. Drive and other allied materials at a price which would be evident therefrom. The purchase order contains the various heads viz., price, delivery, late delivery penalty, payment, guarantee and installation and erection of the said system. By another purchase order dated 05.02. 2008, the Company further placed an order for supply of A.C & D.C Variable Speed Drives and MS Control Panels containing the similar terms and conditions. Subsequently, another purchase order dated 22.04.2008 was issued by the Company for supply of Thyristor Convertor. According to the petitioner, the supplies were made in terms of the said purchase orders and the tax invoices are raised from time to time. The last tax invoice submitted by the petitioning creditor against the aforesaid three purchase orders was on 16.07.2008. The Company paid in part from time to time and subsequently raises an objection against the successful commissioning of the said automation system. An agreement dated 28th October 2009 was entered into between the petitioning creditor and the company to resolve the objections raised by the company. Under the said agreement, the company agreed to release a sum of Rs. 29 lakhs being the balance outstanding dues towards the supply of goods in terms of the aforesaid three purchase orders and Rs. 8.5 lakhs to be paid upon successful commissioning and the plant achieving the agreed speed within the period of 30 days. It would further gather from the said agreement dated 28th October, 2009 that the Company was entitled to withhold or nullify the whole or a part of the said amount of Rs. 8.5 lakhs against any loss if the petitioning creditor did not commission and/or achieve the speed of the system. According to the Company, the petitioner could not achieve the requisite speed and, therefore, the entire sum of Rs. 8.5 lakhs were withheld in terms of the said agreement. Since the Company intended to purchase a terminal unit and the petitioning creditor offered the competitive price, the fourth order was issued by the Company and the payment is admittedly made by the Company. It would be relevant to record in this context that the Company petition does not reflect the factum of the said agreement and there has been suppression by the petitioning creditor. The Company tried to intertwined the aforesaid four purchase orders to avoid the provision of the Limitation Act by treating the last payment made against the supply under the fourth purchase order on 30 April, 2010. According to the Company, the three purchase orders can be clubbed together because of the agreement entered into in respect thereof but the fourth purchase order was independent and it cannot be corelated to the earlier purchase orders. The payment which was made for supply under the fourth purchase order is independent and distinct which do not constitute the acknowledgment and/or confirmation of the liability, if there be any, in respect of earlier three purchase orders. The Company issued the 'C' Form from time to time and lastly on 10th June, 2011 for the invoices between 04.07.2008 and 27.08.2008 which as per the petitioning creditor constitutes the acknowledgment of the liability and establishes a jural relationship of a debtor and creditor.
(3.) The learned Advocate appearing for the petitioner heavily relies upon a division bench judgment of the Andhra Pradesh High Court in case of M/s. Electro Flame Ltd., Hyderabad vs- M/s. Mittal Iron Foundry Pvt. Ltd., 1998 AIR(AP) 203 to contend that submission of 'C' Form is one of the key element to admit the existence of jural relationship between the debtor and creditor. It is further submitted that the Company, in fact, acknowledges the transaction and its liability to pay and issued the 'C' Form to the petitioning creditor. It is lastly submitted that Section 18 of the Limitation Act can be pressed as the Company acknowledges its liability as well as the debt and the limitation would reckon from the date of the issuance of the 'C' Form.;