LEX/BDHC/0264/2001

Equivalent/Neutral Citation: 56 DLR (2004) 422

IN THE SUPREME COURT OF BANGLADESH (HIGH COURT DIVISION)

Company Matter No. 131 of 1999
Decided On: 18.01.2001
Ambala Cold Storage (Pvt.) Ltd. Vs. Prime Insurance Co. Ltd.
Hon'ble Judges/Coram:
Md. Awlad Ali, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Raisuddin Ahmed, Advocate
For Respondents/Defendant: Md. Ibrahim Mollah, Advocate
JUDGMENT
Md. Awlad Ali, J.
1 . This application under sections 241 and 242 of the Companies Act, 1994 has been
made by the petitioner Ambala Cold Storage (Pvt) Ltd. Initially, notice was issued upon
the respondent company to show cause as to why this application for winding up of the
respondent company should not be admitted for hearing. The case of the petitioner is
that, the petitioner is a private limited company carrying on business of cold storage
having its office at House No. 39, Road No. 2. Dhanmondi, Dhaka. The petitioner set up
their cold storage where potatoes are stored upon purchasing from market against loan
obtained by it from Sonali Bank and the Sonali Bank disbursed the working capital to
the petitioner to purchase potatoes to store them in the petitioner's cold storage, by
their sanction letter No. Daibasha/Shilparin/Ambala/Cold/257 dated 22-3-1998. In the
sanction letter there was stipulation, inter alia, that the petitioner will take insurance
policies against Fire, Deterioration of Stocks (DoS) and Machinery Breakdown (MBD),
etc from an insurance company. Pursuant to the stipulation of the sanction letter the
petitioner obtained 3 policies from the respondent company of various kinds for
potatoes stored in the cold storage located at Manikganj covering fire, machinery
breakdown and deterioration of stock and the petitioner obtained 3 policies being Fire
Policy No. Prime/RJK/FP-004/03/98 dated 16-3-1998 for Taka 1,50 crore. Machinery
Breakdown Insurance Policy No. Prime/RJK/MBD/P-001/03/98 dated 16-3-98 for Taka
1.46 crore. Deterioration of Cold Storage Insurance Policy No. PRIME/RJK/DoS/P-
001/03/98 for Taka 2 crore respectively. It is the case of the petitioner that an
unprecedented flood in the country in 1998 occurred and consequently, Dhaka Electric
Supply Authority stopped electricity supply to petitioner's cold storage on 9-9-1998.
The respondent was informed by the petitioner to that effect on 11-9-1998. General
diary was made with the local Police Station. Due to stoppage of electricity the Cold
Storage was run by the Generator and Direct Drive. The main generator ceased to
function on 15-9-1998 and information was made to the respondent by letter dated 16-
9-1998. The Cold Storage remained without power for over 24 hours. The regular power
supply was restored on 16-9-1999. Thereafter, when the delivery of potatoes started it
was found that due to stoppage of electricity and cessation of Generator 35% of the
potatoes kept in the cold storage were damaged and an initial claim was filed with the

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respondent on 11-10-1998 for Taka 80,12,256 only for DoS and Taka 5,00,000 for cost
of repair of the machinery under MBD. Having received the initial claim the respondent
by their letter dated 20-10-1998 appointed two Surveyor Companies, namely, Engineers
Survey Associates Ltd. and Rupali Surveyors as joint surveyors to survey the loss. The
respondents also asked the petitioner to submit formal claim in prescribed form along
with documents. The surveyors made a joint survey on 25-10-1998 in presence of
petitioner's Director Mr. M. Waliul Haque and assessed the loss of weight 5% total loss
8% and partial loss 4% of which 20% is total loss. The report was jointly signed by
both the surveyors and the Director of the petitioner's company. On the basis of the
report formal claim was lodged by the petitioner with the respondent on 8-11-1998
which was countersigned by the Advocate of the petitioner. The respondent by their
letter dated 15-12-1998 informed the petitioner that the claim of the petitioner is under
scrutiny and the petitioner will be informed about the result in due course. It has been
stated that the respondent by their letter dated 18-12-1998 addressed to Sonali Bank,
Foreign Exchange Corporate Branch, Dhaka confirmed that the claim amount will be
directly paid to the petitioner through their branch. Thereafter, the petitioner made
several demands upon the respondent company and made series of correspondence and
requested the respondent company to settle their claim and the respondent promised to
pay but ultimately the claim was not settled. Upon receiving no response from the
respondent company the petitioner through their Advocate served a legal notice upon
the respondent on 9-8-1999 requesting the respondent to pay the petitioner's admitted
claim, but the respondent company did not make any response whatsoever. Then on
September 20, 1999 the petitioner's lawyer served a notice under section 242 of the
Companies Act 1994 upon the respondent to settle the petitioner's claim within 21 days,
but the respondent did not respond to such notice. Subsequently, on September 20,
1999 the respondent through special messenger sent a reply to the petitioner's legal
notice dated 9-8-1999 by which they denied the claim of the petitioner, but no reply
was given to the notice served under section 242 of the Companies Act. It has been
stated that the respondent company sent a frivolous letter to the petitioner on 24-10-
1999 denying the petitioner's claim. The petitioner thereafter, made relentless efforts to
get the outstanding amount against the claim as assessed by the Surveyors but the
respondent company did not pay the claim amount and that the respondent company is
unable to pay its liabilities and to pay its admitted debt and since the respondent
company is unable to pay its debt the company is liable to be wound up under the
aforesaid provision of law.
2 . The respondent has filed an affidavit-in-opposition to resist the prayer of the
petitioner for winding up the company and denying the material allegations, the
respondent has stated that the petition has been filed as a pressure tactics to recover
the so-called dues which is highly disputed by the respondent Company. It has been
stated that the respondent company is a well reputed Insurance company which is
transacting general insurance business and the petitioner obtained the aforesaid 3
policies covering the risk as mentioned in the policies. The DOS policies was
subsequently revised on 31-8-1998 for Taka 1.60 crore. The respondent has denied that
the joint survey report was signed by the surveyors as well as the director of the
respondent. It is the case of the respondent company that the respondent never
admitted the claim of the petitioner as the claim does not fall under the respective
policies and the terms and condition laid down therein. The respondent has pleaded that
the petitioner was informed regarding the flood situation in 1998 and after receiving
information the respondent appointed Messrs Engineers Survey Associates and Rupali
Surveys for inspection in order to ascertain the loss and damages of the petitioner's
property and the surveyors after inspection submitted their report stating that the
compressor No. 1 was in operation and that the motors of the compressor Nos. 2 and 3
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were affected by flood water and, as such, those compressors could be put into
operation, but the compressor No. 1 was saved by giving brick wall around it and they
also observed that the insurer took precautionary measures to prevent entering the
flood water by making flood protection wall with sand bags. It is contended by the
respondent that the capital of the company is 25 crore and wherein the paid up capital
is Taka 15 crore which is far more than the claim of the petitioner. Therefore, it cannot
be said that the respondent is unable to pay the debt of the petitioner even if it is
established the said amount is due to the petitioner.
3. It is contended by the learned Advocate for the petitioner that the joint survey report
was made and the same was communicated to the respondent company the damage was
assessed by that report and, according to the report, the respondent company is liable
to pay on account of loss caused to the petitioner which is covered by the 3 insurance
policies. He has further contended that the respondent company having not denied the
claim of the petitioner is bound to pay the same and since the notice under section 242
of the Companies Act had been served upon the respondent company, the respondent
under the provision of law is liable to pay the debt and having failed to pay the debt the
company is liable to be wound up. He has argued that the subsequent denial by their
letter dated 20-9-1999 is an after-thought as the respondent company avoided to pay
the dues to the petitioner. The plea taken by the respondent company that the policy
does not cover the alleged loss is not tenable.
4. Mr. Md. Ibrahim Mollah, the learned Advocate appearing on behalf of the respondent,
has contended that the survey report annexed to the application is not a joint survey
report pursuant to the terms of the policy and the joint surveyors namely, Engineers
Survey Associates Ltd. and Rupali Surveyor, were appointed and after physical
verification they submitted the report wherein it has been stated that as per physical
finding of the documents which were produced it appears that no breakdown of
machinery occurred and the temperature was normal during the period and the
surveyors opined that the loss suffered by the insured falls outside scope of the policies
and hence no such liabilities were attached to the policies. He has further argued that
the respondent company has never admitted the claim of the petitioner, rather the
respondent disputed the claim relying on the survey report as well as the terms of the
policies. Since the claim is not admitted it is not a debt as contemplated under sections
241 and 242 of the Companies Act and on such disputed claim the company cannot be
wound up under the provision of law. It appears that petitioner obtained 3 policies
covering the aforesaid risk laying down the terms and that, according to the petitioner,
the claim was made on the basis of the report submitted by the Surveyors Annexure E
but the claim was not accepted as genuine made by the petitioner and the respondent
company disputed the claim saying that it is not based on any proper survey report and
that the claim is not covered by the policies. Unless the disputed claim is assessed by a
competent Court having received the evidence for determining the loss and damage the
respondent company is not liable to pay the amount. From the papers and materials
submitted before the Court it does not seem to me that the claim made by the petitioner
has been accepted as a liability of the respondents company and that they agreed to pay
the claim amount. The claim is not undisputedly ascertained, and unless it is admitted it
cannot be said it is a debt and the respondent company is liable to pay the debt.
Winding up of a company by Court for debt is not called for where there is a bonafide
dispute relating to the existence of the debt.
In that view, the application under sections 241 and 242 of the Companies Act cannot
be maintained. The prayer for winding up of the company is refused and the petition is
dismissed without any order as to costs.
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The petitioner may, however, make their claim before the competent civil Court in terms
of the policy.
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