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Arjun Naidu Building Works Pte Ltd v My Idea Pte Ltd [2022] FJHC 109; HBE 83 of 2020 (4 March 2022)

IN THE HIGH COURT OF FIJI

AT SUVA
CIVIL JURISDICTION

Companies Action No. HBE 83 of 2020

IN THE MATTER of a Statutory Demand dated 30^th November 2020 taken out by MY IDEA PTE LTD trading as FIVE SQUARES a company having its registered office at 39 Millet Street, Vatuwaqa, Suva in the Republic of Fiji (“the Respondent”) against ARJUN NAIDU BUILDING WORKS PTE LIMITED (“the Applicant”) and served on the Applicant on 10^th December 2020 by hand delivery.

AND

IN THE MATTER of an Application by the Application for an Order setting aside the Statutory Demand pursuant to Section 516 of the Companies Act.

BETWEEN:

ARJUN NAIDU BUILDING WORKS PTE LIMITED a private company incorporated in Fiji and having its registered office at Nadali, Nausori in the Republic of Fiji.

APPLICANT

AND:

MY IDEA PTE LTD trading as FIVE SQUARES a private company incorporated in Fiji and having its registered office at 39 Millet Street, Vatuwaqa, Suva in the Republic of Fiji.

RESPONDENT

BEFORE:
Justice Vishwa Datt Sharma

COUNSEL:
Mr Singh K. for the Applicant
No Appearance for the Respondent

DATE OF DECISION:
04^th March, 2022 @ 9.30am

DECISION

[Setting Aside Statutory Demand pursuant to Section 516 of the Companies Act]

INTRODUCTION

1. The Applicant Arjun Naidu Building Works Pte Limited is seeking for the following Orders:
   1. That the Statutory Demand dated 30^th November 2020 and taken out by the Respondent against the Applicant be set aside.
   2. That the Respondent pay the costs of and incidental to this application.
      
2. The Application is made in support of an Affidavit deposed by Shiu Ramlu Arjun pursuant to Section 516 of the Companies Act.
3. The Respondent opposed the Application and filed an Affidavit in Opposition on 09^th February 2021.
4. At the Hearing on 05 January 2022, neither the Respondent nor his Counsel was present in Court.
5. The Applicant made oral submissions and furnished Court with written submissions.
   

Applicant’s Case (Summarised)

6. On 10^th December 2021, the Applicant received a Statutory Demand from the Respondent claiming a sum of $14,505.40 for the purchase made between 29^th January 2018 to 14^th February 2018.
7. The Statutory Demand is defected and improper since it has not been signed by the Respondents, not does it clarify the identity of the signatory and not delivered to the registered office.
8. It was a verbal agreement between the Applicant and the Respondent that when orders are placed, all hardware items that will be supplied will be of merchantable quality and to the specification of the order placed or the items chosen.
9. The alleged debt relates to commercial transaction from 2018. The credit account was a revolving account where, payments were made in batch with no specific invoice. The alleged debt is accumulative debt of series of invoices.
10. That after installation of the tiles supplied by the Respondent, the Tiles Changed colour.
11. That my project at Nacaci Hindu School, Ba, Kindergarden Block was government funded and since the project required specific color of tiles, the tiles installed would have been rejected causing a huge loss.
12. That on 24^th August 2018, by letter through my counsel we had a letter written to the Respondent and informed them of the defective tiles and sought replacement of 1500 tiles, 30 bags of glue and 3 bags grout and $700.00 labour costs.
13. That on or around 05^th May 2019, the Respondent through Neel Shivam Lawyers issued us with a demand notice claiming the sum of $10,355.40. The amount in the Neel Shivam Demand Notice is different to that of the notice in the statutory demand, which is $14,505.40.
14. That when the letter was written by KS Law to the Respondent in 2018, the tiles, grout and tile glue were not supplied and the quoted labour costs were low. After reconciliation of records, the costs of replacing the tile glue, fixing of tiles, removal of tiles and re-plaster cost me $7,032.40. There needs to be a set-off from the debt of $10,355.40 as per demand from Neel Shivam Lawyers.
    

Respondent’s Case (Summarised)

15. Admits that the Applicant purchased the hardware items on credit from time to time.
16. Admits that the alleged debt claimed from the Defendant relates to commercial transaction from 2018. The credit account was a revolving account where, payments were made in batch with no specific invoice. The alleged debt is accumulative debt of series of invoices.
17. Admits that the Applicants purchased on credit the required tiles, tile glue and grout from the Respondent.
18. That the difference in the amount stated in the Demand Notice and Statutory Demand is irrelevant to this matter.
19. The Respondent denies that a letter from the Applicant’s Counsel was written to the Respondent on 24 August 2018 informing them of the defective tiles and sought replacements of 1500 tiles, 30 bags of glue and 3 bags of grout and $700 labour costs.
20. The Respondent denies the dispute of the alleged debt as raised at paragraph 23 of his affidavit in Support and that it costs the Applicant $7,032.40 for replacing, fixing, removal of tiles and re-plaster and a set-off from the debt of $10,355.40 as per earlier demand from Neel Shivam Lawyers.
21. The Respondent denies abusing the process of Winding Up and puts the Application to strict proof.
    

Analysis and Determination

22. The only substantive issue before this Court is ‘Whether the Statutory Demand dated 30^th November 2020 served onto the Applicant be set aside with costs?’
23. Section 516(1) of the Companies Act provides:-

“A company may apply to the court for an order setting aside a statutory demand served on the company.”

24. The Applicant was served with the Statutory Demand dated 30^th November 2020 on 10^th December 2021. The Applicant within a period of 21 days after the Demand was served, filed this application for Setting Aside of the Statutory Demand.
25. The Applicant’s contention for Setting Aside the Statutory Demand are as follows:-
    • Disputes the debt;
    • Seeking set-off from the debt of $10,355.40 as per the Demand from Neel Shivam Lawyers of the sum of $7,032.40 for replacement and fixing of tiles and re-plastering costs.
    • The Statutory Demand is defective in terms of signatory and service;
26. It is not in dispute that the Applicant and the Respondent were in a verbal agreement whereby all hardware items that will be supplied to the Applicant would be of a merchantile quality and to the satisfaction of the order placed or the items chosen.
27. The alleged debt herein relates to a commercial transaction from 2018.
28. The Applicant purchased on credit from the Respondent Company, tiles, tile glue, spacers and grout. After the installation of the tiles supplied by the Respondent Company, the tiles changed its colour.
29. The government funded project of the School that the Applicant was carrying out required specific colour tiles and the change in colour of the tiles would have been rejected, causing a huge loss to the Applicant.
30. The Applicant wrote a letter to the Respondent Company on 24^th August 2018 informing the Company of the defective tiles and sought for the replacement of 1500 tiles, 30 bags glue, 3 bags grout and $700 for labour costs.
31. On 05^th May 2019, the Respondent Company through Neel Shivam Lawyers issued a Demand Notice against the Applicant claiming a sum of $10,355.40. The amount claimed on Demand Notice from Neel Shivam Lawyers (10,355.40) had a different amount ($14,505.40) on the Demand Notice issued by Gosai Nambiar Lawyers on 30^th November 2020.
32. Prima facie, it is established by the Applicant that the Respondent Company had served two (2) Demand Notices claiming two separate amounts of $10,355.40 and $14,505.40 respectively. The Respondent Company and/or its Counsel was not present in Court to provide an explanation as for this discrepancy.
33. Further, the Applicant’s contention makes reference to his correspondence to the Respondent Company dated 24^th August 2018 whereby the tiles and grout were not replaced. Further, the Applicant, Arjun Naidu Building Works Ltd carried out the rehabilitation work at the school which cost him a total sum of $7,032.40 as per the breakdown provided at annexure ‘D’ of the Affidavit in Support of Shiu Ramlu Arjun.
34. Taking above into consideration, this Court is satisfied that:-
    • There is a genuine dispute between the Respondent Company and the Applicant in terms of the existence of the amount of debt to which the demand relates, and
    • That the Respondent Company has an off-setting claim.
35. I have no alternative but to set aside the Statutory Demand issued by the Respondent Company on 30^th November 2020 against the Applicant forthwith.
36. The Respondent Company to pay the Applicant a sum of $500 as summarily assessed costs of this Application.
37. Following are the Orders of this Court:-
    

Orders

(i) The Statutory Demand dated 30^th November 2020 and taken out by the Respondents against the Applicant is hereby set aside forthwith.
(ii) The Respondent Company to pay the Applicant a sum of $500 as summarily assessed costs.

Dated at Suva this 04^th day of March, 2022.

.................................................
Vishwa Datt Sharma
Judge

cc: K.S. Law, Suva
Messrs. Gosai And Nambiar Lawyers, Suva