TaxTMI 
TaxTMI 
TaxTMI 
2012 (10) TMI 383
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....of the contract contention of petitioner/s and the defence of the respondent company are similar. Even the relief prayed for in all 3 petitions i.e. order of winding up against the respondent company are common and similar. The learned advocate appearing for the three petitioners and the respondent company are also same and they have advanced common submissions. Therefore, all the three petitions are decided by this common order. 2. I have heard learned counsel for the contesting parties and examined the record of the captioned three petitions. 3. The petitioner companies seek that the Court be pleased to pass order of winding up against the respondent company because the respondent company has, according to the petitioner, lost capacity to discharge its financial obligations and it is unable to pay its debt. To support and justify the said allegations against the respondent company, the petitioners have, in the memo of the three petitions, stated that the respondent company is indebted to the petitioner for a sum of Rs.2 lakhs so far as petition being Company Petition No.179/2010 and for Rs.5 lakhs so far as Company Petition No.181/2010 and for Rs.9 lakhs so far as Company Petit....
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....filed. (v) 20.01.2011 Court directed the office to issue notice to the respondent company. Company Petition No.181 of 2010 (i) 30.03.2009 The agreement was entered into between the respondent and the petitioner of Company Petition No.181 of 2010. (ii) 29.12.2009 Agreement was terminated by the petitioner. (iii) 26.03.2010 Statutory notice was issued by the petitioner. (iv) 27.04.2010 The respondent gave reply to the petitioner's communication dated 29.12.2009 terminating the contract. (v) 16.11.2010 Date of submission of petition. 6.1 It is, however, pertinent to note that the contentions and/or objections and/or explanations and/or defence or even allegations which are raised in the reply affidavit filed in the petition were never raised by the respondent company in its reply against petitioner's communication dated 29.12.2009. Company Petition No.182 of 2010 (i) 30.03.2009 The agreements between the respondent company and the petitioner was entered into and executed. (ii) 24.12.2009 The petitioner terminated the said agreement. (iii) 24.12.2009 The petitioner also demanded refund of the security deposit in the tune....
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....ompany in the sum of Rs. 6.00 lacs (Rupees Six lacs only) as and when demanded by the company. 39. The aforesaid Security Deposit shall be retained by the company without interest, during the tenure of the present Agreement, and shall be refunded to the CCA after settlement of accounts, including, and inter alia, recovery of dues/penalty if any on the termination/completion of the agreement. 40. The company reserves the right to link value of security deposit with business. 41. The company reserves right to forfeit Security Deposit in part or in full in the event of violation, non-fulfilment and/or non-compliance of any of the terms and conditions of the present agreement or predetermination of agreement by CCA and the decision of the Company in this regard shall be final and binding. 49. In case the CCA fails at any time to follow the instructions of the company as directed from time to time, and /or fails to perform his obligations under the present Agreement, the Company shall be entitled inter alia, to terminate this Agreement, and/or to suspend the business operations of CCA and/or levy a penalty at its discretion with a view to effectively control and supervise the operat....
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....rt of his submissions, relied on the below mentioned decisions. (1) Shin Satellite Public Co. Ltd. v. ATN International Ltd. [2011] 109 SCL 1/ 12 taxmann.com 487 (All.). (2) Tata Elxsi Ltd. v. Point Red Telecom Ltd. (Earlier Pointred Telecom Private Limited) (Manu/KA/887/2011) (3) Mazboot Packers & Engineers Co. v. Himachal Pradesh Horticulture Produce Marketing & Processing Corpn. Ltd. [1999] 95 Comp. Cas. 579 (HP) (4) Branch Manager, Magma Leasing & Finance Ltd. v. Potluri Madhavilata.[Civil Appeal No. 6399 of 2000, dated 18-9-2009]. 12. It emerges from the factual background that so far as Company Petition No.179 of 2010 is concerned, in the said case the respondent had not given any reply to the petitioner's intimation terminating the contract and/or the statutory notice and all the defence or dispute which are sought to be raised are raised for the first time in the reply affidavit. It also emerges that in case of the petitioner concerned in Company Petition No.182 of 2010 the respondent never disputed the petitioner's action for terminating the agreement and/or the reasons for terminating the contract. 12.1 Another important aspect which emerges ....
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....uit since the petition involves disputed questions of fact. 14.2 Now, so far as the defence based on the ground of remedy of arbitration is concerned, the Apex Court has in case of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. [2011] 5 SCC 532 held that the special statutory remedy provided by Sections 433 and 434 of the Act is concerned, it is a special remedy for specific relief viz. order of winding up and the remedy of arbitration is not an alternative to the said remedy. 14.3 It is settled position that the remedy under Section 434 read with Section 433 of the Act is not available and cannot be permitted to be used for enforcing recovery of debt, which is bonafide disputed. In present case, the petitioner has not prayed for order or direction against the respondent to pay its dues but the petitioner has prayed for order of winding up and that the said relief would not be available in arbitration proceedings. Hence, the said contention is not available to the respondent in present case. Similarly, remedy of civil suit for recovery of the dues also cannot be termed as alternative remedy for the relief prayed for by the petitioners in the subject petitions i.e. relief of ....
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....rt some ingenious mask invented to deprive creditor and is not a mere wrangle. In this context it is appropriate to refer to the observations made by the Apex Court in para 20 of the decision in case of IBA Health (I) (P.) Ltd. (supra), which read thus: "20. The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his cl....
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....respondent has claimed that its action is justified and competent in view of the said provisions. 16.1 Such defence and dispute raised on the strength of the provisions in the contract - agreement between the parties and in light of interpretation of the terms and conditions of the contract would be, ordinarily, considered bona fide dispute and defence provided court is satisfied that such defence is not raised as an afterthought, in which case court may further probe the matter. 16.2 So as to consider and appreciate the aforesaid rival submissions it is necessary to take into account the relevant provisions under the agreement. Since it is not in dispute that the terms and conditions of the three agreements are similar, provisions from one of the agreements can be considered. 16.3 The provision under clause 38 imposes obligation on the petitioner to deposit the amount mentioned in the said clause as security deposit. The petitioners have, accordingly, paid/deposited the respective amounts towards security deposits. 16.4 Clause 50 of the agreement prescribes duration of the agreement (i.e. until March 2013) and it also prescribes that the agreement can be terminated in accorda....
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.... contract then the party who invokes the provision to explain or support any action then the said party should demonstrate that the action is actually taken and exactly when was it taken. This is necessary because in case of dispute the limitation - and calculation of limitation - shall commence from the date when the action is actually taken i.e. when cause of action arises. Hence, if the action is actually not taken or if it is not informed to the other side, then it would cause prejudice to other side. The first thing which the said clause demands is an overt action on part of the respondent i.e. of retaining/withholding the security deposit. The amount should be actually retained/withheld on occurrence of any of the specified events and the other side should be informed about the action. Mere existence and conferment of right does not mean that the right is exercised and the amount is withheld. In case of even any one of the three petitioners such overt action has not been taken by respondent. 16.10 Either at the point when the petitioners informed the respondent about termination of contract or immediately thereafter the respondent never informed the three petitioners that i....
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....lso be intimated to the affected party. However, in present case either immediately after receiving the intimation terminating the contract or within reasonable time thereafter the respondent had never intimated the petitioners that their security deposit were forfeited. 17.2 Forfeiture of deposit implies and demands overt action to such effect by the person on whom such right is conferred. Mere existence of and conferment of right does not mean it has been actually and in fact exercised. Furthermore, there should also be reasonable, cogent and sustainable justification to forfeit the security deposit. In present case clause 41 itself prescribes the circumstances in which security deposit can be forfeited in part or in full. It provides, inter alia, that in the event of violation of terms and conditions of the agreement or non-fulfilment of the conditions of the agreement or on predetermination of the agreement by CCA i.e. the petitioner the security deposit can be forfeited. 17.3 In present case, it is not shown that upon termination of the contract by the petitioners the respondent actually and in fact forfeited the security deposit and informed the petitioners that it has forf....
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....e three petitioners) and upon service of statutory notice, in its reply through advocate it has for the first time made reference of its right to forfeit the security deposit of the two petitioners. 19. On conjoint consideration of above mentioned aspects it prima facie appears that the dispute or defence sought to be raised by the respondent in case of all three petitioners are in nature of afterthought and they are not genuine and bona fide but are, as described by the Apex Court, ingenious mask invented by the respondent to defeat the petition and seem to have been raised only with a view to shielding or hiding its neglect as well as inability to refund the security deposit and delay or frustrate the obligation to refund the deposits. 19.1 The respondent would claim that the petition and its couple of contentions have been raised which call for defence call for interpretation of the terms of the agreement executed between the parties. When such issues arise in a matter, it can, ordinarily, be claimed that tribal issues are involved. On the same premise, with reference to the three petitions the respondent could, but for the above discussed peculiar facts of these cases, claim ....
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....petitions pending and before passing the order of admission or before permitting publication of advertisement after admission of the petition. 20.2 In this context reference needs to be made to the observations in the decision in case of Conart Engineers Ltd. v. Laffans Petrochemicals Ltd. [(2001) 103 Comp. Cas. 396/29 SCL 388 wherein this Court has observed, inter alia, that: "The Court has to examine the nature of the respective cases pleaded by the parties and if a prima facie case is made out by the petitioner, the company should shoulder the onus of disproving it, by showing that its defence is in good faith and is one of substance and it is likely to succeed in point of law. The defence must be substantial and not mere moonshine. So also where the dispute is a mere after thought, an adverse inference may have to be drawn against the Company that the defence being an afterthought, is a mere cloak to cover up its inability or refusal to pay. Adverse inference may also have to be drawn where the cheque/s issued by the Company for the debt in question or a part thereof is/are dishonoured. For determining whether a debt is disputed bona fide or not, the conduct of the parties in....