TaxTMI 
TaxTMI 
2021 (1) TMI 1191
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....s having its corporate office at Raigad, Maharashtra State. 3. The respondent M/s. Golden Tobacco Limited is a company incorporated under the Companies Act, 1956 on 28.06.1955 having identification No. L16000GJ155PLC067605 and having its registered office at Vadodara, Gujarat State. That Authorised share capital of the respondent company is Rs. 2,50,00,000/- and paid up share capital is Rs. 1,75,98,016/-. 4. The facts in brief of the case are as follows: - 5. Letter dated 01.02.2012 (page 239) addressed to the applicant by the respondent shows that, in accordance with the letter of understanding dated 10.10.2011 entered in to between the two parties, the respondent has received a sum of Rs. 25.00 crores towards financial and marketing assistance. The said letter further stated that "as mutually agreed, please advance a further sum of Rs. 2.00 crores" 6. Letter of the respondent dated 22"4 July, 2011 addressed to the applicant, annexed to the application at page No. 226 (Ex. I) reveals that, consequent upon the alleged Memorandum of Understanding (MoU) (page 218-225 - Ex. H) dated Nil was entered into between the applicant and respondent, the applicant had disbursed tota....
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....e No. 228 (Ex. J) annexed to the application is letter dated 10.10.2011 addressed to the applicant by the respondent, inter alia stating that the respondent had entered into a MoU dated 26.12.2009 with M/s. Sheth Developers P. Ltd.(SDPL) and M/s. Suraksha Reality Ltd. (SRL) for development of the piece of land at Vile Parle, Mumbai. That, two minority shareholders filed a suit in the Bombay City Civil Court, Mumbai and moved and interim application, wherein, the Hon'ble Court passed ad interim injunction restraining the company from giving effect to the resolution dated 18.01.2010 thereby restraining the company from going ahead with the said MoU dated 26.12.2009. In view of the said injunction and in view of the fact that getting the stay vacated will take a long time, the respondent company decided to develop the said property and for the purpose had entered into the alleged MoU dated nil (page 218-225 Ex. H) with the petitioner for financial assistance and marketing services and advice. 8. It is also found that in the letter dated 10.10.2011 (page 228-229 Ex. J) that... "in consideration of the petitioner providing marketing services and marketing of the pr....
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.... crores to the corporate debtor before the expiry of the rehabilitation scheme sanctioned by BIFR; • that, it was further intimated that the above property was already attached by the Office of the Excise Department vide order dated 13.04.2011 and the order of the Income Tax Recovery Officer dated 13.07.2016 and that the corporate debtor was required to seek permission from both the Excise Department and the Income Tax Department before starting any development on the said land; • that, the corporate debtor was compelled to file a modified draft rehabilitation scheme with BIFR; • that, assuming the petitioner has a valid claim against the corporate debtor even then the said claim would be hopelessly barred by limitation inasmuch as the corporate debtor has relied upon order dated 04.10.2019 passed by the Hon'ble Bombay High Court in Notice of Motion No. 68 of 2018 in Commercial Suit No. 782 of 2017 and it is the date of this order that the corporate debtor alleges to be the date of default; • that, petitioner filed Notice of Motion seeking injunction restraining the corporate debtor from disposing of, transferring, alienating, enc....
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.... the project and was not given any rights whatsoever to develop the land. That, the petitioner went ahead and published advertisement in the Times of India on 01.09.2012 misrepresenting that the said development project was undertaken by the petitioner and not by the corporate debtor. That, publishing advertisement without any authority resulted into huge loss of money and reputation of the corporate debtor and the entire development project was jeopardised; • that, the petitioner was to siphon off and misappropriate the entire amount of money received from general public and investors by making false claims and advertisements in respect of the land which belong to the corporate debtor; • that, the petitioner belatedly filed a commercial suit before the Hon'ble High Court based on the so called draft of the MoU dated nil. That, the corporate debtor has filed a counter claim of Rs. 8500.00 crores disputing the entire claim of the petitioner; • that, the corporate debtor would have otherwise made profits to the tune of Rs. 3500.00 crores from the sale of the property and the corporate debtor would have discharged its entire liability toward....
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....ses of the Mou. 14. It is well established rule of law that- "all contracts and agreement but all agreements are not contract". This is so because for a contract to be valid, it needs to fulfil all the essential ingredients mentioned under Section 10 of the Indian Contract Act, 1872 (hereinafter referred to as Contract Act). Even if it is assumed that MoU fulfils all the ingredients of the Contract Act but in that case the MOU so relied upon by the petitioner is bad in the eye of law inasmuch as it does not fulfil the condition of Section 10 of the Contract Act, as the date is not given, and in number of places the vital information and details are blank as is apparent from page no 218 and 220 of the application (Exhibit-H). The enforceability of a MoU depends upon the principle governing legislation, I.e. the Contract Act. In the light of this, enforceability of MoU can be divided into 3 categories; a. In general b. International MOU c. MoU between two countries In General In the general sense, the enforceability of MoU can be divided in to two categories they are; i. When it fulfils the conditions laid down under Section 10 of ....
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....natory. while going through the 'letter of intent' which is a vital document relied upon by the applicant, it is important to note that the contents of letter of intent clearly shows that the financial assistance has been given for the purpose of marketing of the property of corporate debtor based on the MOU enclosed. The corporate debtor further stated, inter alia that, letter of intent has validity of 30 days from the date of receipt of amount of Rs. 5 crores. It is further stated inter alia that, if the MoU is not formally executed on a stamp paper within 30 days, corporate debtor will have full rights to cancel 'letter of intent' and return the amount of Rs. 5 crores. 19. Even if it is assumed that letter of intent is a bona fide document so relied upon by the petitioner, there is no MoU which would have been formally executed between the parties on non-judicial stamp paper within 30 days as agreed in the MoU dated nil (Exhibit H, page 218), which is incomplete and does not fulfil the conditions of section 10 of Contract Act, so as to enforce in law. 20. It is also important to note that the contents of 'Letter of Intent' further create a shadow of doubt, on the petitione....
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....ve been made by the Petitioner, creates a doubt in mind and in absence of proof like Income Tax Return, the amount paid cannot be considered as advance or loan. Admittedly, the amount so paid by the petitioner or acknowledged by the corporate debtor by way of cheque is/are of 2011 as reflected from letter dated 22.07.2011 (exhibit I page no 226), wherein, in para 9 and 10, it is categorically stated that, marketing shall be done by the petitioner and, the sale of build-up units will be done jointly by both the parties. For the sake of brevity, para 9 and 10 is reproduced herein below: "Para 9: Marketing of the project will be done by AEL and the sale proceeds shall be deposited in the Joint bank account. Para 10: The sales of the built-up units will be done jointly by both the parties at the best available price and the amount realized shall be deposited in the joint account." 24. Incidentally, letter dated 22.07.2011 is a relied upon document by the petitioner itself and the petitioner has accepted that it is not a That apart, had there been any loan advanced by the loan. petitioner to the respondent, it must have been reflected in the balance sheet. Unfortuna....