Meghraj Capital Advisors Private ... vs Samira Constructions Limited
2012 Latest Caselaw 200 Bom

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               IN THE  HIGH COURT OF JUDICATURE AT BOMBAY




                                                         
                   ORDINARY ORIGINAL CIVIL JURISDICTION

                      COMPANY PETITION NO. 86  OF 2012




                                                        
    Meghraj Capital Advisors Private Limited
    (formerly known as Meghraj SP Corp)                           ....   Petitioner




                                            
          vs                 
    Samira Constructions Limited                                  ....    Respondent
                            
    Mr. Varun Mamniya along with Mr. Chirag Balsara i/by M/s. Rajani 
    Associates  for the petitioner.
          


    Mr. Kersi Dastoor i/by M/s. Phoenix Legal for the respondent. 
       



                                      CORAM:   ANOOP V. MOHTA, J.

DATE : October 17, 2012

ORAL JUDGMENT:

Heard finally.

2 The Petitioner has filed this winding up petition under Sections

433 and 434 of the Companies Act, 1956 for winding up the

Respondent Company.

    3     On   March   24,     2007   the   Financial   Advisor   Agreement   was 




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entered into between the parties for the project on the terms and

conditions mentioned therein. This was a consultancy agreement. It

was modified on 22.10.2007. Monthly invoices were raised regularly.

The part payments were made, lastly on March 2, 2009. The balance

remained to be unpaid. The statutory notice was accordingly issued

for Rs.32,78,443/-. The Company simply denied the liability in all

respects. There is nothing on record that at any point of time, the

Company has admitted the liability.

4 The clauses of the agreement were read and referred by both the

counsel. The Agreement itself shows that both the parties are

required to comply with their respective obligations. The

Consultancy Agreement itself means the reciprocal obligation and the

performance of their individual part at every stage. This Agreement

was admittedly for the particular project. The Financial Advisor

Agreement, therefore, required to act upon continuously till the

completion of the project and in a given case, even thereafter. The

clauses in the Agreement itself provide the detailed obligations of the

Petitioner which required to be followed by the regular payment to be

made by the Company.

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    5      The   claim   of   Rs.   34,71,577/-   raised   by   the   Petitioner,   based 




                                                                                    

upon 15 invoices till October, 2008. The balance, according to them,

remained of Rs. 18,96,344, including 18% interest per annum from

16.1.2012.

6 Mere denial to the statutory notice may not be sufficient to

accept the defence of oral settlement, as tried to be contended for the

first time in the reply affidavit. It is clear that even after going

through the averments made by the parties nothing pointed out that

the Respondent/company at any point of time confirmed and/or

admitted the liability.

7 In reply to the Company Petition, though by the rejoinder the

Petitioner denied, the following averments are made :

"11 Pursuant to execution of the Revised Mandate, as per

understanding between the parties, the Respondent was clearing

invoices of the Petitioner on ad-hoc basis. However, the Invoice dated

March 26, 2008 for Rs.16,85,400/- towards raised by the Petitioner

allegedly towards milestone fee was incorrect and thus no payment

was made by the Respondent in that regard. I say that the question of

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achieving any milestone does not arise as the investment size as per

Revised Mandate has yet not been achieved by the Respondent and

thus any payment to be made towards achieving milestone does not

arise. I further say that the Petitioner failed to carry out any work

strictly in terms of the said Revised Mandate letter and failed to

render any professional services in relation to SPV structuring. Pre

Due Diligence and Definitive Documentation strictly in accordance

with the terms of Revised Mandate. The said fact was brought to the

notice of concerned person at various occasions however, despite the

same, the Petitioner defaulted and failed to perform its obligation

strictly in accordance with the Revised Mandate and it is on that basis

that the Respondent withheld the payment of Rs. 10,11,240/- towards

the last three invoices raised by the Petitioner for the months of July

to September 2008. The payment of invoice dated March 26, 2008

for Rs.16,85,400/- was wrongly raised by the Petitioner and thus

unpaid. Thereafter, several meetings took place between the parties

to amicably resolve the issue. Accordingly, on the basis of oral

understanding between the parties, the Respondent made payment of

Rs.14,87,662/- to the Petitioner in first week of March, 2009 towards

full and final settlement of all amounts payable to the Petitioner."

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    8      The   above   averments   in   reply   to   the   Company   Petition   are 




                                                                                     

relevant factor which cannot be decided/adjudicated for the first time

in the Company Petition. The dispute so raised, I am inclined to

observe, is bonafide and genuine.

9 The Apex Court in IBA Health (India) Private Limited vs. Info-

Drive Systems SDN BHD1, while dealing with the concept of bonafide

dispute, referring to winding up Petition observed as under :

"20 ..... 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 claim in an action. Lest there is danger of abuse of winding up procedure. The

Company Court always retains the discretion, but a party to a dispute should not be allowed to use the

threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt.

22 The abovementioned decision was later

followed by this Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries (P) Ltd., [ (1971) 3 SCC 632 ]. The principles laid down in the abovementioned judgment have again been reiterated

by this Court in Mediquip Systems (P) Ltd. v. Proxima Medical System Gmbll [ (2005) 7 SCC 42, wherein this Court held that the defence raised by the appellant Company was a substantial one and not mere moonshine and had to be finally adjudicated upon on the merits before the appropriate forum. The abovementioned judgments were later followed by this Court in Vijay Industries v. NATL Technologies Ltd.

1 (2010) 10 SCC 553

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[(2009) 3 SCC 527.

23 The principles laid down in the abovementioned cases indicate that if the debt is bona

fide disputed, there cannot be `neglect to pay' within the meaning of Section 433 (1)(a) of the Companies Act, 1956. If there is no neglect, the deeming provision does not come into play and the winding up

on the ground that the company is unable to pay its debts is not substantiated and non-payment of the amount of such a bona fide disputed debt cannot be termed as "neglect to pay" so as to incur the liability

under Section 433(e) read with Section 434 (1)(a) of the Companies Act, 1956.

10 The submission was also made by the Petitioner that mere

simple denial itself is not sufficient. The Respondent/company ought

to have raised specific pleas while denying the statutory notice.

Having failed to do so, the Company based upon the averments made,

should be wound up. I am not inclined to accept this for simple

reason that the purpose and the object of statutory notice is to

demand from the Company to make payment of admitted and/or

crystallized amount. The requirement is that undisputed, and/or

acknowledged liability and the amount, so due and payable, be paid

within reasonable time. The mandate of statutory notice, therefore, if

not complied with, in a given case, the Court, under such

circumstances, may pass order of winding up. That is always

additional factory while considering the merit of the matter, as

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observed in Focus Management Consultants (P) Ltd. vs. Second

Foundation India (P) Ltd.,1 , referring to ramification of not replying

the statutory notice (para 25).

11 This is not a case where no demand notice was replied. The

Single liner denial, in my view, just cannot be treated as no defence,

basically when there is nothing on referred and/or relied to point out

that the amount so claimed was admitted and/or crystallized and/or

there is acknowledgment of the liability. The moment there is a

denial, the burden lies upon the Petitioner to show on record that the

amount was due and payable, even on the date of the demand.

12 In the present case, the foundation is the Consultancy

Agreement between the parties, where it was agreed, as per the

Petitioner, that the Petitioner would get a guaranteed fee of Rs. 50

lacs, which was payable on a monthly basis at the rate of Rs. 3 lacs

per month, at least for 12 months, or at the time when the investment

size is achieved and/or if the agreement is revoked at Samira's

violation, whichever is earlier, the outstanding balance will be paid as

a lump sum. As per the Petitioner, after 12 months from the date of

1 2007 (3) Company Cases 127 (Delhi)

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agreement i.e. 22.10.2007, apart from lump sum amount of Rs. 5 lacs,

the amount claimed, according to this agreement, was outstanding.

This clause itself cannot be read in isolation. The revised clause and

the obligation on the part of the Petitioner as referred in other part of

the Agreement, just cannot be overlooked. There are no averments to

show that they have complied with their part in full and, therefore,

they are entitled to claim this full consultancy guaranteed amount as

agreed. The Respondent/company in the affidavit has denied and

made a positive statement that there were no full compliances by the

Petitioner.

13 The Petitioner failed to perform their part as alleged. The

parties, therefore, in view of change of circumstances, agreed to settle

the matter and, therefore, the lump sum amount was paid as alleged.

No amount was paid after March 2009. Though the Petitioner is

denying the oral settlement, yet considering the facts and

circumstances read with the documents on which strong reliance has

been placed, I am inclined to observe that there is a bonafide dispute

raised by the Respondent/company. The dispute, unless settled,

through the Arbitration proceedings, as there exists an arbitration

clause in the agreement, I am not inclined to accept the case of the

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Petitioner that the amount is crystallized and, therefore, due and

payable and the Company neglected to pay. The disputed facts are

not speculative and illusory, unless adjudicated finally, there is no

question of passing the order of winding up as prayed.

14 Resultantly, the Company Petition is dismissed. No costs.

(ANOOP V. MOHTA, J.)