Delhi High Court

Dr. Raj Kachroo And Anr vs Sumer Misri And Ors on 26 July, 2012

Author: Indermeet Kaur

$~1
*      IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                 Date of Judgment:26.07.2012

+      CO.A.(SB) 43/2007 & CO. App. No. 1182/2007

DR. RAJ KACHROO AND ANR.                                    ..... Petitioner
                  Through:                 Mr.Arun Kapthpalia and
                                           Mr.Rohan Thawani,, Advocates.

                         versus


SUMER MISRI AND ORS.                                     ..... Respondents
                  Through:                 Mr.Neeraj Sharma and
                                           Ms.Archana Lakhotia, Advocates.

       CORAM:
       HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J. (Oral)

1 This appeal has been filed against the impugned order dated

03.09.2007 whereby the application filed by Dr. Raj Kachroo

(hereinafter referred to as the 'petitioner') seeking initiation of contempt

proceedings under Sections 11 & 12 of the Contempt of Courts Act,

1971 against Sumer Misri and others (hereinafter referred to as the

'respondents') for non-compliance of the directions contained in the

order dated 21.12.2006 had been dismissed. The impugned order had

noted that in terms of its earlier directions dated 21.12.2006 if the

petitioners/appellants are interested in taking over the control of the

company, they should reimburse the respondents of all amounts which

they had brought in for discharging the liabilities of the company after

the order dated 21.12.2006 (which sum is admittedly a sum of Rs.16

lacs.)

2 Record shows that the petitioner had filed the present petition

under Sections 397 & 398 of the Companies Act, 1956 before the

Company Law Board (CLB) alleging oppression and mis-management.

Various allegations were leveled against the respondent and its

directors; these allegations may not be relevant to answer the issue

before this Court.

3 The order dated 21.12.2006 had noted that the company was not

functioning for two years and from the collections made, the secured

creditors had been paid to the extent of Rs. 67 lacs on 01.04.2005; as the

company was not functioning, its machinery had been leased out at a

monthly rent of Rs.20,000/- per month. The allegation of siphoning the

funds based on the audit report had not been established by the

petitioner. This order had further noted that the machinery of the

company had been removed and placed in another premises. The

concluding para of the said judgment which is relevant to answer this

appeal is herein reproduced below and reads as follows:-

"Considering the fact that the company remains closed for over two years and that the machinery stand relocated and that the respondents have offered to hand over the company along with the machinery to the petitioners without any consideration, the petitioner may chose the option of either taking the ownership/control of the company or file a petition for winding up of the company. No other relief can be granted in the facts of the case like asking the 2nd respondent to pay back the investments made by the petitioner as in a business venture, one has to take a risk and in the present case, both the sides appear to have lost their investment."

4 From the aforenoted order, it is clear that the respondents had

offered to handover the company along with its machinery to the

petitioner without any consideration; the petitioner was given the choice

of either taking over the ownership and control of the company or in the

alternate to prefer a petition for winding up of the company.

5 It is these directions which as per the submission of the petitioner

have been flouted; submission being that there has been a willful

disobedience of the directions contained in this order dated 21.12.2006

for which the respondents are liable for contempt.

6 Record shows that Co. Application No. 152/2007 seeking relief

under Sections 11 & 12 of the Contempt of Courts Act had been filed

before the Company Law Board (CLB) on 01.03.2007 but the impugned

order has noted that this application was mentioned before the Board

only on 03.05.2007. The contention of the petitioner is that inspite of its

communications dated 01.01.2007 & 27.01.2007 asking the respondents

to handover the company's machinery and documents to them, the

respondents have not responded; this is a deliberate attempt on the part

of the respondent not to give effect to the directions of this Court and to

flout it.

7 Admittedly there is no proof of dispatch of the aforenoted letters

dated 01.01.2007 & 27.01.2007 receipt of which have been vehemently

denied by the respondents. Learned counsel for the petitioner also fairly

concedes to this point.

8 Reply had been filed by the respondents to the aforenoted

application. In para 5 details of 10 payments had been given which had

been made by the company to the State Bank of India to liquidate the

debts of the company; the contention of the respondents being that this

sum of Rs.16 lacs which has been funded from the individual account of

the respondents be paid back to him as this money has been used by him

to discharge the liabilities of the company and he has no objection for

the petitioner taking over the company along with its machinery subject

to his clearing this amount of Rs.16 lacs.

9 Attention has been drawn to the aforenoted payments. Except for

four payments, all other payments had been made prior to the order

dated 21.12.2006 and not the subject matter of dispute as these

payments were admittedly made prior to 21.12.2006. Four payments i.e.

a sum of Rs.6,50,000/- on 24.01.2007, another sum of Rs.6,50,000/- on

24.01.2007, Rs. One lac on 12.05.2007 and Rs. 2 lac on 17.03.2007 had

been made after 21.12.2006; contention of the respondent being that this

money had been deposited by the respondent in the account of the

company to pay the State Bank of India in order to clear the dues of the

company.

10 There is no dispute to the factum that this money has been paid to

the respondents.

11 In the rejoinder affidavit, the petitioner has submitted that these

moneys which have been deposited are not out of the personal funds of

the respondents but it is the money of the company which has been

collected from the market.

12 Learned counsel for the petitioner further submits that in fact a

copy of the lease agreement dated 28.01.2007 has been furnished to him

only in the course of mediation proceeding (which had been ordered by

the Court) which shows that a sum of Rs.13 lacs had been received by

the company for leasing out this machinery on a license basis;

submission being that there is no explanation by the respondent as to

why he remained silent about this agreement dated 28.01.2007 in his

reply which was filed much later i.e. on 06.08.2007.

13 At the outset, it is relevant to note that the dispute before this

Court is whether the respondent is liable to be hauled for proceedings

under Sections 11 & 12 of the Contempt of Courts Act i.e. whether there

has been any willful disobedience of the directions contained in the

order dated 21.12.2006. The controversy before this Court has to be

restricted to the prayer made in the said application and its scope cannot

be enlarged. This power has to be cautiously exercised. It may not be

used as a tool for revenge; this discretion also may not be exercised on

mere allegations.

14 It is in this background that the averments of the respective parties

have to be appreciated.

15 Admittedly the directions contained in the order dated 21.12.2006

were two-fold. The respondent had made an offer to handover the

company and its machinery to the petitioner; the petitioner had the

option of either taking over the company and its machinery or to prefer a

petition for winding up. This was a choice which was given to the

petitioner; he had choose; he had to elect between either of the two

options i.e. either to take over the ownership and control of the company

or to file a petition for winding up. Admittedly there is nothing on

record to show that any communication had been sent by the petitioner

to the respondent in terms of his submission that two letters dated

01.01.2007 7 27.01.2007 had been sent. There is no proof of dispatch;

on queries put to the learned counsel for the petitioner on this point, he

has fairly conceded to this. As noted supra, these communications had

also been vehemently denied by the respondent. As such the respondent

had nothing before him till the date of filing of this application (which

was filed on 01.3.2007 but the date for mentioning before the CLB was

03.05.2007) that the petitioner was interested in electing for his first

choice i.e. for taking over the ownership and control of the company.

This was only on 03.05.2007. The liability of Rs. 16 lacs incurred by

the company are prior in time thereto (except one payment of Rs. One

lac which was made on 12.05.2007). This has also been explained by the

respondent; submission being that a compromise/settlement had been

arrived at between the company and the State Bank of India on

07.03.2007 and this is clear from the communication of the State Bank

of India dated 26.04.2007 (Annexure 'G' page 176 of the paper book)

which states that the compromise proposal for Rs.16 lacs has been

accepted by the Bank and all suits/complaints in the DRT/Courts shall

be withdrawn by the Bank; submission of the respondent being that the

company could not endlessly wait for the petitioner to approach the

respondent.

16 This factual scenario was correctly noted in the impugned order.

It had inter-alia recorded as follows:-

"There is no indication in these letters that they would take over the company as a whole including the liabilities. Since the respondents have given personal guarantees, the petitioners should have also agreed to replace the personal guarantees of the respondents. These two letters do not talk of personal guarantees or taking over of liabilities. From the list

of payments made by the respondents, I find that in addition to Rs. 16 lacs paid to the bank as an one time settlement, the respondents have also made payments before and after the order of this Board dated 21.12.2006. I so far as the payments made before the said, the respondents cannot make any claim on the petitioners as the petitioners were to take over the management and control of the company as on the date of the said order. In so far as the liabilities cleared by the respondents after the date of the said order is concerned, the petitioners in case they desire to take over the ownership and control of the company, are bound to reimburse the respondents especially since the company has not been functioning since long and all the payments have been out of their personal funds of the respondent. In view of this, if the petitioners are still interested in taking over the control of the company, they should reimburse the respondents of all the amounts that they have brought in for discharging the liabilities of the company after the order dated 21.12.2006. The petitioners should communicate their decision to the respondents within 15 days from the date of this order whether they are prepared to reimburse the respondents o all amount brought in by them for discharging the liabilities of the company after 21.12.2006 and also take over the assets and liabilities as on date indicating the time schedule within which they would reimburse. In case they do so, the respondents should hand over the complete control and management of the company to the petitioners. In case, the petitioners are not interested in doing so, then nothing survives in the application and they may seek for winding up of the company."

17 For a second time, this order of the CLB has granted an option to

the petitioner to exercise his option to take over the management and

control of the company but obviously after the payment of Rs.16 lacs

which has been made by the respondents out of their personal funds.

Relevant would it be to also state that in para 5 of the reply filed by the

respondent, he has categorically stated that he has made a payment of

Rs. 16 lacs on behalf of the company to discharge the liability of the

company which payment had been discharged by respondent No. 1 on

behalf of the company in his capacity as a guarantor and he has a legal

right to recover the aforenoted payment. In the rejoinder affidavit, the

corresponding para 5 of the reply it has been accepted by the petitioner

that the payments have been cleared on behalf of the company; there is