Mehta Entertainment Inc. vs Yashi Multimedia Pvt. Ltd.
2012 Latest Caselaw 3382 Del

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

+      CO.PET. 360/2008 & CO. APPL.1378/2008

MEHTA ENTERTAINMENT INC.               ..... Petitioner
            Through: Mr. V.P. Singh, Senior Advocate
                     with Mr. S.K. Agarwal, Advocate.

                    Versus

YASHI MULTIMEDIA PVT. LTD.              ....Respondent
             Through: Mr. Girdhar Govind, Advocate with
                       Ms. Gopashree, Advocate.

                                   Reserved on : 24th April, 2012.
%                                  Date of Decision: 21st May, 2012

CORAM:
HON'BLE MR. JUSTICE MANMOHAN


                             JUDGMENT

MANMOHAN, J :

1. Present winding up petition has been filed under Section

433(e) read with Sections 434 and 439 of the Companies Act, 1956

(hereinafter referred to as 'the Act') stating that the respondent is

unable to pay its debts allegedly amounting to US$ 300,000

equivalent to Rs. 1,47,72,000/-.

2. The facts as stated in the present petition are that the petitioner

is a sole proprietorship firm, based in the United States of America,

owned by Mr. Deepak Mehta.

3. It is stated in the petition that respondent company's duly

authorised representative Mr. Farhath Hussain was approached by

the petitioner to arrange stage shows in United States in which Mr.

Vivek Oberoi, the film star was willing to participate between 24th

August, 2003 and 30th September, 2003. In support of its case the

petitioner has annexed the respondent's letter dated 29th January,

2003 allegedly authorising Mr. Farhath Hussain to not only enter

into contracts on behalf of the respondent company but also to

accept monies in its account. In the petition, the petitioner has also

relied upon another letter dated 29th January, 2003 issued by Mr.

Vivek Oberoi authorising the respondent company to deal on his

behalf for anything and everything including receipt of payment.

4. It is further stated in the petition that in pursuance to the above

authority, on 1st February, 2003, Mr. Farhath Hussain for and on

behalf of the respondent company had entered into a contract with

the petitioner for stage shows in San Francisco in 2003.

5. It is stated in the petition that in pursuance to the request of

Mr. Farhath Hussain, Mr. Manu Mehta, the brother of Mr. Deepak

Mehta immediately transferred through Wire Transfer service US$

300,000 in the account of the respondent being the consideration for

the proposed stage shows in which Mr. Vivek Oberoi was to

participate.

6. In the petition, it is contended that as Mr. Vivek Oberoi did

not participate in the said stage shows, the respondent was duty

bound to refund the advance received by it along with compensation

on account of huge losses suffered by the petitioner. It is further

stated that as despite exchange of number of e-mails respondent did

not repay the advance received by it, petitioner sent a legal notice

dated 18th January, 2006 and as there was no response to the same,

petitioner filed the present winding up petition.

7. Mr. V.P. Singh, learned senior counsel for petitioner

submitted that the respondent was an admitted creditor of the

petitioner. In this connection, Mr. Singh drew attention of this Court

to the emails exchanged between Mr. Mahesh Oberoi on behalf Mr.

Suresh Oberoi, Director, of the respondent company and Mr. Kevin

H. Lewis at pages 19 to 24 of the paper book. He contended that in

the aforesaid e-mails, respondent company had admitted receipt of

US$300,000 from the petitioner, but instead of offering full refund in

cash, had offered to repay the petitioner partially in cash and the

balance through services performed i.e. future shows to be

performed by Mr. Vivek Oberoi. In particular, Mr. V.P. Singh relied

upon the following e-mails to show the admission of debt to the tune

of US$ 300,000 by the respondent-company:

"From : [email protected] To : [email protected]; [email protected] Sent : Mon, 16 Apr 2007 3:34 PM Subject: Representation From Farhath Hussain

Mr. Uberoi,

Attached is the signed representation from Farhath Hussain that you have requested. Please make arrangements to wire the $340,000 U.S. to my client Deepak Mehta. Let me know who should receive the wire instructions. Thanks

Kevin Lewis"

"From : [email protected] <[email protected]> To : Kevin H. Lewis Sent : Mon Apr 16 15:25:34 2007 Subject: Re: Representation From Farhath Hussain

I thought the amount was $300K and alternate arrangements were made by Mr. Mehta. While we accept this scanned letter from Mr. Hussain, can you please request him to send the

original notarized to Yashi Multi Media? Thank you. Best regards, Mahesh Uberoi."

(emphasis supplied)

8. On the other hand, Mr. Girdhar Govind, learned counsel for

respondent submitted that the present winding petition at the

instance of the petitioner was not maintainable as according to the

petitioner itself monies had been advanced to the respondent by Mr.

Manu Mehta and not by the petitioner firm.

9. Mr. Girdhar Govind also submitted that there was no privity

of contract between the petitioner and respondent inasmuch as Mr.

Farhath Hussain was neither an employee nor authorised

representative or agent of the respondent. He emphatically denied

that Mr. Farhath Hussain was authorised by the respondent to enter

into any contract with the petitioner. In support of his submissions,

Mr. Govind relied on petitioner's own letter dated 7th January, 2006

wherein petitioner has stated, ".....Since Mr. Hussain cannot wait any

longer as he is launching his shows and is signing contracts with

various promoters. It will not be possible for him to add Vivek at a

later stage....."

10. On merits, Mr. Govind stated that despite availability of Mr.

Vivek Oberoi, stage shows as planned could not be held as Mr.

Farhath Hussain did not get confirmation from other actors. He also

stated that the claim made by the petitioner was barred by limitation.

11. Mr. Govind stated that the respondent was always willing to

refund the advance of US$300,000 received by the respondent

provided Mr. Farhath Hussain issued a duly notarised discharge/No

Objection certificate. He lastly pointed out that a recovery suit

between the parties was already pending.

12. In rejoinder, Mr. V.P. Singh, learned senior counsel for

petitioner emphatically reiterated that Mr. Farhath Hussain was the

agent of respondent and thus the respondent was bound by his

actions.

13. He further stated that on 27th April, 2007, Mr. Farhath Hussain

had issued a duly notarised release letter directing the respondent to

refund the aforesaid amount to the petitioner in its entirety.

14. Mr. Singh also denied that there was no privity of contract

between the petitioner and respondent. He stated that though

initially the contractual amount had been remitted by the petitioner's

brother, but on his request, the said amount had been refunded by the

petitioner. Thus according to him, the present petition was

maintainable.

15. Having heard the parties and on a perusal of the paper book,

this Court is of the opinion that it must first inquire as to whether

Mr. Farhath Hussain was an authorised representative/agent of the

respondent. For deciding this issue, the Court has to examine the

full import of the two letters both dated 29th January, 2003 which

were relied upon by the petitioner. The said two letters are

reproduced hereinbelow:-

"Jan 29th, 2003

To Whomsoever It May Concern

This is to confirm that Mr. Vivek Oberoi will be willing to participate in the shows organized by Mr. Farhath Hussain. We further authorize Mr. Farhath Hussain & his partners/promoters to remit the contract amount of the above mentioned shows in our a/c no.910668118, Citibank, Mumbai, India.

Please note that this letter authorizes Mr. Farhath Hussain to remit the contract amount into the above mentioned

account for only the shows held by M/s. Cine Entertainment Promoters Ltd. held between 24th August to 30th September 2003.

Thanking you,

Yours faithfully For Yashi Multimedia Sd/-

Suresh Oberoi"

"Jan 29th 2003

Mr. Farhath Hussain Cine Entertainment Promoters Ltd. 31, Longwood Gardens, Ilford Essex, IG5 OEB (UK)

Sub: Shows from 22nd August to 30th September 2003

Dear Sir,

This is to inform that I have authorized M/s. Yashi Multimedia Pvt. Ltd. to deal on my behalf for anything & everything regarding the above mentioned shows including dates and receiving payments.

Thanking you, Yours faithfully, Sd/-

Vivek Oberoi"

(emphasis supplied)

16. It is apparent from the above letters that respondent company

had only confirmed that Mr. Vivek Oberoi would be participating in

the shows organized by Mr. Farhath Hussain and held by M/s. Cine

Entertainment Promoters Ltd. The aforesaid correspondence prima

facie discloses that there was a principal to principal agreement

between Mr. Farhath Hussain and the respondent.

17. Even Mr. Farhath Hussain's letter dated 01st February, 2003

which according to the petitioner constitutes a contract between the

petitioner and the respondent is sketchy and does not state that Mr.

Farhath Hussain was acting as an agent of the respondent. The said

letter is reproduced hereinbelow:-

"FARHATH HUSSAIN 31 - Longwood Gardens, Ilford, Essex 1G5 OEB United Kingdom To, Mr. Deepak Mehta, Mehta Brothers Entertainments, San Francisco,

Date : Feb 1, 2003

Re: Vivek Show for San Francisco in Sept 03.

Dear Deepak,

Please transfer $300,000.00 (Dollars Three Hundred Thousand) to YASHI MULTIMEDIA PVT. LTD. for the above mentioned show.

I am also faxing to you the confirmation letter of Vivek Oberoi, Yashi Multimedia Pvt. Ltd., and the bank details.

Thanking you, Yours Sincerely, Sd/-

Farhath Hussain"

18. Consequently, the exact understanding amongst the petitioner,

respondent and Mr. Farhath Hussain can only be known when Mr.

Farhath Hussain is either a party to the adjudicatory proceedings or

deposes as a witness.

19. Further, though the receipt of US$ 300,000 is admitted by the

respondent, but its stand has been that it will refund the same to the

petitioner provided Mr. Farhath Hussain is agreeable to the same and

gives a full and final discharge to the respondent. Even the

authenticity of the alleged notarized release letter placed on record

by the petitioner along with its rejoinder is not admitted by the

respondent. The last e-mail written by the petitioner's counsel and

the respondent is reproduced hereinbelow:-

"From : Kevin H. Lewis To : [email protected] Sent : Thu, 24 May 2007 2:06 pm Subject: RE.

Mahesh, thank you for your e-mail. I do not know why YMM has not sent you the notarized letter that you have requested. We have asked Mr. Hussain to do so, and Deepak will call him today and request it again. From my perspective, there is no dispute that he has signed the letter and we have a faxed copy of it, and so I don‟t believe that issue should hold up resolving this matter. If there is some question in your mind about the authenticity of this letter,

feel, free to contact Mr. Hussain directly. In any event, we will continue pushing him to send this letter.

I have spoken to Deepak about your proposal below and we are encouraged that we can find a solution to this issue that will work for all parties. We will continue discussing the details of your proposal amongst ourselves and third parties who are also interested in shows with Mr. Oberoi. One question. Does your proposal require that Deepak agree to take on 10 shows, or would 5 be sufficient?"

In the meantime, Deepak informs me that he has an understanding with Mr. Oberoi that he will be paid the $36,000 by May 27th. Payment of this amount in good faith will go a long way towards reaching an ultimate resolution and we look forward to receiving it. In the meantime, I will continue working with Deepak on your proposal and will respond soon.

„From : [email protected] [mailto: [email protected]] Sent : Friday, May 25, 2007 7:15 AM To : Kevin H. Lewis Subject: Re:

I have the money I can pay Deepak anytime. However, I need a simple agreement signed. Mr. Hussain has disappeared and is not responding to our calls. His friends in India feel some else may be corresponding on his behalf. We need to be careful. Pl help by getting the original notarized. Money is there and will be paid. 5 shows is sufficient if that is all what Deepak wants to do. However, we can all have a win win situation if we have more shows. Thanks."

(emphasis supplied)

20. Consequently, the authenticity of the alleged/release letter

needs to be proved by the petitioner.

21. From the aforesaid discussion, it is apparent that there are

issues which require to be adjudicated in the presence of Mr. Farhath

Hussain. The defence set out by the respondent in the reply to the

winding up proceedings cannot be said to be a moonshine or sham.

The Madras High Court in B. Viswanathan vs. Seshasayee Paper

and Boards Ltd. (1992) 73 Comp.Cas 136 (Mad) has held as under:-

".....It is also well-settled that, in a summary proceeding like winding up, a detailed investigation and adjudication of the dispute should be avoided. This principle has been laid down in the case of G. Loganayaki v. Moolangudi Chit Funds P. Ltd.[1979] 49 Comp Cas 544 (Mad) as extracted above......"

(emphasis supplied)

22. Moreover, the Supreme Court in M/s. IBA Health (I) P. Ltd. vs.

M/s. Info-Drive Systems SDN. BHD. (2010) 10 SCC 553 has held that

"the Company Court is expected to ascertain that the company's

refusal is supported by a reasonable cause or a bona fide dispute in

which the dispute can only be adjudicated by a trial in a civil court."

(See 'para 31').

23. Consequently, the present petition and pending application are

dismissed with liberty to the petitioner to raise its claim if not earlier

raised in the already pending civil suit between the parties.

MANMOHAN, J.

MAY 21, 2012 js