Store One Retail India Ltd. vs Century 21 Infrastructure Ltd.
2013 Latest Caselaw 3569 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

                                              Reserved on: 7th August, 2013
%                                       Date of Decision: 13th August, 2013

+      CO.PET. 188/2010 & Co.Appl.824/2010

       STORE ONE RETAIL INDIA LTD.                          ..... Petitioner

                             Through:     Mr. Prateek Dwivedi, Advocate.

                    versus

       CENTURY 21 INFRASTRUCTURE LTD.                    ..... Respondent

                             Through:     Mr. Praveen Chauhan with Mr.
                                          Vijay Kumar and Mr. Shravan
                                          Sahny, Advocates.

CORAM:
MR. JUSTICE R.V. EASWAR

R.V. EASWAR, J.:

In this petition filed under sections 433(e)/434(1)/439(1)(b) of the

Companies Act, 1956 ("Act"), the only issue, which is a preliminary

issue, which arises is whether the petition is maintainable against the

respondent-company.

2. The petitioner, Store-One Retail India Ltd. (formerly known as

Piramyd Retail Ltd.) entered into a term sheet on 10-1-2007 with the

respondent-company, Century 21 Infrastructure Limited, hereinafter

referred to either as respondent or as "Infrastructure", under which the

respondent would provide the petitioner a chargeable area of

approximately 56,250 sq.ft. in a mall named "Century 21 Mall", situated

at AB Road, Indore. The petitioner was to be the anchor tenant in the

mall and according to the term sheet the mall was to commence

operations in October, 2008.

3. The term sheet is annexed to the petition. It is not necessary to

refer to its terms in detail and suffice to note that the cheque pursuant to

the term sheet was to be drawn in favour of "Century 21 Town Planners

Pvt. Ltd., Indore A/c", hereinafter referred to as "Town Planners",

which was a company belonging to the same group as the respondent

and was its marketing arm. The term sheet was signed by Piramyd

Retail Ltd. and by Town Planners. It was not signed by the respondent,

i.e., Infrastructure. It is to be noted that the name of the developer, as per

the term sheet, was Infrastructure.

4. On the day when the term sheet was signed, the petitioner issued a

cheque for Rs. 7,00,312 as interest-free refundable security deposit; the

cheque was drawn in favour of Town Planners, the marketing arm of the

respondent (i.e., Infrastructure).

5. On 8-2-2007, an e-mail was sent to the petitioner by one Amit

Kumar, General Manager - Marketing, Century 21 Infrastructure Ltd.,

which read as under:

"From: [email protected] Sent: Thursday, February 08, 2007 1:33 PM To: Vishal Singh Subject: Re: Final Plans Drawings & Stamped & Signed Copy from your

Dear Vishal,

Plz refer to our telecon and the agreement (duly signed and stamped by our director) recd by u yesterday we confirm that the front location has been reserved for your brand across three floors. The shop nos are G 28,127 and 227 on the GF, FF, SF respectively.

Will be finalising the other details shortly and then will mail the CAD files to u.

Kindly release the cheques today.

Thanz.

Amit Kumar General Manager - Marketing Century 21 Infrastructure Ltd. G-5, Chiranjeev Tower Nehru Place New Delhi - 110019 Ph Nos: 011 41716820, 21, 22, 24, 25 Fax: 011 41716823 Mobile: 09910002520 E-Mail: [email protected]"

6. Since no action was taken by the respondent pursuant to the term

sheet in the construction of the mall, the petitioner sent a notice on 29-8-

2008 cancelling the term sheet and asking for the refund of the security

deposit. According to the petitioner, it received no reply. Thereafter, it

sent a statutory notice on 3-11-2009 to the respondent under sections

433(e)/434(1)(a) of the Act demanding the deposit back with interest at

18% compounded annually, starting from 10-1-2007 till 3-11-2009,

which amounted to Rs. 11,18,416/-. No reply was received from the

respondent. The petitioner thereupon filed the present petition in April,

2010.

7. It was contended on behalf of the petitioner that since the

respondent was unable and neglected to repay the debt, it should be

wound up. A preliminary objection was raised on behalf of the

respondent to the effect that since the cheque was drawn by the

petitioner in favour of Town Planners, the present petition against

Infrastructure was not maintainable. It was submitted that the

respondent did not receive any deposit from the petitioner and therefore

the provisions of sections 433(e)/434(1)(a) of the Act were not

applicable in its case. It was also pointed out that the term sheet was not

signed by the respondent, but was signed by Town Planners and the

deposit was also made with it for which Infrastructure was not

answerable.

8. Faced with the preliminary objection, the learned counsel for the

petitioner submitted that the respondent was the developer and it was at

its directions that the deposit-cheque was issued in favour of Town

Planners which had signed the agreement and thus the two companies

were in reality one. My attention was drawn to the e-mail (reproduced

supra) in which Infrastructure had referred to the director of Town

Planners, who signed the agreement, as "our director". It was submitted

that it may be for purposes of business convenience that the developing

arm and the marketing arm were formed as separate corporate entities,

but for all practical purposes they were one and the same and hence the

petition against Infrastructure (developer) was maintainable. It was

argued that the relationship between Infrastructure and Town Planners

was that of principal and agent and hence the petition against

Infrastructure was maintainable. These contentions were vehemently

contested by the learned counsel for the respondent whose objection was

that this is a new point raised in the course of the arguments without any

factual basis and without any averment being made in the petition or the

rejoinder. The learned counsel for the petitioner however points out that

in paragraph 9(c) of the petition the basic facts have been given which

can legitimately form the basis of this argument (that the two companies

are in reality one). It was further submitted that the respondent has not

adequately dealt with this point in its reply.

9. The learned counsel for the petitioner cited Castrol Ltd. Vs.

Admiral Shipping Ltd. (2006) 132 Comp. Cas. 241 (Bom.) and

Cravatex Ltd. & Ors. Vs. Vitta Mazda Ltd. & Ors. (2001) 103 Comp.

Cas. 189 (Guj.), in support of his arguments, whereas the learned

counsel for the respondent cited Punjab State Industrial Development

Corporation Ltd. v. PNFC Karamchari Sangh and Another (2006) 4

SCC 367.

10. The only basis for the argument of the learned counsel for the

petitioner is the fact that Town Planners is the marketing arm of the

respondent and therefore the payment to the former amounts to payment

to the latter. This argument is sought to be supported by reference to the

statement of Infrastructure (in the e-mail) acknowledging that payment

was made to "our director". It would be improper and unsafe to draw the

conclusion, merely from the statement of the General Manager

(Marketing) of Infrastructure, that both the companies are one and the

same. It must be remembered that it is not uncommon or unusual for

businessmen to form separate corporate entities to carry out different

aspects of the same business. Such a practice, driven by business

exigencies must be recognised and given effect to, so long as there is no

motive of evasion of lawful liabilities. Employees working in such

companies may have a sense of affinity or of belonging to the same

group and that is perhaps the reason why the General Manager

(Marketing) of Infrastructure referred to the director of Town Planners

as "our director". This does not, per se and without anything more,

necessarily mean that both the companies are one and the same. It was

not also shown that the amount paid to Town Planners was transferred

by it to the respondent, indicating inter-mingling or dovetailing of the

finances of the two companies. Transfer of funds might have perhaps

indicated the existence of a principal-agent relationship. In the Bombay

case (supra), the respondent-company was admittedly acting as an agent

for an undisclosed principal, which is not the case herein. There is no

other material to which my attention was drawn to hold that the

corporate veil must be lifted and I should see Infrastructure through the

prism of Town Planners or vice versa.

11. Though the submission of the learned counsel for the respondent

that this is a new point raised by the petitioner, not in the pleadings, but

only in the course of the arguments and that too after being confronted

with the preliminary objection is not without force, I have still permitted

the petitioner to raise the point and have examined the facts stated in

paragraph 9(c) of the petition which refers to the e-mail as the basis for

the argument that both the companies are one and the same. This is

because of the judgment of the Supreme Court in Ram Sarup Gupta

(decd.) by LRs, (appellants) v. Bishun Narain Inter College and others

(respt.) (AIR 1987 SC 1242). In this case it was held that though the

general principle is that in the absence of pleadings, no party shall be

permitted to travel beyond the pleadings and raise a new point and that

the necessary and material facts should be pleaded specifically, it is

necessary to have the object of this principle in mind, which is that the

opposite party should not be taken by surprise; having regard to this

object and with a view to ensuring a fair trial, however, a pedantic

approach should not be adopted to defeat justice or hair-splitting

technicalities. It was further held that undue emphasis on the form,

sacrificing the substance of the dispute, should be avoided. Having

regard to this judgment, to which my attention was drawn in the course

of the arguments, I have examined the contention of the learned counsel

for the petitioner based on paragraph 9(c) of the petition. It is another

matter that I do not find merit in the same, as discussed in the preceding

paragraph.

12. In view of the foregoing discussion, I dismiss the company

petition as not maintainable against the respondent. The connected

application is also dismissed. There shall be no order as to costs.

(R.V. EASWAR) JUDGE AUGUST 13, 2013 //vld