Pld International Pvt. Ltd. vs Reebok India Company
2013 Latest Caselaw 48 Del

       IN THE HIGH COURT OF DELHI AT NEW DELHI


                             CO.PET. 612 of 2012

       PLD INTERNATIONAL PVT LTD               ..... Petitioner
                    Through: Mr. Arun Kathpalia, Mr. Yoginder
                             Handoo, Mr. Angad Mehta and
                             Mr. Samaksh S. Goyal, Advocates

                    versus


       REEBOK INDIA COMPANY                    ..... Respondent
                     Through: Mr. C. Mukund, Mr. Ravi Kumar and
                              Ms. Firdouse Qutb Wani, Advocates.

       CORAM: JUSTICE S. MURALIDHAR

                               ORDER

04.01.2013

1. By this petition under Section 433 of the Companies Act 1956 ('Act'), the

Petitioner, PLD International Pvt. Ltd., seeks the winding up of the

Respondent M/s. Reebok India Company.

2. The case of the Petitioner is that in terms of an agreement dated 26th

April, 2010 entered into between the parties, a copy of which agreement is

enclosed with this petition as Annexure P-2, the Petitioner gave on rent to

the Respondent the ground floor of the property at 422-425, Ghitorni

Market, Opposite Metro Pillar No.132, MG Road, New Delhi-110 030

(hereafter 'rented premises') on a monthly rent of Rs.4,25,000/- subject to

deduction of tax at source on applicable rate and payment of service tax,

with effect from 1st May, 2010. It is asserted by the Petitioner, which

assertion is disputed by the Respondent, that possession of the rented

premises was handed over by the Petitioner to the Respondent on 1st May,

2010. It is further stated that the Respondent defaulted in payment of the

rent from 1st May 2010 and finally some cheques were received in January,

2011 which did not clear the arrears. Even thereafter the Respondent

continued to be irregular in the payment of rent. It is stated that till

September 2011 as against the total outstanding rent of Rs.72,25,000/-

(exclusive of service tax), the Respondent had paid only Rs.49,72,500/-

(exclusive of TDS).

3. It is stated that since in the meanwhile this Court had, in a batch of

petitions to which the Respondent was a party, upheld the levy of the service

tax on rented property. Consequently service tax also was liable to be paid

by the Respondent. The Petitioner sent an e-mail to the Respondent on 26th

September, 2011 demanding the outstanding rent and arrears of service tax

enclosing an account statement for the period from May 2010 till September

2011 with break ups for TDS, service tax, rent due, rent paid etc. The

service tax amount i.e. outstanding for this period was Rs.7,44,175/-

(without interest) calculated at Rs.43,775/- per month, while the outstanding

rent was Rs.15,30,000/-. It is stated that in December 2011 the Respondent

paid the service tax amount, without interest up to date. However, the arrears

of rent were not cleared.

4. On 1st March, 2012, the Petitioner received a letter from the Respondent

terminating the tenancy and stating that the vacant possession of the

premises would be handed over to the Petitioner on 31st May, 2012. The

Petitioner in response thereto sent a legal notice to the Respondent on 27th

March, 2012 calling upon the Respondent to pay a sum of Rs.31,84,534/-. It

sent separately another notice on the same date regarding unpaid electricity

bills in the sum of Rs.60,580/-. With the Respondent continuing to not pay

the sums and another notice was sent by the Petitioner on 2nd May 2012

which quantified the outstanding amount as on 31st May 2012 at

Rs.42,90,904/-.

5. It is stated that apart from not making payment of arrears the Respondent

also did not hand over vacant possession of the rented premises to the

Petitioner on 31st May, 2012. A reply dated 9th July, 2012 was received to

the Petitioner's legal notice in which the Respondent claimed that

possession of the rented premises was handed over to it only in December

2010 and that it had been wrongly made to pay rent from 1st May 2010

onwards. It accordingly claimed the said sum from the Petitioner. According

to the Petitioner this was a false defence since in its e-mail dated 26th June,

2012 the Respondent had paid service tax for the period from May 2010

onwards.

6. In the petition it is averred that when the Petitioner's representative met

the representative of the Respondent and the Respondent 'orally'

acknowledged its liability to pay the admitted dues. However, since the

dues were not paid and the statutory notice dated 14th May, 2012 sent to the

Petitioner under Section 434 of the Act was also not replied to, the Petitioner

filed the present petition seeking the winding up of the Respondent.

7. This Court has heard the submissions of Mr. Arun Kathpalia, learned

counsel for the Petitioner and Mr. C. Mukund, learned counsel for the

Respondent.

8. In response to the query from the Court as to the availability of the

alternative remedy to the Petitioner in view of the arbitration clause in the

agreement, Mr. Kathpalia relied upon the decisions in Haryana Telecom

Ltd. v. Sterlite Industries (India) Ltd., AIR 1999 SC 2354 and Prime

Century City Developments Pvt. Ltd. v. Ansal Buildwell Limited, 102

(2003) DLT 445 to contend that where the defence by the Respondent is

"palpably false" and "dishonest", the petition for winding up should be

admitted.

9. The Court drew the attention of Mr. Kathpalia to the fact that although the

lease was for a period of three years the agreement was not registered. Mr.

Kathpalia responded by stating that the tenancy was not denied and even

otherwise it could be proved irrespective of the agreement. In response to

query whether there is any document to show that in fact possession of the

vacant premises was handed over on 1st May, 2010 and not December, 2010

as contended by the Respondent in its reply dated 9th July, 2012 to the

Petitioner's legal notice dated 14th May, 2012, Mr. Kathpalia submitted that

correspondence exchanged between the parties and the payments made by

the Respondent of service tax in December 2011 itself acknowledged that

rent became payable from May 2010. His submission was that if in fact

possession had not been handed over in May 2010 itself the Respondent

ought to have raised such an objection when called upon to pay the service

tax. He submitted that service tax for the period from May 2010 was paid

without demur by the Respondent and this itself demonstrated the defence

now taken was sham.

10. In the absence of any document showing that in fact possession of the

premises were handed over to the Respondent in May, 2010 and in light of

the stand taken by the Respondent that possession was handed over to it only

in December 2010, the said issue raises a disputed question of fact which

cannot be decided without evidence led by the parties. In the circumstances

this Court is unable to come to the conclusion at this stage that the defence

of the Respondent is sham, false or mala fide. If indeed there is an

arbitration agreement between the parties there is no reason as to why it

cannot avail of that remedy and must necessarily seek the remedy of

winding up.

11. In Prime Century City Developments Pvt. Ltd. the Court passed a

common judgment in two petitions. In the first petition the Court was

satisfied that a substantial defence had been raised which was not possible to

be viewed "as moonshine or as lacking bona fides." It was observed that the

said defence "can be properly adjudicated upon in regular and not summary

proceedings". In the circumstances it was held that "it would be

inappropriate to entertain this petition; the parties must seek their remedies

in arbitration to which they have expressly agreed". It was categorically

held "once a bona fide defence is shown to exists, arbitration can be

efficacious and proper remedy; where the defence is mala fide and

moonshine, arbitrable disputes would not exist in actuality". However, in the

facts of the second case which was also decided by the same judgment the

Court was satisfied that the defence of the Respondent was dishonest and

accordingly admitted the petition for winding up.

12. In the present case this Court is not satisfied at this stage, on the basis of

the documents placed on record by the Petitioner that the defence of the

Respondent is moonshine or false. The Court recalls the observation in

NEPC India Ltd. v. Indian Airlines Ltd. (2003) 2 Comp. LJ 122 to the

effect that "the machinery of winding up should not be allowed to be utilised

merely as a means of realizing its debts."

13. Accordingly, this Court declines to entertain the present petition and

dismisses it as such. It would be, however, open to the Petitioner to seek

other appropriate remedies that may be available to it in accordance with

law.

S. MURALIDHAR, J

JANUARY 04, 2013 mm