M. R. A. Associates India Pvt. Ltd. vs Seven Seas Hospitality Pvt. Ltd.
2013 Latest Caselaw 5128 Del

* IN THE HIGH COURT OF DELHI AT NEW DELHI

                                         Reserved on: 1st November, 2013
%                                    Date of decision: 8th November, 2013

+      CO. PET. No.478/2011

       M. R. A. ASSOCIATES INDIA PVT. LTD.        ..... Petitioner
                       Through: Mr. Subhiksh Vasudev and Mr.
                                Srivats Kaushal, Advocates.

                            versus

       SEVEN SEAS HOSPITALITY PVT. LTD.         ..... Respondent
                    Through: Mr. S. C. Singhal, Advocate.

CORAM:
HON'BLE MR. JUSTICE R.V.EASWAR

                               JUDGMENT

R. V. EASWAR, J.:

1. This is a petition filed under Section 433 (e) of the Companies Act,

1956 seeking winding-up of the respondent-company for non-payment of

the dues of `21,20,232/-.

2. The petitioner is a company engaged in rendering integrated

services relating to infrastructure development. The respondent-company

had planned to build a five star Hotel in Rohini, Delhi and sought the

assistance of the petitioner to provide management services for the

project. On 17.12.2010 a techno-commercial proposal was submitted by

the petitioner which explained the scope of "construction management

services" at pre-construction, post-construction and during the

construction phases. The proposal, towards the end, enumerated the

terms of engagement. The fees payable for the provisional services was

`6,00,000/- per month or part thereof; in addition thereto, the travel

expenses, boarding and lodging, etc., site office and pantry expenses were

also payable. The payment terms were that one month professional fees

is to be paid in advance and the invoice payment shall be made within 7

days of the submission thereof. The engagement could be terminated by

either side after giving 2 months‟ advance notice.

3. On 18.12.2010, an e-mail was sent by the respondent to the

petitioner accepting the proposal and mentioning that a sum of `1 lakh

was given in cash as advance. It was also stated that the duties of the

petitioner would start at 20.12.2010 and the petitioner shall meet Mr.

Sachdeva and Mr. S. C. Gupta, who were deputed by the respondent to

show to the petitioner the site and for meeting the contractors. The

mobile number of Sachdeva was also given.

4. It is not clear what exactly happened between the petitioner and the

respondent thereafter, but it would appear that the arrangement between

them was soon terminated. According to the petitioner, invoices were

raised by it as per following details: -

 Date of Invoice     For the period        Total amount
                                           (including service tax)

 30.01.2011          December, 2010        2,34,832/-


 30.01.2011          January, 2011         6,61,800/-

5. In addition to the above the petitioner also issued receipt for `1

lakh received by it on 16.12.2010 as advance. The invoices were not paid

by the respondent.

6. Reminders were, therefore, issued by the petitioner on 01.03.2011,

21.03.2011, 25.03.2011 and 01.04.2011. In these reminders, the

respondent was asked to pay `21,20,232/- as detailed below: -

       "MRAPL/Seven Seas/Fees                           Date:1-03-11

       To,
       M/s Seven Seas Hospitality Pvt. Ltd.
       Lawrence Road
       New Delhi

                           Kind Attn : Mr. Jagannath

Sub: - Bill for Project Management Services for Hotel at Mangalam Place, New Delhi.

       Ref: E Mail Dt 30 Dec 2010

       Unpaid amount for the month of

        December 2010                              `2,12,903.00

       Unpaid amount for the month of
       January 2011                               `6,00,000.00


       Project Management Services rendered
       for Feb 2011                               `6,00,000.00

       The termination fees for the project
       (as per agreed terms it was 2 months but we
       raising only for a month as a
       goodwill gesture)                           `6,00,000.00

       Add service tax @ 10.3%                    `2,07,329.00

       Less Received                              `1,00,000.00
                                                 ____________
                                     Total        `21,20,232.00
                                                _____________

(Rupees Twenty One Lac Twenty thousand two Hundred thirty two Only) For M.R.A. Associates India Private Limited Sd/-

(Aroon Kumar Aggarwal)

IT PAN NO.: AAFCM3239H, SERVICE TAX NO.: AAFCM3239HST001 "

7. Since no reply was received from the respondent, the petitioner

sent a reminder by e-mail on 06.04.2011. Since there was no response to

this also, a further reminder was sent by e-mail as well as by registered

post. Even these did not evoke any response. Therefore, the petitioner

sent a demand notice on 09.08.2011 under Section 434 (1)(a) of the Act

calling upon the respondent to pay the amount of `21,20,232/- with

interest @ 18% per annum from April, 2011 till 31.07.2011 with further

interest @ 18% per annum till actual payment. The notice was served on

the respondent but did not evoke any response. The service of notice is

not denied by the respondent.

8. The petitioner, therefore, filed the present winding-up petition on

the ground that the company is unable to pay its debts.

9. According to the petitioner, the respondent was liable to pay the

aforesaid amount for the services rendered by the petitioner and since

there was no reply either to the statutory notice or to the reminders issued

earlier it must be taken that the respondent has admitted the debt. It is

stated that the conduct of the respondent shows that its defence is not

bona fide or substantial but is mere moon-shine. It is further argued that

there is sufficient evidence on record to show that the petitioner rendered

services for which payment is due.

10. The respondent, however, states that there is no admission of any

liability and that though there were certain negotiations between the

parties, but no concluded agreement ever came into existence and the

terms and conditions were not settled. It is submitted that the petitioner

never rendered any consultancy services to the respondent and it has

failed to point out as to in what manner the consultancy services were

rendered.

11. On a careful consideration of the facts, the material on record and

the rival contentions, I am satisfied that the petitioner has made out a case

for admitting the winding-up petition. The proposal of the petitioner was

accepted by the respondent and the fact that there was no contract which

was reduced into writing cannot lead to the conclusion that the petitioner

did not render any services. The respondent paid an advance of

`1,00,000/- to the petitioner and stipulated that the duties of the petitioner

would start from 20.12.2010 on the site. The petitioner was also directed

to meet Mr. Sachdeva and Mr. Gupta deputed by the respondent to show

the site and meet the contractors. Thereafter, there is a series of

correspondence which would prima facie show that the petitioner did

commence the rendering of the services for which it was engaged. At

page 26 of the petition, there is a letter written by Ahluwalia Contracts

(India) Ltd., (hereinafter referred to as „AHLCON‟) to the respondent.

AHLCON was the company which was engaged by the respondent for

construction of the hotel. A copy of this letter which is dated 29.12.2010

is seen marked to the petitioner for information. The letter speaks of

corporate guarantees for performance and mobilisation advance to be

given by AHLCON to the respondent. This shows that the petitioner was

kept in the loop. Another letter written by AHLCON to the respondent

on the same day in connection with the execution of a power of attorney

was also marked to the petitioner. On 02.02.2011, AHLCON wrote a

letter to the respondent regarding requirement of steel. A copy of this

letter was marked to the petitioner for information and necessary action.

Enclosed to this letter is a comparative statement of steel reinforcement

for the approval of the respondent. On 04.02.2011 another letter was

written by AHLCON to the respondent with a copy thereof marked to the

petitioner for information and necessary action. The subject of this letter

was "progress of work". More specifically, the letter dealt with the

problem concerning dewatering. There appears to have been a problem

due to collection of sub-soil water. AHLCON was complaining to the

respondent about the evasive conduct of the dewatering contractor. The

photographs of the site were attached to this letter, to explain the

problem. On 08.02.2011, a similar letter was written by the AHLCON to

the respondent on the same subject, a copy of which was marked to the

petitioner.

12. On 14.02.2011 AHLCON wrote another letter to the respondent on

the subject of anti-termite treatment. A copy of this letter was also

marked to the petitioner. This letter appears to be a sequel to an earlier

letter written by AHLCON to the petitioner itself on 10.01.2011

requesting the petitioner to arrange the material in advance so that the

anti-termite work can start in time. Another letter of the same date

written by AHLCON to MRA Associates, the petitioner, relates to the

subject of extending the commencement date of the project. AHLCON

has stated in the letter that they have not received the structural drawings

which was delaying the construction and procurement schedule. A

request was made to the petitioner to extend the commencement date of

the project. On 14.01.2011 another letter was addressed by AHLCON to

the petitioner regarding quotation for cement. The petitioner was

requested to approve the quotations for cement and procure the cement as

early as possible. There are letters dated 18.01.2011 on the subject of

control points and architectural drawings. These letters were addressed to

the petitioner by AHLCON. On 25.01.2011, AHLCON again wrote to

the petitioner, the subject being the problems due to dewatering. The

complaint in the letter is that due to the inefficiency of the dewatering

contractor, there is a delay in the schedule which should be considered

and extension of the commencement date should be given. A reply seems

to have been written by the petitioner on the same day. In this reply there

is reference to a verbal discussion on 21.01.2011 on the subject of the

dewatering. The letter states that AHLCON had excavated more than

1500 mm resulting in the sub-soil water coming up. They were advised

not to excavate more than 1000 to 1500 mm. The petitioner blamed the

lack of supervision of the work by AHLCON pointing out that no

engineer was available to check the excavation which was being done at

night.

13. The aforesaid correspondence between the petitioner and

AHLCON and copies being marked to the petitioner in respect of the

initial correspondence entered into between AHLCON and the respondent

indicate that the petitioner did render some services to the respondent for

which payment was due. As to what exactly was the amount due to the

petitioner for the services may be in dispute but the fact that there was a

dispute does not in all cases mean that no amount was due by the

respondent. In Madhusudan Gordhandas & Co. Vs. Madhu Wollen

Industries Pvt. Ltd. : AIR 1971 SC 2600, it was held by the Supreme

Court that where there is no doubt that the company owes the creditor a

debt entitling him to a winding-up order, but the exact amount of the debt

is disputed, the Court will make a winding-up order without requiring the

creditor to quantify the debt precisely.

14. The defence taken by the respondent is not of substance. Having

accepted the proposal of the petitioner and having paid an advance of

`1,00,000/- and also having invited the petitioner to start work from

20.12.2010, there was no justification on its part to dispute the claim that

the petitioner rendered services merely on the ground that no formal

contract was concluded between the parties. The respondent could not

have been unaware that copies of the letters written by AHLCON to it

were marked to the petitioner. If no formal contract had been concluded

and if the respondent had not engaged the services of the petitioner, the

respondent ought to have told AHLCON that the petitioner had nothing to

do with the hotel project and, therefore, copies of the correspondence

need not be marked to the petitioner. Moreover, AHLCON could not

have possibly come to know that the petitioner was engaged as consultant

of the hotel project, except on being informed by the respondent. An

advance of `1,00,000/- was given to the petitioner with a request to start

the work on site from 20.12.2011. All this leads to the reasonable

inference that the petitioner‟s services were engaged by the respondent.

For the services, the petitioner has to be paid and merely because the

amount payable is disputed and is not acceptable to the respondent, it

cannot be said that there is no case for winding-up the respondent.

15. The learned counsel for the respondent in the course of the

arguments submitted that the petitioner did not submit a list of the various

services it had claimed to have rendered, as stipulated in the proposal

submitted by the petitioner. The rendering of services is quite different

from the submission of the list of the services to the respondent as

stipulated in the proposal. The fact that the petitioner did not submit a list

of the services rendered by it in terms of its proposal does not take away

anything from the fact that the services were actually rendered, if such

services can be otherwise proved to have been rendered. Moreover, the

conduct of the respondent does not bear scrutiny. It did not reply to the

statutory notice sent by the petitioner under Section 434(1)(a). Before the

issue of the statutory demand notice, the petitioner sent several reminders

through registered post, e-mail, etc.; however, the respondent did not care

to reply to any of these. The respondent also does not deny the receipt of

the statutory demand notice. All the objections/ defences to the

petitioner‟s claim are taken only in the counter affidavit for the first time.

If the respondent really thought that there was no concluded contract and

that the petitioner was not engaged for rendering any consultancy

services, it ought to have responded to the reminders issued by the

petitioner at the earliest. In Resham Singh & Co. (P) Ltd. vs. Daewoo

Motors India Ltd. : (2003) 66 DRJ 511, Vikramjit Sen, J. (as he then

was, of this Court) held that where there is no response to the statutory

notice, the respondent company runs the risk of the winding-up petition

being admitted for hearing at the threshold stage itself. In the judgment

of the Supreme Court cited supra it has also been held that the defence of

the company should be in good faith and one of substance and not mere

moon-shine.

16. The learned counsel for the respondent, in the course of his

arguments, disputed the claim of the petitioners that the bills/ invoices

were acknowledged by one Shefali, an employee of the respondent. He

submitted that the said person was not in the employment of the

respondent-company at the relevant dates and her signatures were forged.

This defence was not taken by the respondent at any earlier point of time,

though the petitioner had referred to the invoices and the reminders in its

e-mails sent prior to the sending of the demand notice. There was no

response to any of them, even the statutory notice. It is also not clear

why, if no contract was concluded between the parties and no services

were rendered by the petitioner, the respondent did not even ask for

refund of the advance of `1,00,000/- paid to the petitioner. Thus, the

contention of the respondent in paragraph 5(a) of the counter affidavit to

the effect that the terms and conditions were not settled between the

parties and that the petitioner never provided any consultancy services to

the respondent appears to me to be mere moon-shine and not bona fide.

17. For the above reasons I admit the winding-up petition.

List on 20.03.2014 for further proceedings.

(R.V. EASWAR) JUDGE NOVEMBER 08, 2013 hs