Ebony Retail Holdings Ltd vs Shanti Prakash Gupta & Ors.
2015 Latest Caselaw 1455 Del

$~21
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                               Date of hearing and Order: February 20, 2015.
+     CO.APP. 2/2015
      EBONY RETAIL HOLDINGS LTD
                                                               ..... Appellant
                          Through:     Ms.Ekta Kalra Sikri, Mr. Prannoy
                                       Dey, Advocates
                   versus
      SHANTI PRAKASH GUPTA & ORS.
                                                           ..... Respondents
                          Through:     Mr.Peeyoosh Kalra, Advocate
      CORAM:
      HON'BLE MR. JUSTICE KAILASH GAMBHIR
      HON'BLE MR. JUSTICE I.S.MEHTA
                        ORDER

% KAILASH GAMBHIR, J. (ORAL) This matter is being adjourned for the last three dates at the request of

the learned counsel for the appellant for seeking instructions from the

appellant as to the amount that could be paid by the appellant towards the

arrears of the rent in respect of the ground and the first floor of Crown Plaza

Mall, Faridabad (subject property). Ms. Ekta Sikri representing the appellant

on instructions from Mr.Rakesh Bhalla, authorised representative of the

appellant company - M/s. Ebony Retail Holdings Ltd., submits that the

appellant is prepared to pay an amount of Rs.73,80,653/- by way of 12 post

dated cheques of equal amounts towards the entire claim of the respondents,

after adjusting Rs.7,12,320 towards TDS, security amount of Rs.17,57,204/-

paid by the appellant in terms of directions given by the Court. In response

to the suggestion given by the Court that whether they would be in a

position to clear at least the said outstanding arrears in two equal

instalments, learned counsel for the appellant submits that the appellant

would not be in a position to pay the said amount in two equal instalments,

as the company is not in its best financial position. Learned counsel for the

appellant also submits that the amount which the respondents have claimed

in the company petition, is seriously disputed by the appellant.

Mr. Peeyoosh Kalra, Advocate appearing on behalf of the respondents

on the other hand submits that more than Rs. 2 crores is outstanding against

the appellant.

We have heard the submissions made by the learned counsel for the

parties.

The respondents have filed the petition under Section 433(e) read with

Sections 434(1), 439, 449, 450 of the Companies Act, 1956, seeking

direction for winding up of the petitioner Company. The respondents are the

landlords/joint owners of commercial property No.GB-19 and FB-15,

Crown Plaza Shopping Mall, Crown International, 29 KM Stone, Sector

15A, Main Mathura Road, Faridabad, Haryana. The petitioner Company was

inducted as tenant on the ground floor and the first floor of the said premises

and a registered Lease Deed dated 5.3.2010 was duly executed between the

parties. As per the respondents the petitioner failed to pay arrears of rent

from 1.4.2011 to 30.09.2012 amounting to Rs.1,00,91,285/-, service tax due

till 30.09.2012 amounting to Rs.24,21,214/- and maintenance charges w.e.f.

1.4.2012 to 30.09.2012 amounting to Rs.4,06,518/- and thus, in all, a sum of

Rs.1,29,19,017/-. This amount was claimed by the respondent Company

alongwith interest @ 18% per annum from the date when the said amount

became due till the date of its realisation.

As per the respondent, the said amount was claimed by them through

legal notice dated 17.12.2011 duly served upon the petitioners but the

petitioner failed to pay the said amount despite service of legal notice and

therefore as per the respondent, the petitioner company is deemed to be

unable to pay its debts within the meaning of provisions of the Companies

Act, 1956.

The petitioner had contested the said winding up petition filed by the

respondents and the stand taken by the petitioner before the Company Court

was that there are complicated questions of facts and law and the same

cannot be adjudicated in a winding up petition in the absence of a full-

fledged trial. On merits, the petitioner denied that they are in arrears of the

rent as claimed by the respondents. The petitioner also taken a stand that

several meetings were held between the parties, whereafter the respondent

vacated the first floor of tenanted premises in March 2012 duly recorded in

the minutes of meeting dated 21.1.2012.

On appreciation of the pleadings filed by the parties and the material

produced on record, the Company Court categorised the claims of the

respondents in three categories, i.e., (1) for arrears of rent/use and

occupation charges; (2) for payment of interest and (3) for payment of

service tax. With regard to the claim for arrears of rent/occupation charges,

the Court found that there is no dispute of relationship of landlord and tenant

between the parties and also the agreed rate of rent of Rs.5,93,605/- per

month for both ground and first floor. The Court also found that it was also

not in dispute that the lease deed dated 5.3.2010 was executed between the

parties and that no rent was paid by the petitioners after 7.5.2011 for either

of the floors. The Court further recorded that the vacant possession of the

first floor was delivered to the respondents on 30.03.2013 and that of the

ground floor on 19.03.2013 under the orders of the Court. The Court also

held that the plea raised by the petitioner that it agreed in the meetings held

on 21.1.2012 that it would vacate the first floor in March 2012 and that

thereafter, it handed over the vacant possession of the first floor on

19.03.2012 and therefore it is not liable to pay any rent thereafter, is not

sustainable. The Hon'ble Company Court also held that neither any

document was produced nor was relied upon by the petitioners evidencing

the fact that the possession of the first floor was actually vacated and

delivered to the respondents in March 2012 and this fact was duly conceded

by counsel representing the petitioners before the Court. The Company

Court thus was convinced in arriving at a conclusion that the petitioners

have admittedly not paid any rent of the tenanted premises from 7.5.2011

and their liability to pay the rent is clear and ambiguous till the date of

handing over the possession and the defence raised by the petitioner is

clearly moonshine.

With regard to the claim of the respondents in respect of the interest

on the arrears of rent/use and occupation charges @ 18% per annum and

service tax with interest, the Court found that the same was a disputed

question of fact and law and as such the same cannot be adjudicated in a

summary manner in a winding up petition. In so far as the claim of the

respondents with regard to the arrears of rent/use and occupation charges at

the agreed rent of Rs. 5,93,605/- w.e.f. 01.04.2011 till the date of handing

over the possession till 19.03.2012 for the first floor and till 26.04.2012for

the ground floor was concerned, the Court found that the petitioners have

failed to pay the same without any plausible reasons. Therefore, to that

extent the winding up petition is liable to be admitted. With regard to the

claim of the respondents for arrears of service tax and interest thereon, the

Court found that the claim requires adjudication and therefore cannot be

tried in a summary manner before the Company Court.

To test the bonafides of the petitioner, whether they are prepared to

pay the arrears of the admitted amount of rent after calculating the rent of

the first floor premises till March 2012, the matter was adjourned at the

request of the learned counsel for the petitioner to seek instructions from the

petitioner in this regard. Today, the stand taken by the appellant is that they

are prepared to pay an amount of Rs. 73, 80,653/- by way of twelve post

dated cheques of equal amounts after having adjusted a sum of Rs.

Rs.7,12,320 towards TDS, security amount of Rs.17,57,204/- and an amount

of Rs. 8,21,168/- towards the amount paid by the appellant in terms of

directions given by the Court. When asked as to whether the petitioner

would be in a position to clear the said amount in two equal instalments, the

appellant expressed its inability to do so because of the bad financial

condition of the appellant company.

The aforesaid calculation was although disputed by counsel

representing the respondent and as per the respondents, more than Rs.2

crores is outstanding against the appellant towards the arrears of rent and

other dues. From the record we find that on 21.01.2012 the message was

sent by Mr. Rakesh Bhalla, authorised representative of the appellant

company to the respondent which is also referred to in the minutes of the

meeting held at their office in respect of their overdue rent payments and in

this meeting the petitioners had agreed to clear unpaid rent up to March

2012 in instalments by April 2012 after adjusting the security deposit. There

is a reference to certain other decisions but suffice to notice that the

petitioner failed to clear payment of their outstanding liability towards

payment of arrears of rent till this date.

There is a clear liability of the petitioners towards payment of arrears

of rent in respect of the ground floor and first floor of the premises and

possibly the petitioner has no bonafide dispute or any substantial defence to

counter the same. The only defence raised by the petitioners is that they had

vacated the first floor of the tenanted premises in March 2012. The

bonafides of the petitioners have already been tested by this Court by giving

them a chance to clear their outstanding liability towards the arrears of rent

in two equal instalments, but they have failed to show their bonafides. The

appellants have also admitted that their financial conditions of the appellant

company is not good and due to this reason they require at least one year

time to pay the arrears in equal monthly instalments to liquidate their

liability towards payment of arrears of rent.

In the background of the aforesaid facts, we do not find that the

appellants have been able to dispute the payment of rent of the said

premises. The defence raised by the appellant is clearly illusory and

moonshine. We find no merit in the present appeal filed by the appellant.

The same is hereby dismissed.

KAILASH GAMBHIR, J

I.S. MEHTA, J FEBRUARY 20, 2015 pkb