Delhi High Court
Jitender Lalwani & Ors. vs Dhir International Pvt. Ltd. on 8 October, 2018
$~CP-28
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 08.10.2018
+ CO.PET. 505/2016
JITENDER LALWANI & ORS. ..... Petitioner
Through Mr.Anil K.Kher, Sr.Adv. with
Ms.Namita Sharma and Mr.Kunal Kher, Advs.
versus
DHIR INTERNATIONAL PVT. LTD. ..... Respondent
Through Mr.Gaurav Mitra, Ms.Rashmita Roy
Chowdhury and Ms.Karnika Bahuguna, Advs.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
1. This petition is filed under sections 433(e) 434 and 439 of the
Companies Act, 1956 seeking winding up of the respondent company. The
case of the petitioners is that the petitioners had let out the premises being
industrial property bearing No.299, Phase-II, Udyog Vihar, Gurgaon-
122015, Haryana to the respondent vide Lease Agreement dated 12.09.2002.
As per the lease deed an aggregate rent of Rs.6,50,000/- per month was
agreed to be paid. A sum of Rs.40,00,000/- was also paid by the respondent
as interest free security deposit. The monthly rent was to increase by 20%
after every three years. Hence, it is pleaded that the rent increased
accordingly and became Rs.9,36,000/- w.e.f. 15.10.2008. Thereafter for the
period 15.10.2011 to September 2014 the rent became Rs.13,47,840/-. It is
the case of the petitioner that the respondents have been defaulting in
payment of rent and for the period from 15.10.2008 to 15.10.2015. There are
Co.Pet.505/2016 Page 1
arrears of rent of Rs.9,08,56,708/-. A legal notice was issued to the
respondent under section 434 of the Companies Act. 1956 on 21.10.2015
seeking payment of Rs.10,13,17,662/-.
2. In the meantime, the learned Arbitrator was appointed and arbitration
proceedings commenced. On 4.7.2016 the learned Arbitrator has given his
award in favour of the petitioner. An award of approximately
Rs.20,40,07,330/- has been passed in favour of the petitioner. It is stated
that thereafter the respondent has also filed objections under section 34 of
the Arbitration & Conciliation Act which were dismissed on 25.1.2018. In
the meantime, the respondent vacated the premises on 01.03.2018.
3. Learned counsel for the respondent has strongly opposed the present
winding up petition. He has relied upon judgment of the Andhra Pradesh
High Court in the case of National Research Development Corporation vs.
Electro Flux (P) Ltd., [2005] 127 CompCas 23(AP) and; judgment of
Punjab and Haryana High Court in the case of Talwar Brothers (P) Ltd. vs.
Punjab State Industrial Development Corporation Ltd.,
Manu/PH/0042/1999 to contend that as the petitioner has availed of an
alternative remedy of filing execution proceedings which are pending
adjudication and where the respondent has filed objections, this court would
not pass any winding up order against the respondent company as the
petitioner has chosen its alternative forum to adjudicate the issues.
4. I may look at the judgment relied upon by the learned counsel for the
respondent. In Talwar Brothers (P)Ltd. vs. Punjab State Industrial
Development Corporation Ltd. (supra) the Punjab and Haryana High Court
held as follows:-
"10. The courts have held that winding up petition cannot be treated
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as an alternative to the suit or the legal process of a suit. Certain
controversies can only be properly adjudicated in the proceedings
other than winding up. In the present case, admittedly, the
proceedings are pending before the court of competent jurisdiction
and any order passed by this court would apparently be affecting
the orders of Hon'ble Supreme Court of India, which is not
permissible. The provisions of sections 433 and 434 of the Act do
not vest any right in the petitioner, but cases have to be considered
on their own merits and keeping in view the facts and
circumstances of each case by the court.
11. The entire controversy in the present case, can be viewed from
another angle as well. It is a settled principle of law that if the
dispute raised by the respondent company in a winding up petition
is bona fide and just, the winding up court would be very reluctant
to pass any adverse order. I am of the considered view that the
respondent company has a bona fide, reasonable and just dispute to
the claim of the petitioner company. In fact, the order of Hon'ble
Supreme Court of India is the complete defence of the respondent
company at this stage. Furthermore, the objections relate to the very
validity and legality of the impugned award. One of the grounds
raised is that the arbitrator could not have passed an order of
eviction in relation to the disputed property. It is not for this court to
comment upon the merits or otherwise of this dispute but at least
prima facie these disputes cannot be termed to be mala fide or
totally unfair or unreasonable. In the case of M/s. Madhusudan
Gordhandas & Co. v. Madhu Woollen Industries (P) Ltd.
MANU/SC/0033/1971 : AIR 1971 SC 2600, the Hon'ble court had
enunciated the principle which will regulate the fate of the winding
up petition in response to which a bona fide or a valid dispute has
been raised."
5. In that case the objections to the Award were pending and were being
adjudicated upon. The objections related to merits of the case as to the very
existence and validity of the Award including the plea of jurisdiction.
Pursuant to certain proceedings before the Supreme Court, the Supreme
Co.Pet.505/2016 Page 3
Court had also permitted the respondents to raise their objections before the
executing court. The above observations were made as there was a bona fide
dispute regarding the objections raised by the respondents.
6. Regarding the judgment of the Andhra Pradesh High Court in
National Research Development Corporation vs. Electro Flux (P) Ltd.
(supra), in that case the court was of the view that as the petitioner has
chosen an alternative remedy the company court would not exercise its
discretionary powers.
7. In the present case the facts are materially different. The award that
was passed in favour of the petitioner has subsequently been upheld and the
objections filed by the respondents under section 34 having been dismissed.
The said objections were dismissed on 25.1.2018. Admittedly, no appeal has
been filed under section 37 of the Arbitration Act till date. The Award has
attained finality and the decree is to be executed. Admittedly, despite lapse
of nearly nine months of dismissal of the objections the respondents have
not made the necessary payment.
8. I may also note that though the learned counsel for the respondent has
vehemently argued that objections have been filed by the respondent against
the execution, but he was unable to elaborate any details on merits regarding
the objections. In fact learned counsel for the respondent admits that for the
balancesheets filed by the respondents for the year ending 31.3.2016 there is
a debit balance of Rs.10,77,12,798 plus applicable service tax which the
respondent company is unable to pay.
9. In Mediquipsystems (P) Ltd. vs. Proxima Medical System GMBH,
(2005) 7 SCC 42 the Supreme Court held as follows:-
"18. This Court in catena of decisions held that an order under
Co.Pet.505/2016 Page 4
Section 433(e) of the Companies Act is discretionary. There
must be a debt due and the company must be unable to pay the
same. A debt under this section must be a determined or a
definite sum of money payable immediately or at a future date
and that the inability referred to in the expression 'unable to pay
its dues' in Section 433(e) of the Companies Act should be
taken in the commercial sense and that the machinery for
winding up will not be allowed to be utilized merely as a means
for realising debts due from a company."
10. In the present case, the debt is clearly is due and payable by the
respondent.
11. Consequently, the petition is admitted and the Official Liquidator
attached to this Court is appointed as the Provisional Liquidator. He is
directed to take over all the assets, books of accounts and records of the
respondent-company forthwith. The citations be published in the Delhi
editions of the newspapers 'Statesman' (English) and 'Veer Arjun' (Hindi),
as well as in the Delhi Gazette, at least 14 days prior to the next date of
hearing. The cost of publication is to be borne by the petitioner who shall
deposit a sum Rs.75,000/- with the Official Liquidator within 2 weeks,
subject to any further amounts that may be called for by the liquidator for
this purpose, if required. The Official Liquidator shall also endeavour to
prepare a complete inventory of all the assets of the respondent-company
when the same are taken over; and the premises in which they are kept shall
be sealed by him. At the same time, he may also seek the assistance of a
valuer to value all assets to facilitate the process of winding up. It will also
be open to the Official Liquidator to seek police help in the discharge of his
duties, if he considers it appropriate to do so. The Official Liquidator to take
all further steps that may be necessary in this regard to protect the premises
Co.Pet.505/2016 Page 5
and assets of the respondent-company.
12. In the interest of justice the above order is suspended for four weeks
to enable the respondent to pay the dues of the petitioner. In case necessary
payments are made in terms of the award passed by the learned Arbitrator
dated 4.7.2016 the above order shall stand revoked.
13. List on 30.11.2018.
JAYANT NATH, J
OCTOBER 08, 2018
n
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