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TMI Blog2003 (1) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Rs. 96,80,00,000. (b)One of the conditions of the rights offer was that in case minimum subscription amount of 90 per cent was not received within 60 days from the closure of rights offer i.e. 24th November, 1994, the entire subscription amount was to be refunded by the company. (c)Three companies of S.K. Modi Group, namely, Modi Overseas Investment Pvt. Ltd., Kesha Investments Pvt. Ltd. and Paradise Credits Pvt. Ltd. had applied for allotment of 1,15,49,272 shares on rights issue basis and paid Rs. 10 per share towards application money. M/s. Kesha Investments also paid a sum of Rs. 1,33,07,280 towards allotment money. However, these three companies did not pay allotment and final sum amounting to Rs. 33,31,70,880. (d)Agache Associates and respondent company entered into a lease agreement for a property in Calcutta in November 1995 by which Rs. 36 crores was agreed to be paid by Modiluft to Agache Associates as security deposit and a rent of Rs. 10,000 per month was agreed to be paid for a premises which was occupied by 30 tenants and possession of which was never handed over to Modiluft. (e)This artificial liability towards Agache was created in the books of Modiluft Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d)The lease was executed on 11th September, 1995 was for nine years on a security deposit of Rs. 36 crores refundable on the termination of the lease agreement. There was a possibility of company purchasing the same from the answering respondent at a later stage. (e)The property had been inspected by Mr. Werner Heesan, Senior Vice President and Director of Modiluft, a nominee of Lufthansa Airlines, at the time of execution of the lease agreement. At the time of execution of the lease it was informally agreed that the agreement would be of a long term nature with an option to purchase the property from Agache Associates. This understanding was later recorded in writing in August 2001 when an agreement was executed between Modiluft and the answering respondent. 5. This lease agreement between Modiluft and the answering respondent was a legal, valid and bona fide transaction and allegations of fraud are wrong. The answering respondent is not harming the interest of Modiluft Ltd. but has acted for the benefit of the company by getting a loan of Rs. 5 crores from Peerless Capital Ltd. Modiluft in its reply through counsel amicus juris supported the plea of the applicant and had stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(c) read as follows : "390. Interpretation of sections 391 and 393. - In sections 391 and 393,- (a )the expression 'company' means any company liable to be wound up under this Act;" "391. Power to compromise or make arrangements with creditors and members.-(1) Where a compromise or arrangement is proposed- (a )between a company and to creditors or any class of them; or (b)between a company and its members or any class of them, the Court may, on the application of the company or of any creditor or member of the company, or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs." "443. Powers of Court on hearing petition.-(1) On hearing a winding up petition, the Court may- ****** (c )make any interim order that it thinks fit; or". 9. Learned counsel for the applicant further placed reliance on section 536(2) and submitted that in case of winding up by or subject to supervision of the Court, any disposition of the property of the company made after the commencement of the windin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors to be the assets of the Company. All the pleas raised in the application are not being decided at this juncture. The observations made in Rossell Industries Ltd., In re AIR 1996 Cal. 257, relied upon by the respondent, read as under : "12. In view of the various later judgments even of the Bombay High Court, I respectfully agree with later judgments that the said observation in the judgment in Saksaria's case (AIR 1967 Bom. 341) (supra) was merely an obiter dictum. In my opinion, the expression 'company' used in section 390 of the Act applies to all companies which can be wound up under the Companies Act and is not confined only to companies which are presently in a position to be wound up i.e., as on the date of making of the application under sections 391 to 394 of the Companies Act. In my opinion as on the date of the making of the application for merger or amalgamation the company may be quite prosperous and a profit-making company. All that is meant to be included by the words 'liable to be wound up' is that it must be a company which is subject to the laws of winding up as provided in the Companies Act, i.e., it must be liable to be wound up as and when the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allotment and call money payable for 1,15,49,272 shares valued at Rs. 33,31,80,880 by three investment companies belonging to the S.K. Modi Group i.e. Modi Overseas Pvt. Limited, Kesha Investments Pvt. Limited and Paradise Credits Pvt. Limited. The very fact that the rental for the premises is only Rs. 10,000 per month and the security deposit as large as Rs. 36 crores is sufficient in my view to taint the transaction. No rational explanation has been given in the reply for this extraordinarily high security deposit given by the company. No company acting prudently and guided by any sense of commercial acumen would pay a such a disproportionately large security deposit for a property with such low rental. The transaction is further rendered suspicious by the fact that the Agache Associates is a related party. The reply of the S.K. Modi Group does not explain this huge discrepancy but attempts to give a facile reply not answering the germane issue. The reply waxes eloquent about the conduct of (RHSL) and further terms this application as mala fide and instigated and inspired by RHSL. The reflection of the lease agreement as one with a related party in the company's record is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to make any comment on the aforesaid valuation. In the absence of any recent financial statements of Agache Associates Limited, we are also unable to comment about the recoverability of the deposit of Rs. 360.00 million. However, as the deposit does not carry any interest, we have discounted it at 15 per cent per annum. As at September 30, 1997 and accordingly made an adjustment for Rs. 238.40 million in the Proforma Balance Sheet as at September 30, 1997." 14. In my view these observations of the auditors do not carry the case of the company any further. Even this report declines to comment on the valuation by D.K. Bose Associates. Similarly the recent valuation got done by the company from HDFC shows the valuation at Rs. 31.83 crores as of 13th March, 2000 considerably lower than the two valuations done by the D.K. Bose valuer who had valued the property at Rs. 38 crores. 15. Accordingly as an interim measure, it is directed that the property described in detail in the lease deed dated 11th September, 1995 annexed to this application at annexure E and bearing No. 15, Ratan Babu Road, Cossipore, Calcutta shall remain attached and shall not be disposed of in any manner or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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