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M/s COMPAREX INDIA PVT. LTD Versus M/s ZURI HOSPITALITY PRIVATE LIMITED

2016 (2) TMI 50 - BOMBAY HIGH COURT

Winding up petition - Held that:- In the instant case, despite receiving the legal notice, that no payment has been made to liquidate the amount payable by the Respondent-Company has not been disputed. Admittedly, the software was purchased by the Respondent-Company pursuant to the Agreement and even assuming that the alleged termination has to be accepted, a sum of ₹ 10,99,615/- was due by the Respondent-Company to the Petitioner.

Consequently, in case of the default of the pay .....

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pers one in “The Navhind Times” and other in regional language Marathi “Gomantak”.In case the amount is deposited within the said period stipulated herein above, the petition shall stand accordingly dismissed with liberty to the Petitioner to recover the legal dues from the Respondent in accordance with law. - COMPANY PETITION NO. 20 OF 2014 - Dated:- 11-9-2015 - F. M. REIS, J. For The Petitioner : Mr. Amit Prasad and Mr.Rohit Bras De Sa, Advocates For The Respondent : Mr. S. S. Kantak, Senior A .....

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placed a firm purchase order upon M/s. PC-WARE India Pvt. Ltd. for procurement of such Microsoft Software Licenses under Microsoft Enterprise Agreement. The payment terms under the purchase order were monthly instalments of Rs,2,62,312/- each over a period of three years w.e.f. 01.10.2011. Subsequently, the Petitioner was appointed as new large account reseller in place of M/s. PC-WARE India Pvt. Ltd. and accordingly a change of channel partner (CoCP) form was executed between the Petitioner Com .....

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e contract and does not need the softwares any longer. It is further the case of the Petitioner that the Respondent- Company has no right to terminate the agreement after the supply and installations are completed especially when the Respondent-Company has used the software for over a period of one year. The Respondent-Company has neglected to make the payment of the outstanding dues after being served with the statutory notice for winding up. It is further the contention of the Petitioner that .....

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as such, the Petitioner is not, prima facie, entitled to present the Petition for winding up under Section 439 of the Companies Act, 1956. It is further their case that the claim of the Petitioner is not admitted by the Respondent-Company but has always been bonafidely disputed at all points of time and further such dispute has been placed on record by the Petitioner. It is also their case that even assuming without admitting the liability, the allegations made by the Petitioner do not constitut .....

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y which owns and operates a five star luxury hotel, with state of the art amenities, in Bangalore and forms part of a renowned multinational conglomerate whose global spread extends across Asia, Africa and Europe. It is also contended that the audited balance sheet of the Respondent for the financial year 2013-2014 is in the process of being finalised and, therefore, the financial figures for the financial year 2012-2013 have been highlighted and pointed out that the turnover of the Respondent-C .....

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India Pvt. Ltd., was appointed as the authorised reseller on behalf of Microsoft in order to deliver the products to the Respondent-Company. The said Agreement was subsequently renewed from 01.10.2011. It is further their case that the Respondent-Company placed upon PC-Ware a purchase order dated 08.11.2011 for procuring certain products. The PO provided for payment of the licence fee on monthly basis and as per the explicit and unequivocal understanding between PC-Ware and the Respondent refle .....

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he PO, the period was thereafter to be extended for three years would require to be renewed on monthly basis in order to remain valid and binding. It is further their case that after the merger, the authorised reseller was changed from PC-Ware to the Petitioner and the said change was put on record by an Agreement dated 04.05.2012. It is further their contentions that after being dissatisfied with the utility of the products and the unavailability of the arrangement with the Petitioner, the Resp .....

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further submitted that due to the continual and unremedied dissatisfaction with the working of the products, the Respondent was left with no option but to terminate the Agreement with Microsoft under its emal dated 31.12.2012. It is also their case that there is no privity of contract with the Respondent since the Agreement was between the Respondent and Microsoft. It is further their case that the aforesaid notice on 07.12.2013, which is a winding up notice is repeating and reiterating the fal .....

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ication for denying each and every allegation of the Petitioner which is a matter of record. It is further contended that the Respondent is a healthy and commercially solvent entity which is able to pay its bonafide debts and, accordingly. It is prayed that the Petition be rejected. 6. The Petitioners filed an affidavit in rejoinder and pointed out that the financial statement produced by the Respondent-Company according to the Petitioners disclose that the Respondent-Company has suffered loss o .....

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the assets of the Respondent-Company have been mortgaged to the bankers for securing loans, advances and overdraft facility which for obvious reasons are procured for the purposes of meeting the operating losses which the Respondent- Company suffered. The allegations made in the affidavit in reply have also been disputed by the Petitioner by filing their rejoinder and producing documents thereto. 7. Shri Prasad, learned Counsel appearing for the Petitioner has pointed out that in terms of the A .....

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to delay the payments to the Petitioners as the Respondent-Company is financially insolvent. Learned Counsel further submits that the alleged termination is totally misplaced and further that the amount are payable to the Petitioner in terms of the said Agreement. Learned Counsel has taken me through the Agreement to point out that specific term therein which clearly disclosed that the allegations of the Respondents are totally baseless and without any foundation. Learned Counsel further pointe .....

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make a semblance of dispute for illegal considerations and illegal motives. Learned Counsel further pointed out that considering the poor financial status of the Respondent-Company, the Petitioner has made out a case for winding up of the Respondent-Company. 8. On the other hand, Shri S. S. Kantak, learned Senior Advocate appearing for the Respondent-Company pointed out that the financial status of the Respondent-Company would itself disclose that there is no justification for winding up. Learne .....

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Respondent-Company. Learned Senior Advocate further pointed out that as the Respondent-Company have raised a bonafide dispute, there is no reason for any winding up of the Respondent- Company. Learned Counsel has thereafter taken me through the Agreement to point out that the service Agreement between the parties was to make payments on monthly basis which itself shows that as the Respondents were not satisfied with the services rendered by the Petitioners, the Respondents were free to terminat .....

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L MR 105 (S.C.) in the case of Mediqup Systems Pvt. Ltd. vs. Proxima Medical System G.M.B.H., 2013 (2) ALL MR 188 in the case of Deutsche Bank AG, London vs. Pearl Engineering Polymers Limited, 2012(3) ALL MR 294 in the case of Katare Spinning Mills Limited vs. Kotak Mahindra Bank Limited and 2013(1) ALL MR 51 in the case of Meghraj Capital Advisors Pvt. Ltd. vs. Samira Constructions Ltd. 9. I have considered the submissions of the learned Counsel. I have also gone through the records. On perusa .....

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osoft's acceptance of this Enrollment and on each Enrollment anniversary date. Subsequent orders are invoiced upon acceptance of the order and the Enrolled Affiliate may elect to pay annually or upfront for Online Services and upfront for all other Licenses. These terms clearly stipulate that it is for the purchaser such as the Respondent-Company herein to make the payment upfront or to spread the payment in monthly instalments. The termination of the cause terms clearly provides that any te .....

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iliate will have the following options for Licenses, excluding Subscription Licenses: (i) It may immediately pay the total remaining amount due, including all installments, in which case, Enrolled Affiliate will have perpetual rights for all Licenses it has ordered (for the latest version of Products ordered under Software Assurance coverage in an initial or renewal term); or (ii) It may pay only amounts due as of the termination date, in which case Enrolled Affiliate will have perpetual License .....

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be relevant is clause 2(c) of the Enterprise Agreement which reads thus : "2 How the Enterprise and Enterprise Subscription programs work. (a) ... (b) ... (c) Choosing and maintaining a Reseller. Each Enrolled Affiliate must choose and maintain a Reseller authorized in the Enrolled Affiliate's location. (i) When ordering through a Reseller. Orders under an indirect Enrollment will be made to the Reseller. Microsoft will invoice the Reseller according to the terms in the applicable Enro .....

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In the event of termination, new Enrollments will not be accepted but any existing Enrollment will continue for the term of such Enrollment and be governed by this agreement. (c) Termination of cause. Either party may terminate an Enrollment if the other party materially breaches its obligations under this agreement, including any obligation to submit the terminating party must give the other party 30 days notice and opportunity to cure. If Microsoft gives such notice to an Enrolled Affiliate, .....

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as a result of a breach by Microsoft, or if Microsoft terminates an Enrollment because Enrolled Affiliate ceases to be Customer's Affiliate, then Enrolled Affiliate will have early termination options described in an Enrollment. (d) Modification or termination of an Online Service for regulatory reasons. Microsoft may modify or terminate an Online Service in any country where there is any current or future government requirement or obligation that (1) subjects Microsoft to any regulation or .....

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updates. Microsoft may make a change to this program that will make it necessary for Customer and its Enrolled Affiliates to enter into new agreements and Enrollments at the time of an enrollment renewal. 13. On perusal of the said terms, it specifically provides that the payments of the installments towards the services rendered to the Respondent-Company were to be paid to the Reseller who is the Petitioner herein. In such circumstances, the contention of Shri Kantak, learned Senior Advocate a .....

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the credit facility extended to the Respondent-Company as stated in the legal notice which is dated 18.10.2013 and, as such, entitled for a sum of ₹ 66,10,309/-. The Respondent-Company nevertheless are raising the contention that they have terminated the Agreement as on December, 2012 on account of deficiency in the services rendered but, however, it is contended by the Petitioner that the Respondent-Company were not entitled to terminate the Agreement and, as such, no valid letter of term .....

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iling appropriate proceedings in accordance with law. But the fact remains that as per the case put forth by the Respondent-Company itself, the alleged termination was in December, 2012. As per the terms of the Agreement as referred to herein above, such termination would be effected by issuing a two months notice. The Petitioner cannot be deprived of receiving the amount upto the month of February 2013. In this connection, I called upon the learned Counsel appearing for the parties to point out .....

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however, Mr. Kantak, learned Senior Counsel appearing for the Respondents has brought to my notice that as per the averments of the Petitioner themselves in the above Petition, it discloses that since October, 2012, the Respondent-Company has failed to honour their commitment towards the payment of the monthly instalment of ₹ 2,62,312/-. This contention is seriously disputed by the learned Counsel appearing for the Petitioner by submitting that as on October, 2012, the amounts payable for .....

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ny to the Petitioner, prima facie, would work out to be the sum payable from October, 2012 to February, 2013. In this connection, the learned Counsel appearing for the Petitioner stated that the amount payable for the said period, would work out to ₹ 10,99,615/-. 15. The remaining amounts claimed by the Petitioner as such are disputed which would have to be recovered by the Petitioner after filing appropriate proceedings in accordance with law. On the basis of the material on record and co .....

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ents of the Respondent-Company themselves, as far as such amount is concerned, it cannot be said that the Respondent-Company has substantially disputed the debt to that extent and there is no reasonable cause or existence of any bonafide dispute which can be adjudicated only by trial in the Civil Court as far as such amount is concerned. But, however, as far as the remaining amounts are concerned, the Respondent-Company has seriously disputed such amount and there is a substantial defence raised .....

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ny was running a loss. In any event, the fact remains that after the statutory notice was issued, even the amount which is legally recoverable from the Respondent- Company was not paid by the Respondent-Company despite of such notice. The Apex Court in the Judgment reported in AIR 2009 SC 1695 in the case of M/s. Vijay Industries vs. M/s. NATL Technologies Ltd., has observed at para 33 thus : 33. Section 433 of the Companies Act does not state that the debt must be precisely a definite sum. It h .....

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ing from the quantity or quality of supply of the goods stands admitted but a question is raised as to whether any agreement had been entered into for payment of interest or whether the rate of interest would be applicable or not. In the latter case, in our opinion, the application for winding up cannot be dismissed. 16. Taking note of the observations of the Apex Court herein above, in the instant case, despite receiving the legal notice, that no payment has been made to liquidate the amount pa .....

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however, contended by the learned counsel appearing for the Petitioner that the winding up petition would enure for the benefits of all the creditors and as such, the question of making such order would not be justified. 18. But however, the Division Bench of this Court, Principal Seat at Mumbai, in the case of Videocon Industries Limited Vs Intesa Sanpaolo S.P.A., in Appeal (L) No. 29 of 2014 in Company Petition No. 528/2012 has observed at paras 42 and 43 thus : "42. When we so indicated .....

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