TMI Blog2017 (6) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a) that the company is unable to pay it debts, the law should take its own course and the company of course will have an opportunity on the liquidation application to rebut that presumption. In view thereof, in this case the defence of the respondent is totally spurious, speculative, illusory or misconceived and moonshine and not bonafide dispute on specific ground. The respondent is not able to avoid statutory demand by raising any specific dispute and thus deserves to face consequence of winding up on the ground that the respondent is unable to pay its debts. A perusal of the record clearly indicates that the respondent is unable to pay its debts and deserves to be wound up. - COMPANY PETITION NO. 210 OF 2012 - - - Dated:- 6-6-2017 - R.D. DHANUKA, J. Mr. Aditya Shiralkar with Mr. Hemang Raythatha and Mr. Jayesh Mestry i/b RMG Law Associates for the Petitioner. Mr. Raman Gandhi with Mr. A.D. Saman and Mr. Anoop Patil for the Respondent. JUDGMENT :- 1. By this petition filed under sections 433(e) and (f) and 434 of the Companies Act, 1956, the petitioner seeks winding up of the respondent on the ground that the respondent is unable to pay its debts and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed the agreements with eight clients for various amounts totalling to ₹ 14,47,50,000/-. It is the case of the petitioner that the petitioner became entitled to receive from the respondent commission at the rate of 20% of the said amount of ₹ 14,47,50,000/- i.e. a sum of ₹ 2,89,50,000/-. It is also the case of the petitioner that the respondent did not enter into an agreement with Nestle Limited introduced by the petitioner where the amount of contract was to be at ₹ 35,00,000/-. It is the case of the petitioner that since the respondent did not execute the said agreement with the said Nestle Limited for which the respondent was solely responsible, the petitioner became entitled to the commission of ₹ 7,00,000/- in respect of the said transaction also. According to the petitioner, the petitioner is entitled to the said commission of Rs,2,96,50,000/- under the said agreement. 5. Some time in the month of September, 2010, the respondent issued and tendered to the petitioner a cheque dated 27th September, 2010 drawn on State Bank of Patiala for ₹ 19,99,600/- only towards part payment of the amount of commission to the petitioner. The said ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the respondent was returned with remark left . The matter appeared for hearing and final disposal before this Court on 14th November, 2014. None appeared for the respondent, though served. By an order dated 14th November, 2014 passed by this Court, the aforesaid company petition was allowed in terms of prayer clauses (a) and (b) and the respondent was ordered to be wound up under the directions of this Court and under the provisions of the Companies Act, 1956. By the said order, the Official Liquidator of this Court came to be appointed as a Liquidator of the respondent with all powers under section 457 of the Companies Act, 1956, including the powers and authority to take charge and possession of the property and assets of the respondent and to deal with and dispose off in accordance with law. 10. The respondent thereafter filed two Company Applications bearing Nos.661 of 2015 and 693 of 2015 in the aforesaid company petition. The Company Application No.693 of 2015 was filed inter-alia praying for leave under clause 446(1) of the Companies Act, 1956 to implead the Official Liquidator as a party to the suit filed by the respondent before Delhi High Court. Insofar as the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein filed a suit (1091 of 2013) before the Delhi High Court against the respondent inter-alia praying for an amount of ₹ 2,97,78,800/- from the respondent to the petitioner under the said Deal Memo. On 16th September, 2016, the respondent filed a writ petition under section 482 of the Criminal Procedure Code against the petitioner before the Punjab Haryana High Court in the proceedings filed under section 138 of the Negotiable Instruments Act by the petitioner for dishonour of part payment of ₹ 19,99,600/-. In the said writ petition, there was a reference made by the respondent to the pendency of this company petition. 16. Some time in the year 2014, the respondent filed a Civil Suit bearing No.159 of 2014 against the petitioner before the Delhi High Court inter-alia praying for a declaration that the Deal Memo dated 21st May,2010 was frustrated and unsuccessful. It is the case of the petitioner that the address of the respondent mentioned in the said suit was the same as its registered office address at which the petitioner had sent the papers and proceedings and the notices of the winding up petition which were returned with the remarks left or unclaimed . In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount as its commission. The petitioner was not required to do anything else. He submits that the claim for commission of the petitioner was not dependent upon the successful execution and or performance of the contract by the respondent with those partners / sub-licencees or with the said O.C., C.W.G. The petitioner having introduced such clients and the respondent having executed the agreements with such partners / sub-licencees, the petitioner became entitled to be paid such commission at the rate of 20% of the amount mentioned in the agreements entered into between the respondent and such partners / sub-licencees. 20. Learned counsel for the petitioner invited my attention to the averments made in paragraph 8 of the affidavit in reply filed by the respondent setting out the names of seven clients introduced by the petitioner with whom the respondent has admittedly executed the agreements for various amounts. He submits that it is the case of the respondent itself that the respondent had received a sum of ₹ 4,75,32,060/- from those partners / sub-licencees introduced by the petitioner. He submits that the respondent has not paid even 20% of the said amount which is adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court is totally frivolous and is filed as the counter-blast to the suit and the company petition filed by the petitioner against the respondent. He submits that the respondent never terminated the Deal Memo dated 21st May, 2010 and on the contrary has acted upon the said Deal Memo and accepted the moneys to the tune of ₹ 5,27,00,000/- from various partners / sub-licencees introduced by the petitioner under the said Deal Memo. 24. Learned counsel for the petitioner invited my attention to the balance sheet of the respondent for the financial year 2013-2014 showing negligible bank balance in the account of the respondent. He submits that the respondent has siphoned off huge amount recovered from the partners / sub-licencees introduced by the petitioner and did not pay any amount except ₹ 19,99,600/- to the petitioner. It is submitted that the enquiry made by the Official Liquidator pursuant to an order of appointment made by this Court also clearly shows that the respondent does not have its registered office on ownership basis now but there is a leave and licence agreement by the owner in some one else's name in respect of the registered office premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent submits that at the instance of the said O.C., C.W.G., the entire matter is also referred to the C.B.I., who has also filed an F.I.R. against the respondent and several others. He submits that the petitioner also has filed a civil suit against the respondent in addition to this winding up petition and also the proceedings under section 138 of the Negotiable Instruments Act. 29. Learned counsel for the respondent submits that in view of pendency of several proceedings in respect of the same transaction pending before different Courts, including criminal proceedings, the petitioner cannot pursue this winding up petition against the respondent. He submits that if the petitioner obtains no objection from those partners / sub-licencees, that they would not make any claim against the respondent arising out of those agreements which are entered into between the respondent and those partners / sublicencees, the respondent can make some payment to the petitioner. 30. It is submitted by the learned counsel for the respondent that the respondent also has filed a separate suit against the petitioner inter-alia praying for a declaration that the said Deal Memo is void and is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Sushila Devi Anr. vs. Hari Singh Ors. AIR 1971 SC 1756 and in particular paragraphs 5, 7, 11 and 12, and in case of Rozan Mian vs. Tahera Begum Ors. AIR 2007 SC 2883 and in particular paragraphs 9 to 11. 33. It is submitted by the learned counsel for the respondent that no contract between the Organizing Committee, Commonwealth Games and the respondent came to be signed. Only a draft of the agreement was exchanged. 34. Learned counsel for the respondent placed reliance on the judgment of the Supreme Court in case of IBA Health (India) Pvt. Ltd. vs. Info-Drive Systems SDN. BHD., (2010) 10 SCC 553 and in particular paragraphs 9, 11, 18, 20 to 24, 29 to 31 and would submit that since there is substantial dispute between the parties in respect of the alleged entitlement of the petitioner of the commission, this company petition inter-alia praying for winding up cannot be entertained. He submits that the suit of the respondent having been filed first in point of time, both the suits are already tagged and are pending before the Delhi High Court. The next date of hearing in those suits is 4th July, 2017. 35. Mr. Shiralkar, learned counsel appearing for the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Contract Act, 1872 thus would not be attracted to the facts of this case. 38. Insofar as the submission of the learned counsel for the respondent that the contract between the parties hereto is frustrated on the ground that the partners / sub-licencees introduced by the petitioner are demanding refund of the amount paid by them, from the respondent is concerned, it is submitted that the petitioner is not concerned with any such legal notices alleged to have been sent by those parties. He submits that in any event the respondent has not produced any proceedings, if any, filed by those parties against the respondent for seeking refund of the said amounts. He submits that the claims, if any, of those parties, are already barred by limitation. He submits that the respondent has also not produced any reply to those notices sent by the respondent and are suppressed by the respondent. He submits that it is not the case of the respondent that such amounts demanded by those partners / sub-licencees from the respondent are kept in escrow. 39. Learned counsel for the petitioner distinguished the judgments cited by the respondent on the ground that none of those judgments would assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and the said addressed continued on the records of the Registrar of Companies. Even in the plaint filed by the respondent against the petitioner, the respondent has shown the same registered office address. Learned counsel tenders a copy of the record of Registrar of Companies issued in the month of February, 2017 showing the same registered office address of the respondent. 43. Learned counsel for the respondent submits that since this Court has already set aside the ex-parte order, this Court cannot now re-open that issue. He submits that one of the partner introduced by the petitioner has filed a suit against the respondent inter-alia for recovery of ₹ 1,50,00,000/-. REASONS AND CONCLUSIONS: 44. There is no dispute that the parties had executed Deal Memo dated 21st May, 2010, by which the respondent had appointed the petitioner as its representative on non-exclusive basis to negotiate on behalf of the respondent with potential licensing and merchandising partners in India in relation to the Commonwealth Games Delhi 2010 on the terms and conditions recorded in the said agreement. It is the case of the respondent that the said O.C., C.W.G. had granted licensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that those parties had asked for refund of the amounts paid by them to the respondent. One of those parties has also filed a suit for recovery of the said amount from the respondent. 47. A perusal of the Deal Memo entered into between the petitioner and the respondent clearly indicates that the respondent had represented and had given the guarantee in the said Deal Memo that they had exclusive rights to be the sole concessionaire including brand licensing and merchandising rights holder of the Commonwealth Games 2010 and all rights and benefits were granted by the licensor to the licencee i.e. the petitioner herein. Clause 1.2 of the said agreement provides that the said agreement shall be in force upon execution by both the parties and unless terminated in accordance with the provisions of the said Deal Memo for one year. 48. Clause 2.1 of the said agreement provides that the respondent will enter into agreement with a partner/s following an introduction effected by the petitioner during the Representation Period, executed either directly or until the Common Wealth Games 2010 was over and will pay to the petitioner commission @ 20% of the gross revenue due from ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not recover or could not recover the balance amount, if any, from those partners / sub-licencees under those agreements for whatsoever reasons alleged in the affidavit in reply or merely because there was a dispute between the respondent and the said O.C., C.W.G. or on the ground that the respondent also had made a counter claim against the said O.C., C.W.G. before the learned arbitrator, the obligation of the respondent to pay the commission @ 20% on the gross revenues due from each partner to the respondent would not frustrate under the said Deal Memo entered into between the petitioner and the respondent. 52. In my view, the petitioner is not concerned with the out come of the arbitration proceedings filed by the said O.C., C.W.G. or any counter claim filed by the respondent against the said O.C., C.W.G. before the learned arbitrator. In my view, even if the partners / sub-licencees introduced by the petitioner do not pay the balance amount to the respondent, the said event also will not frustrate the obligation of the respondent to pay the commission @ 20% on the gross revenues dues from each partner / sub-licencee to the respondent and such commission is being payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent and on the respondent having executed the agreements with them. The amount of 20% of commission was payable on the basis of the amount due to the respondent by those partners / sub-licencees introduced by the petitioner. A perusal of the record indicates that the respondent has already recovered substantial amount from those parties introduced by the petitioner but did not pay any amount to the petitioner towards commission. The respondent is thus benefited out of those agreements entered into between those partners / sub-licencees and the respondent. In my view, if a party who is himself responsible for frustration of the contract, if any, he cannot take benefit out of such default on his part and cannot refuse to perform his part of obligation under the agreement on the ground of alleged frustration of the contract under section 56 of the Indian Contract Act, 1872. 56. Insofar as the judgment of the Supreme Court in case of Har Prasad Choubey (supra) relied upon by the learned counsel for the respondent is concerned, the said judgment of the Supreme Court would assist the case of the petitioner and not the respondent. 57. Merely because the other parties have fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dismissed on the ground that the petitioner has alleged to have lost its right to file a written statement in the said suit filed by the respondent. The Delhi High Court has clubbed both the suits filed by the parties inter-se against each other for hearing and final disposal. There is no merit in this submission made by the learned counsel for the respondent. This Court cannot decide the merits of the said application for recalling of the order passed by the Delhi High Court. 61. In my view, there is no merit in the submission made by the respondent that the petitioner had suppressed any facts from this Court and more particularly about filing of the civil suit filed by the petitioner against the respondent when the aforesaid company petition was heard at the stage of admission and also at the stage of final hearing. When the company petition was filed by the petitioner, the said civil suit for recovery of money was not even filed by the petitioner and thus there was no question of the petitioner disclosing about the said suit against the respondent. In my view even if the petitioner did not inform this Court at the time of admission or at the time of final hearing that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent continued to be the same all through out,even till today at which the petitioner had sent papers and proceedings and the notices to the respondent. The same registered office address was disclosed by the respondent even in the proceedings filed by it against the petitioner. Though this Court noticed these facts in the order passed by this Court on 24th November, 2016, this Court gave an opportunity to the respondent to defend the company petition on merits. 65. A perusal of the financial documents i.e. the balance sheet as on 31st March, 2014 produced on record by the petitioner of the respondent clearly indicates that the respondent has been suffering from losses. Though the respondent admittedly received more than ₹ 4,00,00,000/- from those partners / sub-licencees introduced by the petitioner, the cash and the bank account of the respondent as on 31st March, 2014 showed as ₹ 1,18,970/-. There is no revenue from the operations as on 31st March, 2013 and also 31st March, 2014. There is no other income as on 31st March, 2014. There is a loss of ₹ 23,52,697/- as on 31st March, 2014 and ₹ 3,68,587/- as on 31st March, 2013. The balance sheet of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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