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2011 DIGILAW 1418 (CAL)

Orbit Towers Pvt. Ltd. v. Simplex Projects Ltd.

2011-11-15

SANJIB BANERJEE

body2011
JUDGMENT 1. BOTH the basis of the claim and the defence are as dishonest as they come, but on a comparative assessment of the level of dishonesty, the Company Court may err - if it must - on the side of the company in the winding up jurisdiction. 2. THE short claim of the petitioner is that it made an inter-corporate deposit of an amount of Rs.20 lakh with the company. The petitioner has relied on the document under which it made the payment. The letter is dated November 17, 2009 and appears to have been received by the company with the company's rubber-stamp and the signature of an office-bearer thereof. The petitioner's letter referred to only "the Deposit" and not to any intercorporate deposit. The letter did speak of any tenure or interest. On October 5, 2010, the petitioner demanded repayment of the sum of Rs.20 lakh together with interest and had this to say in the first paragraph of the letter addressed to the company: "Whereas a sum of Rs.20,00,000/- {Rupees Twenty lacs only) was given to you vide cheque No. 514671 dated 17th November, 2009 drawn on Bank of Baroda, India Exchange Place Branch, Kolkata towards Inter Corporate Deposit bearing interest @ 13% per annum for a period of 6 months." 3. IT is evident from the letter that the petitioner claimed that the cheque for Rs.20 lakh tendered under cover of the letter dated November 17, 2009 reflected an inter-corporate deposit which was to carry interest and which was payable after a fixed duration. These minor matters did not find mention in the letter of November 17, 2009. 4. THE company's response to the October 5, 2010 letter was by way of a writing of October 18, 2010 where it claimed that a director of the petitioner had entered into a transaction with the company for the acquisition of the company's interest in a property and the payment of Rs.20 lakh was part of such transaction. To boot, the company added that the agreement had not been honoured by the petitioner company or its director and a substantial sum remained due and owing to the company from the petitioner or its director. To boot, the company added that the agreement had not been honoured by the petitioner company or its director and a substantial sum remained due and owing to the company from the petitioner or its director. The petitioner refuted the allegations contained in the company's letter of October 18 and sent the statutory notice on December 22, 2010, insisting on the claim made in the letter dated October 5, 2010 and referring to what the petitioner called was the fraudulent stand taken by the company in the letter dated October 18, 2000. 5. THE company's response to the statutory notice contains a detailed reference to the transaction that it has sought to set up. According to the company, one B.K. Mundhra, who is apparently the principal person in control of the petitioner, had agreed to acquire the company's interest in an immovable property at 66, Purna Das Road and there was an agreement entered into between the company and B.K. Mundhra in such regard. Both in its reply to the statutory notice and in the affidavit filed on its behalf, the company has taken great pains to explain that for the company, B.K. Mundhra was the petitioner itself. The company has referred to B.K. Mundhra controlling 55% of the paid-up capital of the petitioner and at least four directors of the petitioner carrying Mundhra surnames and the other directors of the petitioner being employees of the Mundhra family or owing allegiance to B.K. Mundhra. In short, according to the company, B.K. Mundhra is the petitioner company walking on two legs. 6. THE company's affidavit builds on its reply to the statutory notice. Though the company's initial response of October 18, 2010 merely gave the outlines of the transaction that the company asserts, the company did not claim that it was entitled to or had forfeited the sum of Rs.20 lakh that, according to the company, had been tendered by the petitioner on behalf of B.K. Mundhra. In the reply to the statutory notice, the company maintained that the sum of Rs.20 lakh had been forfeited since time was of the essence of the agreement between the company and Mundhra and the period of three months that was envisaged thereunder had elapsed. In the reply to the statutory notice, the company maintained that the sum of Rs.20 lakh had been forfeited since time was of the essence of the agreement between the company and Mundhra and the period of three months that was envisaged thereunder had elapsed. In the affidavit the company's stand is that the agreement between the company and Mundhra necessarily implied that the initial payment made on behalf of Mundhra would be forfeited upon Mundhra's obligation not being discharged within the stipulated time. The petitioner says that notwithstanding the transaction between the company and Mundhra as pleaded by the company, the payment which is the subject matter of the present proceeding has undeniably been made by the petitioner under a letter which, in its caption, referred to the letters "ICD" which may presumably stand for "inter-corporate deposit." The petitioner says that whether or not the company has any claim against Mundhra or any person who may be in overwhelming control of the petitioner, that cannot be an adequate defence to refuse repayment of a sum admittedly received from the petitioner. One of the first principles of corporate jurisprudence - that of the company being distinct from its shareholders - is the underlying basis for such submission. 7. THERE are several anomalies that appear in the petitioner's case. The marked difference between what was written in the letter of November 17, 2009 and what was contended in the opening paragraph of the petitioners demand of October 5, 2010 cannot be missed. In addition, it appears to be somewhat questionable that an organization of the magnitude and reputation as the petitioner would invest in a company like the one under attack. Though the company has sought to rely on the annual accounts of the petitioner in support of some assertion made in its affidavit, the company has been declined such leave because of the increasing - and distasteful - practice of springing documents in course of the hearing without affording the other side a previous look thereat. 8. THE principles that are to be kept in mind are well settled. If the company makes out an arguable case, not a watertight defence or even one that is likely to succeed, the Company Court has to allow the claim to be tried in more protracted proceedings. 8. THE principles that are to be kept in mind are well settled. If the company makes out an arguable case, not a watertight defence or even one that is likely to succeed, the Company Court has to allow the claim to be tried in more protracted proceedings. It is only when the Company Court sees that the defence is altogether untenable, but some other conditions weigh with the Company Court that an order may be made for security to be furnished. There is nothing that the petitioner has been able to show here in support of the petitioner's claim that it was an inter-corporate deposit that was made on November 17, 2009. Notwithstanding the petitioner not being a signatory to the purported agreement dated November 12, 2009 relied upon by the company, the close proximity of the date of the agreement put forth by the company and the date of the payment would lend some credence to the defence adopted by the company. Equally, the company has admittedly received the money from the petitioner against no consideration that can be attributed to have been received by the petitioner. Further, it is evident that nothing that the company has been able to rely on gives the company the authority to forfeit the money that was paid by the petitioner, whether or not such payment was tendered on behalf of Mundhra. There is, therefore, the undeniable payment by the petitioner and the irrefutable receipt thereof by the company which the company does not claim in so many words that it has suffered any loss or damage, it only says was in respect of a transaction involving the principal person in control of the petitioner that the company was entitled to forfeit. The company says that its transaction with Mundhra had a sell-by date and the alleged failure on the part of Mundhra to adhere to the schedule there under entitled the company to forfeit any payment that had been made by or on behalf of Mundhra prior to such date. Just as the petitioner's version of the inter-corporate deposit is unacceptable, so is the company's defence that it was entitled to forfeit the payment. 9. Just as the petitioner's version of the inter-corporate deposit is unacceptable, so is the company's defence that it was entitled to forfeit the payment. 9. THE petitioner does not appear to be a party to the transaction that the company maintains that since Mundhra was the face of the petitioner it was the company's belief, particularly upon the initial payment coming from the petitioner that the agreement was between the two parties herein. But such a naive explanation cannot be accepted from a company that fails to show any paper connecting the petitioner directly with the transaction. There was not even a written response from the company to the petitioner's letter of November 17, 2009 hinting at the agreement or the petitioner's involvement therein. 10. IT is elementary that a creditor carrying a winding-up petition against a company must affirmatively establish its claim. Yet, when the making and the receipt of the payment remain undisputed and there is no legal basis to the defence set up, the creditor would be ex debito justiciae entitled to an order of admission. There is no legal basis to the company's defence as to the consideration for the sum of Rs. 20 lakh that it admittedly received from the petitioner. But it is not altogether outlandish to suggest that business magnates in this country heading corporate bodies - even high-profile juggernauts - treat the corporate entities they control as mere proprietorship concerns. IT is such consideration and the fact that the payment by the petitioner does not appear to be an inter-corporate deposit that would warrant the claim being required to be proved in more protracted proceedings upon the company being directed to deposit the amount that it received from the petitioner. Accordingly, CP. No. 128 of 2011 is directed to be permanently stayed upon the company making a deposit of the sum of Rs.20 lakh with the Registrar, Original Side, within a period of a fortnight from date. In default, the petition will stand admitted for such sum and the petition will be advertised in the Statesman and in Bartaman and the advertisements should indicate that the matter would be returnable before Court on the first available working day after the expiry of four weeks from the date of publication thereof. Publication in the Official Gazette will stand dispensed with in such case. 11. Publication in the Official Gazette will stand dispensed with in such case. 11. IN the event the deposit is made by the company and no suit is instituted by the petitioner in respect of the claim within a period of eight weeks from date, the company will be at liberty to obtain refund of the deposit, together with any interest accrued thereon. Upon the deposit being made, the Registrar, Original Side will invest the same by way of a fixed deposit and the future treatment of such deposit will abide by the orders that may be made in the petitioner's action in support of such claim. 12. THERE will be order as to costs. The company will be obliged to intimate the petitioner immediately upon the deposit being made. Similarly the petitioner will be obliged to inform the company immediately upon the suit being filed. Petition disposed of.