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2010 (11) TMI 845 - HC - Companies LawWinding up - Circumstances in which a company may be wound up - Held that - It is accepted by the petitioner that they had security deposit of 3, 88, 740. In the petition and the two legal notices dated 19-5-2007 and 25-6-2007 it is not alleged that the security deposit was required to be adjusted on account of arrears towards electricity water or damages caused to the premises. There are no such allegations or averments. In these circumstances the security deposit given by the respondent company to the petitioner can be adjusted towards the rent for the months of March to May 2007. No further amount is due and payable by the respondent company to the petitioner towards admitted liability or debt due and payable for the purpose of section 433(e) r/w section 434 (1)(a) of the Act. In view of the aforesaid I do not find any merit in the winding up petition and the same is dismissed.
Issues Involved:
1. Whether the petitioner can seek winding up of the respondent company under section 433(e) of the Companies Act, 1956. 2. Whether the Agreement to Lease dated 5-9-2006 is an enforceable lease deed or merely an agreement to lease. 3. Whether the respondent company is liable to pay liquidated damages for vacating the premises before the lock-in period. 4. Whether the petitioner is entitled to claim arrears of rent and other dues from the respondent company. Issue-wise Analysis: 1. Winding Up Petition under Section 433(e) of the Companies Act, 1956: The petitioner sought winding up of the respondent company under section 433(e) of the Companies Act, 1956, claiming that the respondent company failed to pay the agreed rent and liquidated damages. The court examined whether the petitioner could establish that the respondent company was unable to pay its debts and whether the claim was sustainable under the said section. 2. Enforceability of the Agreement to Lease: The petitioner relied on an unregistered "Agreement to Lease" dated 5-9-2006, claiming it was an enforceable lease deed. The court differentiated between an "Agreement to Lease" and an "Agreement of Lease," citing the Supreme Court's observations in Food Corpn. of India v. Babulal Agrawal. It was held that an agreement for/to lease does not create any present interest in the property and does not require registration. However, the court found that the document in question was a lease deed in praesenti, which required registration. Since the document was unregistered, it could not be relied upon by the petitioner to claim any rights under it. 3. Liability for Liquidated Damages: The petitioner claimed liquidated damages for the respondent vacating the premises before the lock-in period, relying on Clause 5 of the agreement. The court examined the distinction between 'liquidated' and 'un-liquidated' damages, stating that mere use of the term 'liquidated damages' does not determine its nature. The court concluded that Clause 5 was a penalty clause rather than a genuine pre-estimate of damages. The petitioner failed to provide evidence that the clause represented a genuine pre-estimate of the loss suffered due to the respondent vacating the premises early. 4. Claim for Arrears of Rent and Other Dues: The petitioner claimed arrears of rent for the months of March, April, and May 2007, amounting to Rs. 3,88,740, and liquidated damages totaling Rs. 37,57,820. The court noted that the petitioner had a security deposit of Rs. 3,88,740 from the respondent, which could be adjusted towards the arrears of rent. The court found that no further amount was due and payable by the respondent company to the petitioner towards any admitted liability or debt for the purpose of section 433(e) read with section 434(1)(a) of the Companies Act, 1956. Conclusion: The court dismissed the winding-up petition, concluding that the petitioner could not rely on the unregistered lease deed to claim any rights, and the claim for liquidated damages was unsustainable. The security deposit held by the petitioner adequately covered the arrears of rent, and no further amounts were due from the respondent company.
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