2010 (4) TMI 898 - HC - Companies Law

Winding up - claim for damages - Held that - In the present proceedings the test is not to finally assess the merits of the claim or the defence unless the defence is such that it is demurrable. The company court will proceed no further once it sees that a triable issue has been raised which calls for a more detailed scrutiny. Just as it would not do for a company to create an illusion of a defence, it is also mandatory that a petitioning creditor affirmatively establish the debt before the petition can progress to the second stage after admission. It is for such reason that the petitioner has to be left to pursue the claim in the arbitral reference or in a suit that the petitioner may bring. The claim of the petitioner may be pursued in the arbitral proceedings already commenced or in a suit that the petitioner may institute in accordance with law. C.P. No. 199 of 2009 is permanently stayed. For the company s showing in its affidavit, it will pay costs to the petitioner assessed at 1,000 GM.

Summary

Issues Involved:
1. Claim on account of sums payable under two agreements.
2. Lock-in period obligations.
3. Abandonment of premises and subsequent claims.
4. Clause 2.2 and Clause 4 of the deed of lease.
5. Defense of the company regarding damages.
6. Disputed questions and penal nature of clauses.
7. Demand letters and statutory notice.
8. Company's response and alleged understanding.
9. Legal principles regarding claims in damages.
10. Just enrichment and mitigation of loss.
11. Summary proceedings and triable issues.
12. Security or payment to ward off admission.

Detailed Analysis:

1. Claim on Account of Sums Payable Under Two Agreements:
The petitioner claimed sums payable by the company under two agreements executed in February 2008: a deed of lease and an amenities agreement. The company had leased an area of about 763 sq.ft in Oberoi Mall, Goregaon (East), Mumbai.

2. Lock-in Period Obligations:
The petitioner argued that both agreements included a lock-in period, obligating the company to honor its commitments for 60 months, regardless of usage. The company was required to pay the monthly amounts for the entire lock-in period, even if it did not occupy the premises or surrendered them.

3. Abandonment of Premises and Subsequent Claims:
The company abandoned the premises and claimed to have delivered possession to the petitioner by an ante-dated letter on 17-1-2009. Despite the removal of the company's goods, the petitioner asserted that the company was liable for payments due under the agreements. The petitioner retained a security deposit but claimed it was insufficient to cover the due amount. An arbitration reference on the subject matter was initiated by the petitioner.

4. Clause 2.2 and Clause 4 of the Deed of Lease:
Clause 2.2 of the deed of lease, which also applied to the amenities agreement, stated that the lessee would be liable to pay an amount equivalent to the rent for the unexpired contractual term if the lease was terminated prematurely. Clause 4 stipulated the payment amounts: Rs. 1,06,057 per month for the first 33 months and Rs. 1,21,966 per month for the next 27 months.

5. Defense of the Company Regarding Damages:
The company's primary defense was that the petitioner's claim was in damages, which is generally not entertained in this jurisdiction. The company also suggested that the relevant clauses were penal in nature and required more protracted evidence than possible in the current proceedings.

6. Disputed Questions and Penal Nature of Clauses:
The company argued that disputed questions arose from the correspondence exchanged before the statutory notice. The company claimed that the clauses requiring payment for the entire period were penal and opposed to public policy.

7. Demand Letters and Statutory Notice:
The petitioner issued the first demand on 1-12-2008, followed by reminders and a lawyer's notice. The company allegedly handed over the keys on 15-12-2008, but the petitioner issued a formal receipt only on 17-1-2009. The petitioner demanded payment of outstanding amounts and forfeited the security deposit.

8. Company's Response and Alleged Understanding:
The company's response on 18-2-2009 asserted that no amount was due as of 15-12-2008 and mentioned an understanding that the agreements would be given a go-by. The petitioner refuted this, citing clauses that required any modification to be in writing and registered.

9. Legal Principles Regarding Claims in Damages:
The company relied on a judgment (Greenhills Exports (P.) Ltd. v. Coffee Board) stating that a claim in damages is not a debt until adjudicated by a court. The petitioner argued that the foundation of the claim was established and the quantum agreed upon, making it a genuine pre-estimate of damages.

10. Just Enrichment and Mitigation of Loss:
The court considered whether the petitioner would unjustly enrich itself by claiming rent and amenity fees for the unexpired lock-in period while potentially re-letting the premises. The court noted the need for evidence on whether the petitioner took steps to mitigate the loss.

11. Summary Proceedings and Triable Issues:
The court emphasized that in summary proceedings, the test is whether a triable issue has been raised. The petitioner must affirmatively establish the debt, and the company must show a defense that is not illusory or sham.

12. Security or Payment to Ward Off Admission:
The petitioner scaled down its demand to a prayer for security. The court noted that the discretion to require security depends on the assessment of the defense. The petitioner was directed to pursue the claim in arbitration or a suit.

Conclusion:
The court permanently stayed the petition (C.P. No. 199 of 2009) and directed the company to pay costs to the petitioner. The petitioner was advised to pursue its claim through arbitration or a suit.