2013 (11) TMI 751 - HC - Companies Law

Winding up of company - Non payment of dues - Payment not made for services rendered to defendants - Contract not reduced to writing - Held that - The proposal of the petitioner was accepted by the respondent and the fact that there was no contract which was reduced into writing cannot lead to the conclusion that the petitioner did not render any services. The respondent paid an advance of Rs. 1,00,000/- to the petitioner and stipulated that the duties of the petitioner would start from 20.12.2010 on the site. The petitioner was also directed to meet Mr. Sachdeva and Mr. Gupta deputed by the respondent to show the site and meet the contractors. Thereafter, there is a series of correspondence which would prima facie show that the petitioner did commence the rendering of the services for which it was engaged - AHLCON was the company which was engaged by the respondent for construction of the hotel. A copy of this letter which is dated 29.12.2010 is seen marked to the petitioner for information. The letter speaks of corporate guarantees for performance and mobilisation advance to be given by AHLCON to the respondent. This shows that the petitioner was kept in the loop. correspondence between the petitioner and AHLCON and copies being marked to the petitioner in respect of the initial correspondence entered into between AHLCON and the respondent indicate that the petitioner did render some services to the respondent for which payment was due. As to what exactly was the amount due to the petitioner for the services may be in dispute but the fact that there was a dispute does not in all cases mean that no amount was due by the respondent - there was no justification on its part to dispute the claim that the petitioner rendered services merely on the ground that no formal contract was concluded between the parties. The respondent could not have been unaware that copies of the letters written by AHLCON to it were marked to the petitioner. If no formal contract had been concluded and if the respondent had not engaged the services of the petitioner, the respondent ought to have told AHLCON that the petitioner had nothing to do with the hotel project and, therefore, copies of the correspondence need not be marked to the petitioner. Moreover, AHLCON could not have possibly come to know that the petitioner was engaged as consultant of the hotel project, except on being informed by the respondent. An advance of Rs. 1,00,000/- was given to the petitioner with a request to start the work on site from 20.12.2011. All this leads to the reasonable inference that the petitioner‟s services were engaged by the respondent. For the services, the petitioner has to be paid and merely because the amount payable is disputed and is not acceptable to the respondent, it cannot be said that there is no case for winding-up the respondent - Decided in favour of appellant.

Issues Involved:

1. Winding-up of the respondent-company under Section 433(e) of the Companies Act, 1956 for non-payment of dues.
2. Existence and acceptance of a contract for management services.
3. Rendering of services by the petitioner.
4. Non-payment of invoices and reminders.
5. Defense of the respondent regarding the non-existence of a concluded contract.
6. Admission of debt and the respondent's defense.
7. Substantiality and bona fides of the respondent's defense.

Detailed Analysis:

1. Winding-up of the respondent-company under Section 433(e) of the Companies Act, 1956 for non-payment of dues:

The petitioner sought the winding-up of the respondent-company for non-payment of dues amounting to Rs. 21,20,232/-. The petitioner argued that the respondent was unable to pay its debts, thus justifying the winding-up petition.

2. Existence and acceptance of a contract for management services:

On 17.12.2010, the petitioner submitted a techno-commercial proposal outlining the scope of "construction management services" and the terms of engagement. The respondent accepted this proposal via an email on 18.12.2010, mentioning an advance payment of Rs. 1 lakh and directing the petitioner to commence duties from 20.12.2010.

3. Rendering of services by the petitioner:

The petitioner claimed to have rendered services as per the proposal, evidenced by invoices raised for December 2010 and January 2011. The petitioner also provided evidence of correspondence with AHLCON, the company engaged by the respondent for construction, indicating that services were indeed rendered.

4. Non-payment of invoices and reminders:

The petitioner issued invoices for the services rendered, which were not paid by the respondent. Multiple reminders were sent by the petitioner on 01.03.2011, 21.03.2011, 25.03.2011, and 01.04.2011, demanding payment of Rs. 21,20,232/-. Despite these reminders, the respondent did not respond or make any payments.

5. Defense of the respondent regarding the non-existence of a concluded contract:

The respondent contended that no concluded agreement existed between the parties and that the petitioner did not render any consultancy services. They argued that the terms and conditions were not settled, and thus no liability for payment existed.

6. Admission of debt and the respondent's defense:

The court noted that the respondent's defense lacked substance. The acceptance of the proposal, advance payment, and subsequent correspondence indicated that services were rendered. The respondent's failure to respond to statutory notices and reminders further weakened their defense.

7. Substantiality and bona fides of the respondent's defense:

The court found the respondent's defense to be insubstantial and not bona fide. The respondent's conduct, including the lack of response to statutory notices and reminders, suggested that their defense was mere "moon-shine." The court cited the Supreme Court's judgment in Madhusudan Gordhandas & Co. Vs. Madhu Wollen Industries Pvt. Ltd., emphasizing that a winding-up order can be made even if the exact amount of debt is disputed, provided there is no doubt about the existence of the debt.

Conclusion:

The court admitted the winding-up petition, concluding that the petitioner had made a prima facie case for winding-up due to the respondent's inability to pay its debts. The respondent's defenses were found to be unsubstantial and not in good faith. The case was listed for further proceedings on 20.03.2014.

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