2015 (9) TMI 1131 - HC - Companies Law

Maintainability of petition for recovery suit by the company who was not exiting at the time of filing of suit - That the present petition was filed as on 3.4.2010. That the petitioner s status as a corporation stood voided, on account of non payment of taxes, under the Delaware Code applicable in the State of its incorporation, in the United States of America, as on 1.3.2010. And that it stood renewed and revived by a certificate of revival dated 2.8.2011. The point that would arise for consideration is therefore, whether the petition could have been entertained as on 3.4.2010, by this court. Held that - The petitioner was not in existence as on the date of institution. The petition was hence not maintainable. It is not a case where the petition had been instituted before the certificate of incorporation was forfeited, whereby it could be claimed that the petition could be revived immediately after the certificate of incorporation was revived, though by a deeming fiction the corporation ceased to exist, temporarily. It was also possible for the petitioner to have instituted fresh proceedings on a revival, after the initial forfeiture of the certificate of incorporation. The petition which was infirm on the date of filing cannot be resuscitated on the basis of a subsequent event, to the prejudice of the respondent. The petitioner would also be disentitled to claim that any such relief be moulded in its favour, to avoid multiplicity of proceedings or such other hardship, on account of the petitioner not having stated the actual state of affairs as on the date of filing of the petition, which the respondent has brought to light subsequently. The petitioner seeking to take this impropriety in its stride and to glibly seek to defend its position is hardly appreciable. - Petition dismissed.

Issues Involved:
1. Validity of the petition filed by a corporation whose status was voided.
2. Respondent's liability for outstanding payments.
3. Acknowledgment of debt by an independent consultant.
4. Revival of a corporation and its retrospective effect on legal proceedings.

Detailed Analysis:

1. Validity of the Petition Filed by a Corporation Whose Status Was Voided:
The petitioner, a company incorporated in Delaware, USA, filed a petition on 3.4.2010. However, its corporate status was voided as of 1.3.2010 due to non-payment of taxes. The respondent contended that the petition was invalid as the petitioner had forfeited its corporate powers, including the right to sue. The petitioner argued that its subsequent revival on 2.8.2011 validated all prior actions retroactively. The court examined Delaware Code SSSS 510 and 312, and relevant case law, including *Transpolymer Industries Inc. v. Chapel Main Corp.*, which established that a voided corporation loses its right to sue. The court held that the petition was not maintainable as the petitioner was non-existent at the time of filing.

2. Respondent's Liability for Outstanding Payments:
The petitioner claimed that the respondent owed a significant amount for goods supplied. The respondent disputed this, stating that payments were made directly to a third party, Abakus Communications, as instructed by the petitioner. The respondent contended that it had paid the petitioner in full for the units supplied and that no further payments were due. The court did not delve into the merits of this issue due to the primary finding on the petition's maintainability.

3. Acknowledgment of Debt by an Independent Consultant:
The petitioner relied on a letter dated 10.7.2008, allegedly acknowledging the debt, signed by Mr. Ajay Jalan, an independent consultant. The respondent argued that Mr. Jalan was not authorized to acknowledge debts on its behalf and that his signature did not bind the respondent. The court found that the letter could not be treated as an acknowledgment of debt by the respondent, as the consultant was not authorized to make such acknowledgments.

4. Revival of a Corporation and Its Retrospective Effect on Legal Proceedings:
The petitioner argued that its revival under Delaware law retroactively validated all actions taken during the period of forfeiture. The court examined the legal principles and found that the revival did not cure the initial defect of non-existence at the time of filing the petition. The court cited *Rameshwar v. Jot Ram* and other precedents to emphasize that the right of a party is determined by the facts as they exist at the time of instituting the action. Since the petitioner was non-existent on the date of filing, the petition could not be resuscitated by subsequent revival.

Conclusion:
The court allowed the application in CA 118/2012, rejecting the petition as not maintainable due to the petitioner's non-existence at the time of filing. Consequently, the applications in CA 204/2010, CA 722/2010, CA 1455/2014, and CA 369/2015 were also dismissed as they did not survive for consideration.

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