2013 (2) TMI 942 - HC - Companies Law

Issues Involved:

1. Entitlement to fees under the agreement dated 11.08.2008.
2. Alleged non-payment and winding-up petition under Sections 433, 434, and 439 of the Companies Act, 1956.
3. Dispute over the introduction of TATA Capital Ltd. as an investor.
4. Validity of the invoice and acknowledgment of debt.
5. Determination of a bona fide dispute over the debt.
6. Commercial solvency of the respondent company.

Detailed Analysis:

1. Entitlement to Fees Under the Agreement Dated 11.08.2008:

The petitioner claimed entitlement to fees under an agreement dated 11.08.2008, which provided for success fees of 3% of the gross consideration received by the respondent company from selected investors. The petitioner's role was defined as a financial advisor tasked with raising private equity finance through six phases, including transaction strategy, preparation of information memorandum, and completion of the transaction. The court noted that the agreement stipulated that success fees would be payable upon the signing of a definitive agreement and actual receipt of investment.

2. Alleged Non-Payment and Winding-Up Petition Under Sections 433, 434, and 439 of the Companies Act, 1956:

The petitioner filed a winding-up petition under Sections 433, 434, and 439, alleging non-payment of fees for services rendered. The petitioner issued a statutory notice on 03.11.2010, which the respondent company replied to, denying liability and contesting the claim. The court examined whether the alleged debt was an admitted debt or a bona fide disputed debt, which is crucial for the maintainability of a winding-up petition.

3. Dispute Over the Introduction of TATA Capital Ltd. as an Investor:

The petitioner claimed to have introduced TATA Capital Ltd. to the respondent company, leading to an investment of Rs. 25 Crores. The respondent company disputed this, asserting that TATA Capital Ltd. was already known to them and had previously advanced a short-term loan. The court found no conclusive evidence that the petitioner completed the phases of work as per the agreement or that the investment was a direct result of the petitioner's efforts.

4. Validity of the Invoice and Acknowledgment of Debt:

The petitioner presented an invoice dated 21.12.2009 for Rs. 75 Lacs, claiming it was for services rendered in raising funds from TATA Capital Ltd. and Aureous India Advisors Limited. The respondent company challenged the validity of this invoice, arguing inconsistencies and lack of evidence of actual receipt of funds from the alleged investors. The court noted that the invoice was for sanction, not actual receipt, and the email acknowledgment cited by the petitioner predated the invoice.

5. Determination of a Bona Fide Dispute Over the Debt:

The court examined whether there was a bona fide dispute over the claimed debt. It referred to established legal principles that a petition for winding up should not be used to enforce a disputed debt. The court found that the respondent company raised substantial grounds for disputing the debt, including the nature of the finance (equity vs. debt) and the petitioner's role in securing it. The court concluded that the dispute was bona fide and substantial, warranting dismissal of the petition.

6. Commercial Solvency of the Respondent Company:

The respondent company argued that it was a profit-making entity and a going concern, as evidenced by its financial statements. The court considered the company's commercial solvency as a factor, noting that winding-up petitions should not be used as a tool to pressure solvent companies into paying disputed debts. The court found no evidence that the respondent company was unable to pay its debts or had lost its financial substratum.

Conclusion:

The court dismissed the petition, concluding that the alleged debt was a bona fide disputed debt and not an admitted debt. The petitioner failed to demonstrate entitlement to fees under the agreement or that the respondent company received private equity finance as claimed. The court emphasized that winding-up proceedings should not be used to enforce disputed debts and that the respondent company remained a solvent and going concern.

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