9911796707
TMI Blog1999 (9) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... ers Pvt. Ltd., having its corporate office at 502, Som Datt Chambers 1, 5, Bhikaji Cama Place, New Delhi 110 066, party of the first part hereinafter referred to as the principal (which expression shall unless excluded by and/or repugnant to the subject and/or context shall include its directors, agents, employees, nominees and/or assigns) and Banaras Beads Ltd., of A/1, Industrial Area, Varanasi 221 106, party of the second part hereinafter referred to as the agent (which expression shall unless excluded by and/or repugnant to the subject and/or context shall include its successors, agents, nominees and/or assigns). Whereas the principal approached the agent for financial arrangements against share applications for subscription to rights issue in the primary market of Shrishti Videocorp Limited and whereas the agent agreed to make financial arrangements in account of the principal on the terms and conditions and against charges to be paid by the principal unto the agent as enumerated hereunder. Now, this agreement witnesseth and it is hereby agreed by and between the parties hereto as follows: (1)The agent shall inform the principal of the amount that the agent would like to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishti Videocorp Limited acquired by the agent on behalf of the principal as well as the shares pledged by the principal with the agent by way of security and recover the amount advanced by the agent on behalf of the principal in acquiring the FCDs and further interest at 28 per cent. per month for the days of default and all expenses incurred in this regard. (10)That all costs of acquisition of FCDs and transfer shall be on account of the principal. (11)That any dividend, bonus, rights share or interest payable in the intervening period will be the entitlement of the principal. (12)That this agreement has been entered into at Varanasi and the Varanasi court alone shall have the jurisdiction to entertain any suit or proceedings in case of any dispute between the parties. (13)The agent, immediately after submitting debenture applications shall draw his bill on the principal for the commitment charges at the rate specified in clause (7) hereinabove, payment whereof shall be made by the principal to the agent forthwith. (14)The agent, on receipt of the allotment/refund advice, shall intimate the principal of the date of application supported with the xerox copy of such advice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 434 of the Companies Act, 1956, to the respondent-company at the registered office but even after the service of notice the company neither responded nor made the payment towards the dues of the petitioner. The petitioner filed the company petitionion on December 3, 1996, and on this petition the notice was issued to the company. The respondent-company has filed a counter-affidavit and has taken several pleas. The contention of the respondent-company is that the petitioner had invested the amount in purchase of the convertible debentures and it was its investment and is not a debt due to the petitioner. The petitioner is claiming the amount in pursuance of the agreement dated May 16, 1995, and if there is a breach of agreement, the petitioner can file a suit for specific performance of agreement. Secondly, the petitioner has already given security in the shape of shares of the respondent-company. Thirdly, the cheque was entrusted to the petitioner with an understanding that it shall not be encashed and presented to the bank and, lastly, that the company is solvent. It is not a case where the winding up petition be entertained. I have heard R.P. Agarwal, learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity for buy-back of debentures and if the respondent failed to buy back the debentures the petitioner can file suit for specific performance of the agreement and the winding up petition on the ground of "inability to pay" is not maintainable. A perusal of the agreement indicates that the debentures were not purchased by the petitioner in its own right but as an agent for the respondent-company and as they were purchased as agent and it was in the name of the petitioner, it was to be transferred in the name of the respondent company. It was in the nature of transaction of loan because the FCDs were to be transferred within 180 days in the name of the respondent-company and to ensure that, a post-dated cheque was to be presented in the bank on the due date. Moreover, there cannot be any question of buy-back of the debentures because the debentures were held by the petitioner as agent of the respondent and in the account of the respondents and not in its own right. The petitioner is not expected to buy back its own property. The third submission of learned counsel for the respondent is that the petitioner was provided adequate security in the shape of shares/debentures and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Instruments Act and civil proceedings are simultaneously possible. From the facts and circumstances of the present case it is clear that the respondent-company is unable to pay its debt. In paragraph 9 of the counter-affidavit filed on behalf of the respondent it has been asserted that the shares and debentures could not be got transferred due to certain unavoidable circumstances and for the reasons beyond their control "the respondent-company has been unable to perform this part of the agreement". In paragraph 10 it has been stated that the main reason for the company having not been able to perform its part of the agreement is unforeseen collapse of the share market and drought of fund which is being faced by the entire industry and the business community. In paragraph 27 it has been stated that no amount is due and payable by the respondent to the petitioner. On the other hand, it is stated "however, the obligation to repurchase the FCDs is outstanding and the respondent-company is making efforts to discharge its obligation. However, any delay in discharge of the obligation to repurchase the units would not amount to creation of and inability to pay the debts". 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