9911796707
TMI Blog2001 (1) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... of law, which was pleaded, the Division Bench while allowing the appeal directed that the petition be heard afresh on all points including the point which was raised by way of amendment. In paragraph 6 of its order the Division Bench has clarified that the court had no occasion to enter into the merits of the rival contentions and the order of the learned Single Judge was set aside without investigating into the merits of the case. The petition has, thus, been placed for admission once again and has been argued for admission. 2. Before going into the merits of the case, it would be necessary to consider whether the petition is maintainable. An additional affidavit of 13-9-2000 has been filed on behalf of the company in which it has been sought to be contended that the provisions of Part X of the Companies Act apply to an unregistered company and will not therefore apply to a firm which is duly registered under the Indian Partnership Act, 1932. It has been sought to be contended that under section 583 of the Act only an unregistered company may be wound up and the respondent which is duly registered under the Indian Partnership Act, 1932 is not an unregistered company within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression unregistered company shall save as provided by the exclusion in clause ( a ) include any partnership, association or company consisting of more than seven persons. In other words any partnership or association or company which consists of more than seven members at the time when the petition for winding up is presented is regarded as an unregistered company. Clause ( b ) is not circumscribed by the requirement that the partnership should be an unregistered partnership. In fact clause ( b ) contains no reference to a requirement as regards the registration of the partnership or association as the case may be. In these circumstances reading the statute as it stands, there is no substance in the contention that Part X has no application to the case of a winding up of a registered partnership firm. 5. There is no doubt about the fact that in the case of a partnership registered under the Indian Partnership Act, 1932, the remedy for a dissolution of partnership is also provided in Chapter VI of the Act. The Indian Partnership Act provides for a dissolution of a partnership firm in section 39 and enunciates various modes of dissolution amongst them, in section 40 a dissolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 434. 6. What emerges from the provisions of section 583 is that the power of the Court to wind up an unregistered company is restricted to a unregistered company as defined in section 582, on the grounds which are specified in section 583 and subject to the restrictions contained therein. The generality of the provisions of the Companies Act in regard to winding up is, thus, circumscribed in application to the winding up of an unregistered company. The limitations on the winding up of an unregistered company are as regards the qualifying conditions for being called an unregistered company, the mode of winding up, and the circumstances in which winding up may take place. 7. As I said earlier, the position is not bereft of precedent. A learned single Judge of this Court considered the question in Vasantrao Dattaji Dhanwatay v. Shyamrao Dattaji Dhanwatay AIR 1977 Bom. 188. It will be clear from para 2 of the judgment of this Court that the court was considering the question of a partnership registered under the Indian Partnership Act. The question which was sought to be canvassed before the court was that in the case of a registered partnership which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd up as a company or as an unregistered company under the Indian Companies Act, 1913 or any Act repealed by that Act. An enactment means the whole Act or a part of it. The proviso which contains a rule of construction of references in any such enactment to any provision in the Indian Companies Act, 1913 or any Act repealed by that Act is not relevant for the present purpose. It is clear that the provisions for winding up of the affairs of a firm which Chapter VI of the Indian Partnership Act contains besides provisions for the dissolution of partnership are left untouched by section 590 of the Companies Act, 1956. The cases cited in support of the respective contentions of the parties are not really on the point under consideration except the decision of the Mysore High Court in Pattada Uttayya v. Pattada Somayya, AIR 1955 Mys. 149 to which counsel for the appellants referred. The Mysore case contains an observation on section 271 of the Indian Companies Act, 1913 which corresponds to section 590 of the Companies Act, 1956. The learned single Judge who decided the case held that there was nothing in section 271 or in the words any unregistered company may be wound up appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct it must be stated in fairness that the learned counsel appearing on behalf of the respondents argued the question as to the merits of the petition for winding up first and the question of maintainability was only faintly pressed upon at the concluding stage of the submissions. 10. Coming to the merits of the case, the dispute in the present case arises out of certain premises consisting of Unit Nos. 112 and 113 situate on the first Floor of a building known as "Nirman Kendra" situate at Dr. E. Moses Road, Mahalaxmi, Mumbai-400 013. By and under an agreement dated 22-6-1995 the respondent-company, which is the owner of the aforesaid premises agreed to and granted a licence to the petitioner of the premises for a period of 60 months commencing from 15-7-1995. The agreement of licence provided expressly in clause (1) that the petitioner herein who was the licensee shall not claim any tenancy rights in respect of the premises and shall only have a right to use and occupy the premises for a period of 60 months. Under clause 2 the licence fee was Rs. 22,500 per month, and under clause 3 a provision was made for furnishing a security deposit in the amount of Rs. 1,60,00,000. The se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and the docket of the said agreements, bears the name of the aforesaid firm of attorneys. On 1-7-1995 by the first agreement which was entered into between the parties, the respondent as licensor agreed in clause (1) of the agreement not to exercise the right of termination of the licence as stipulated in clauses 9 and 12 of the earlier agreement. By clause 2, the licensor permitted the licensee to carry out any alteration in the premises subject to obtaining the approval of the Municipal Corporation. By the second agreement which was entered into also on 1-7-1995 the petitioner was given an option to purchase the premises from the respondent at and for a consideration of Rs. 1,75,00,000. Clause 1 of the said agreement provides thus : "1. In the event of the Purchaser not exercising its option to extend the period of licence as provided in the said Leave and Licence Agreement, the Purchaser shall have an option to purchase from the vendors the said premises at or for a total price of Rs. 1,75,00,000 (Rupees one crore and seventy-five lacs only). This option shall be exercisable by the Purchaser at any time during the last three months of the licence period i.e. during the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement relating to surrender of the premises and recovery of the amount. According to the respondent, the petitioner was treated virtually as the purchaser and it was on this basis that the petitioner had been permitted to carry out structural alterations in the premises. The letter of the respondent s attorneys made no reference to the agreement dated 1-7-1995, by which an option to purchase had been given to the petitioner. This fact was adverted to in the reply dated 8-10-1999 addressed on behalf of the petitioner to the respondent. 14. On 29-9-1999 a statutory notice for winding up under the provisions of section 583(5)( a ) was issued by the petitioner, which was replied to on 20-10-1999 on behalf of the respondent. According to the petitioner, on the termination of the licence by the petitioner, the company is bound to refund the security deposit of Rs. 1.60 crores. This amount constitutes a debt payable by the company and the failure of the company to pay the debt constitutes a ground for winding up under sub-sections (4) and (5) of section 583. 15. A perusal of the agreements which were entered into between the parties would show that by the first agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n leave and licence, the purchase would take place subsequently. The case of the respondent is that after a few days of the execution of the agreement of licence, a representative of the petitioner, Mr. Cawas Patel informed the respondent that the petitioner be treated as an outright purchaser and the respondent would not be required to refund the said deposit of Rs. 1,60,00,000. 18. Even if the facts set out in the aforesaid paragraphs of the reply are accepted as correct as they may be for the purpose of a winding up petition, the real issue which arises is as regards the execution of the agreement dated 1-7-1995 by which the petitioner was given an option to purchase the property. The respondent stands by the option agreement and it is not the case of the respondent that the said agreement was not to be acted upon. In fact in paragraph 2.7 of the affidavit in reply, the respondent has stated that the option agreement Broadly recorded the understanding between the parties. Having regard to this situation, in my view even if the negotiations which took place between the parties prior to the execution of the agreement dated 1-7-1995 are as pleaded by the respondent, inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd substance. 19. In a petition for winding up the primary, if not, sole issue to be considered is whether there is any substantial or bona fide defence. Equally, it is well settled that the remedy for winding up is not to be utilised as a means to enforce the payment of a debt, which is bona fide disputed by the company. The principle of law has been enunciated in the judgment of the Supreme Court in Amalgamated Commercial Traders (P.) Ltd. v. Krishnaswami [1965] 35 Comp. Cas. 456. Reference may also be made to the judgment of this Court British India General Insurance Co. Ltd., In re AIR 1971 Bom. 102. The Division Bench of this Court in Pfizer Ltd. v. Usan Laboratories (P.) Ltd. [1985] 57 Comp. Cas. 236 has held that merely because there was a dispute as to the liability to pay interest, that would not render a statutory notice invalid or result in the dismissal of the winding up petition. 20. In the present case I have come to the conclusion that there is no bona fide defence and all that has occurred is a deliberate and wilful neglect on the part of the respondent to refund the security deposit which is due and payable to the petitioner. In the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
