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TMI Blog2009 (7) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... notice to the Registrar of Companies, affixture of notice at the premises of the registered office of the respondent-company and also permitted advertisement in the English daily News Today and the Tamil daily Makkal Kural. However, by a subsequent order dated 26-9-2003, this court, having found from the records of the Registrar, Board for Industrial and Financial Reconstruction ("BIFR"), New Delhi, that in respect of the respondent-company under liquidation a case was pending before the BIFR in Case No. 283 of 2002, closed the company petition in view of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, with liberty to file application as and when finality is arrived in the case before the BIFR. 3. It appears that, subsequently, the respondent-company under liquidation has been discharged by the BIFR by an order dated 9-5-2006, and in C.A. No. 1410 of 2008, this court, by order dated 25-4-2008, has directed revival of C.P. No. 115 of 2002 at the stage where it was left and notice was directed to be served on the respondent returnable in six weeks time. In spite of the notice having been served on 26-6-2008, there was no representation and consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the petitioner. 7. It is the case of the petitioner that, as per the contract, the petitioner acted as a financial intermediate and by contacting various sources they arranged ECB borrowings for 8 million US dollars through BHF Bank of Germany: The respondent has agreed and thereafter, a letter of sanction was handed over to the respondent. As per the procedures, it was for the respondent-company to be responsible to comply with various conditions like furnishing of bank guarantee and getting clearance of the Reserve Bank of India, etc. It is stated that the project report prepared was forwarded by the petitioner to their counter part to obtain the financial sanction from BHF Bank. It is the case of the petitioner that it was based on the agreement the petitioner has prepared the project reports, etc., for getting order for sanctioning loan and ultimately the BHF Bank has sanctioned loan on 15-6-2000 and the respondent was directed to furnish the bank guarantee and was also directed to get the Reserve Bank of India s clearance. 8. It is the case of the petitioner that as per the subsequent terms of contract, the respondent had to pay 1 per cent of the value of the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 lakhs. The respondent is a public limited company, which has to act in the interest of its shareholders and customers. It is also stated that the letter of the respondent dated 20-4-2000, is very clear that the fee will be paid only after the respondent avails the loan. There was no obligation on the part of the respondent to give willingness for availing the loan and the petitioner has already been paid Rs. 2 lakhs, which itself, according to the respondent, is excessive. Therefore, according to the respondent, this petition for winding up is not maintainable. 11. It is the contention of Mr. Ravi, learned counsel for the petitioner that as per the terms of the agreement between the parties, even though all the terms have not been specifically put in writing, the respondent-company, by its letter, has clearly accepted its obligation to pay 1 per cent of the total loan towards the charges to the petitioner for arranging the loan and in such circumstances, when it is admitted that such loan has been arranged from a foreign bank and the further requirement was only on the part of the respondent-company in fulfilling certain requirements like that of furnishing bank guarantee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desh v. North India Petro Chemical Ltd. [1994] 79 Comp Cas 835 /3 SCC 348; ( v ) United Bank of India v. Ramdas Mahadeo Prashad [2003] 48 SCL 625 (SC); and ( vi ) Narsey Bros. v. Nithyalakshmi Textiles Mills (P.) Ltd. [2008] 144 Comp. Cas. 446 (Mad.). 13. Under section 433 of the Act, which deals with the circumstances in which a company can be wound up by the court, sub-clause ( e ) is as follows: "Section 433. Circumstances in which company may be wound up by Tribunal . A company may be wound up by the court, . . . ( e ) if the company is unable to pay its debts ." [Emphasis supplied] 14. Section 434 of the Act explains the circumstances when a company is deemed unable to pay its debts. The said section is as follows : "Section 434. Company when deemed unable to pay its debts. A company shall be deemed to be unable to pay its debts ( a )if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding one lakh rupees then due, has served on the company, by causing it to be delivered as its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (one) lakh in advance, towards the preparation of the detailed business plan. In addition, expenses incurred in preparing the plan, such as travel, boarding and lodging, taxi fares incurred on our consultants for visits to Tirupur will be to your account. ( c ) Professional fee payable to us, on successful completion of the assignment, is 2 per cent of the total funds arranged by us. This is payable on your drawing the first instalment ." (Emphasis supplied) 17. In fact, in the said letter, the petitioner-company has informed the managing director of the respondent-company that "if the above terms are acceptable to you, please confirm your acceptance to these terms in writing along with your cheque/demand draft for Rs. 2 lakhs (towards the advance) payable in favour of our company at Chennai." 18. It is true that based on the said letter the respondent-company, by its communication dated 5-2-2000, has enclosed a cheque for Rs. 2 lakhs drawn on the Canara Bank in favour of the petitioner towards non-refundable retainer fee payable in advance. In the said letter, the respondent has stated that the professional fees payable to the petitioner is 1 per cent of the total lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from BHF Bank, Germany subject to two conditions, namely, ( i ) obtaining approval of the Reserve Bank of India ; and ( ii ) obtaining bank guarantee in the acceptable format. It is not the case of the petitioner that the respondent has fulfilled the abovesaid requirements, for it is not in dispute that the abovesaid two requirements are to be performed only by the respondent. In fact, in the approval letter of BHF Bank dated 15-6-2000, approving the loan of 8 million US dollars, there is a condition that "unconditional irrevocable payment guarantee from an acceptable prime bank in India" has to be furnished by the respondent and subsequently, it is seen that the respondent has not shown any interest in availing the loan, since the clearance from the Reserve Bank of India has not been obtained and the bank guarantee has not been furnished. 22. For a legal notice issued on behalf of the petitioner dated 26-12-2000, demanding the amount of Rs. 37 lakhs, in the reply notice issued on behalf of the respondent dated 16-1-2001, it was the stand of the respondent that the letter dated 4-2-2000, was not a concluded contract and even if it is accepted that the respondent is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al fee is payable only on the respondent drawing the first instalment of the loan. Whether the respondent has taken any steps for the purpose of availing the loan or not, is not a cause of action for the petitioner for recovery of the professional fees. In any event, this is an issue which cannot be decided by this court under section 433 of the Act. May be the petitioner has a good case before the civil court for recover of the amount, but that itself is not a ground to hold that the respondent is unable to pay debt. There is no debt according to the records in my view and it is not the case of the respondent that the respondent is unable to payoff its ,debts and in such circumstances, to decide about the winding up of the company on those facts is not possible. 26. Law is well-settled in the field of contract that mere making an offer, by which the offeror signifies his desire to do something or not to do something with an intention that the person to whom such desire is intimated should accept, itself is not sufficient unless such offer is accepted by the offeree in full form, without making any counter offer. In the present case, when once the petitioner has made an offer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as follows : "(9) Shri R.F. Nariman, learned counsel for the respondent therefore, contended that the counter offer made by the respondent amounts to acceptance by conduct of the appellant and he placed reliance on paragraph 53 (acceptance by conduct) and 99 (agreement in principle only) of the Chitty on Contract. Paragraph 53 provides that an offer may be accepted by conduct. For example, an offer to buy goods can be accepted by supplying them; and an offer to sell goods, made by sending them to the offeree, can be accepted by using them . The substance of paragraph 99 is that parties may reach agreement in principle but the details may be worked out at a later date. There is no dispute to the proposition of law but two factors have to be kept in mind, viz., when the counter-offer was made by the respondent and whether the unilateral offer amounts to acceptance by submitting the tenders by the appellant to the board. We find that it does not amount to acceptance of counter proposal. It is seen that admittedly, clause ( 10 ) which thrusts responsibility on the first respondent was deleted in the counter-proposal. In clause 12, for joint responsibility unilateral liability w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed the loan, which is the crux of the issue involved, is a matter to be decided in a competent forum and in a properly instituted proceedings and not in a proceeding under section 433 of the Act, wherein the court decides the inability to pay off the debt. In the case on hand, the obligation of the respondent-company itself is disputed not only on the ground that there was no concluded contract, but also on the ground that even in a tacit contract, an obligation arises only on availing the loan. The non-availing of loan by the respondent from the foreign bank, in spite of the efforts taken by the petitioner under the agreement, itself cannot be a ground to decide that there has been inability on the part of the respondent-company to pay the amount due to the petitioner. 30. It is also well-settled that a winding up petition cannot be used as a method for the purpose of making recovery of any amount due, which is otherwise enforceable as per the due process of law. In Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami [1965] 35 Comp. Cas. 456, the three-judge Bench of the Apex Court has held as follows : "It is well-settled that a winding up petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned single judge was perfectly correct in rejecting the petition..." (p. 450) 33. While examining the entire case law on the issue, especially with reference to the word "debt" in section 433( e ) of the Act, another Division Bench of this court in Neg Micon v. NEPC India Ltd. [2004] 120 Comp. Cas. 784, presided over by A.S. Venkatachalamoorthy and K.G. Gnanaprakasam JJ., as they then were, has held as under : "If the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. In determining whether a debt is disputed bona fide or mala fide , the conduct of the parties, the character of the pleas and the circumstances which will be peculiar to each case will be the contributing factors. The test is whether the dispute is raised only to avoid payment of the debt and not based on the substantial ground." (p. 790) 34. On the established legal position and applying the same to the facts of the present case, I am of the considered view that the grounds raised by the petitioner against the respondent cannot be presumed to be an inability to pay off the debts by the respondent-company under section 433( e ) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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