9911796707
TMI Blog2009 (2) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... our weeks from the date of default - C.P. NO. 898 OF 2008 - - - Dated:- 12-2-2009 - S.J. VAZIFDAR, J. Virag Tulzapurkar and Simil Purohit for the Petitioner. Navroz Seervai and Abhay Jodya for the Respondent. JUDGMENT 1. The petitioner has sought an order of winding up of the company, inter alia, on the ground that it is unable to pay its debts. According to the petitioner, the company is indebted to it in a sum of Rs. 7,58,52,000. 2. Two identical leave and licence agreements, both dated 3-4-2008, were entered into between the petitioner and the company. Under each of the agreements, the petitioner agreed to give and the company agreed to take on leave and licence basis, an office unit, belonging to the petitioner, ad-measuring 3,500 sq. ft. together with three car parking spaces. The premises and the car parking spaces are in the same building "Solitaire". The terms and conditions of the agreements are identical. 3. Under section 4, clause 1 of each of the agreements, an aggregate sum of Rs. 10,53,500 was payable per month towards the use of the licensed premises, the furniture, fittings, equipment, etc., therein, and the car parking spaces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been terminated prior to the commencement of the term of the licence and not during the lock-in-period, it was not liable to pay the said sum of Rs. 7,58,52,000. The company agreed to adjust the amount paid by the petitioner towards stamp duty against the sum of Rs. 10,00,000 and called upon the petitioner to refund the balance amount of Rs. 8,99,800. 8. The petitioner through its advocate, served a statutory notice dated 1-7-2008, on the company. The further correspondence merely reiterates the rival contentions between the parties. 9. Mr. Seervai contended that the said leave and licence agreements had not come into effect/existence. He based the submission on the fact that the agreements had been terminated prior to the commencement of the terms thereof. 10. The submission is not well founded. The agreements were executed by both the parties. The mere fact that they were to be performed at a later date cannot possibly lead to the conclusion that the agreements had not come into existence and that the parties were not bound by the terms thereof. There is a fundamental difference between an agreement coming into existence and the date for the performance thereof. Merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence till the commencement of the licence period, must be accepted in view of sub-section (2) of section 55. 17. This submission must be rejected at least on two grounds. Firstly, the company cannot be permitted to take advantage of its own wrong. It is the company that terminated the agreement and expressly indicated that it would do nothing further in respect thereof. It is important to note that the termination by the letter dated 16-4-2008, was before the expiry of the period of four months within which the agreements could have been registered It is not the company s contention that the petitioner had refused to register the agreements. 18. Secondly, and more important, is the fact that the reliance upon section 55(2) in the facts of the present case, is entirely misconceived. Under section 55(2), if the agreement is not registered "the contention of the tenant about the terms and conditions subject to which a premises have been given to him by the landlord on leave and licence or have been let out to him, shall prevail, unless proved otherwise". The term "contention" in section 55(2) refers to contentions of fact and not of law. Construction of the terms and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the terms of the alleged agreements referred to in paragraph 6 of the further affidavit. The most glaring omission in this regard pertains to the clause providing a lock-in-period such as clause 8 in the said leave and licence agreements. 24. Mr. Seervai also relied upon the said e-mail message dated 1-5-2008, as it called upon the petitioner to proceed with leasing his offices to other parties. Mr. Seervai submitted that the petitioner s claim is only in damages which as on date are not quantified and that there is nothing to indicate the quantum of damages. 25. Let me assume that the clause providing payment during the lock-in-period is similar to a maximum liquidated damages clause. Even then, it will make little difference in the facts of the present case and in particular, considering the nature of the agreements. 26. The only manner in which damages in a leave and licence agreement can be mitigated is by actually letting out the premises again. A licensor may not necessarily want to let out the premises to another person. 27. The agreements of leave and licence cannot be equated with agreements for the sale of goods or properties. In an agreement for sale it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lock-in-period. 30. I will now speculate as far as I possibly can, in favour of the company. I will presume that the petitioner would be bound to mitigate the loss even by taking a calculated risk and even without insisting on all the clauses in the present leave and licence agreement including the clause as to the lock-in-period. It is not the respondent s case that there is no difference in the price as of today. 31. Mr. Seervai s contention that the price immediately upon termination ought to be considered, is not well founded. A licensor understandably and necessarily would not enter into a leave and licence agreement with any party without ascertaining the suitability and reliability of a party and endeavouring to obtain terms desired by him. This cannot be done immediately. It would take time. 32. Thus, considering this fact also, the maximum I would be inclined to speculate in favour of the company at this stage is by assessing the loss at 50 per cent. This speculative exercise is only for the benefit of the company and only with a view to show some leniency in arriving at the quantum of deposit to be ordered. 33. It is important to note in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 433 and 434 of the Companies Act. If Mr. Bhabha s contention that commercial insolvency must be established in every case were to be accepted, it would lead to the logical absurdity that, though section 434 lays down six grounds on which a winding-up order could be made by the court, in the ultimate analysis, it boils down to only one ground, viz., actual inability to pay debt laid down in clause ( e ) of section 433. Such a construction would render all other clauses of section 433 redundant. Moreover, if that were to be the construction to be placed upon section 434(1)( a ), there would be no reason why section 434(1)( a ), should have been enacted by the Legislature. In my opinion, therefore, it is impossible to accept Mr. Bhabha s contention on this point in the face of these statutory provisions." (p. 471) 39. A similar contention was raised before the same learned Judge in Seksaria Cotton Mills Ltd., In re [1969] 39 Comp. Cas. 475 (Bom.). Following the judgment in Advent Corpn. (P.) Ltd., In re s case ( supra ), the learned Judge held : ". . .Mr. Khambatta has sought to contend that the company is not commercially insolvent and that its financial positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties in this regard. The creditor is bound to say it is undisputed and the company in all probability would say it is disputed. Whether the debt is undisputed or not will depend upon the decision of the Court. It can hardly be suggested that merely because the company contends that the debt is disputed, it cannot be termed to be undisputed and that it cannot be held that there is no bona fide dispute in respect of the petitioner s claim. Where a company refuses to pay an amount held by the Court to be undisputed, on the ground that, according to it, the debt is disputed, it must be assumed that the company is deliberately refusing or is unable to pay the undisputed debt. 42. That the above judgments are a complete answer to Mr. Seervai s submission, is clear: (A)Mr. Seervai, however, submitted that the above judgments are in conflict with the judgment, of the Supreme Court in the case of Pradeshiya Industrial Investment Corpn. of Uttar Pradesh v. North India Petro Chemical Ltd. [1994] 79 Comp. Cas. 835 . (B)There is absolutely no conflict. In that case, the Supreme Court found that the debt itself was yet to be established and that merely because the promoter s agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany chooses not to pay that particular debt. (G)There is nothing in the judgment in Pradeshiya Industrial Investment Corpn. of Uttar Pradesh s case ( supra ) which even remotely suggests that this observation was even dissented from, leave alone, impliedly overruled. Further, both the judgments were delivered by two learned Judges. I cannot, therefore, imply an intention on the part of the learned Judges in Pradeshiya Industrial Investment Corpn. of Uttar Pradesh s case ( supra ) to overrule the judgment of the Supreme Court in Madhusudan Gordhandas Co. s case ( supra ). 43. In the circumstances, the company petition is disposed of by the following order : ( i )If the company deposits in this Court a sum of Rs. 3,50,00,000 on or before 31-3-2009, the same shall be invested in a nationalised bank initially for a period of one year and thereafter for like periods of one year each. ( ii )In the event of the amount being so deposited and in the event of the petitioner filing a suit within twelve weeks from the date of the petitioner s advocate being informed of the same in writing, the amount shall stand transferred to the credit of that suit. ( iii )In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
