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TMI Blog2012 (10) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, in its reply through advocate it has for the first time made reference of its right to forfeit the security deposit of the two petitioners. - it prima facie appears that the dispute or defence sought to be raised by the respondent in case of all three petitioners are in nature of afterthought and they are not genuine and bona fide but are, as described by the Apex Court, ingenious mask invented by the respondent to defeat the petition and seem to have been raised only with a view to shielding or hiding its neglect as well as inability to refund the security deposit and delay or frustrate the obligation to refund the deposits. - it becomes relevant and necessary to examine as to whether there is any bona fides in the dispute sought to be raised by the respondent or not. The respondent is directed to deposit in the Registry of this Court, within 30 days from receipt of the certified copy of present order, 30% of the deposited amount by each of the three petitioners, i.e. Rs.4.80 lakhs (Rupees Four Lakh Eighty Thousand only) in the interest of justice and the Registry shall list the three petitions being Company Petition Nos.179 of 2010, 181 of 2010 and 182 of 2010 on 16th J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuance of identical agreements entered into between the petitioner companies and the respondent company. It is also claimed that the petitioners have terminated the agreement in accordance with the terms thereof and that therefore the respondent company is under obligation to return the amount deposited towards security deposit. However, despite repeated reminders and requests and even after due and proper service of statutory notice at the Registered Office of the respondent company, the payment has not been made. The petitioners, therefore, have filed present petition. 4. The respondent company has, after receiving the notice from the Court, resisted the petition by filing affidavit-in-reply. It is claimed, inter alia, that the petition raises and involves several disputed questions of fact and in view of the terms of the agreements which were executed between the parties, the respondent company has a substantive and bonafide defence. The respondent has also resisted the petition on the ground that the agreements between the parties contain arbitration clause and that therefore the petitioners should approach the arbitration forum or it should be relegated to the remedy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v ) 26.03.2010 The petitioner, therefore, issued statutory notice. ( vi ) 27.04.2010 The statutory notice dated 26th March 2010 was, however, replied by the respondent. 7. The claim of the petitioners is based on the premise that the agreements obliged the petitioner to deposit the amount mentioned in the agreement as security deposit. The agreements also envisaged termination of the agreement by either party after following the procedure prescribed in the agreements. The petitioners claim that the agreements were terminated by the petitioners after following the procedure prescribed in the agreement and that therefore, according to the terms of contract/s the amounts deposited towards security deposits are required to be returned by the respondent to the petitioners. However, despite reminders and statutory notices the respondent has not refunded the security deposit amounts to the petitioners. 8. Per contra, the respondent would contend that the agreements were terminated illegally and arbitrarily and unilaterally by the petitioner. The respondent would further contend that the agreements envisage that in such event and circumstances the respondent can forfeit the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s terminated in accordance with the procedure set out hereinbelow. 51. This agreement can be terminated by either party by giving 30(thirty) days notice to the other side in writing. 55. Any delay or indulgence shown by the Company in enforcing the terms and conditions of this agreement or any forbearance or giving of time to the CCA shall not be construed as a waiver on the part of the Company or any breach or non-compliance of any of the terms and conditions of this agreement by the CCA shall in no manner prejudice the rights of the Company. 58. Any disputes or differences between the parties arising out of or in connection with this agreement or its performance shall,m so far as it is possible, be settled amicable between the parties. ( a ) If after 30 days of consultation the parties have failed to reach an amicable settlement on any and all disputes or differences arising out of or in connection with this agreement or its performance, such disputes or differences shall be submitted to Arbitration at the request of either party upon written notices to that effect to the other party and such Arbitration shall be in accordance with Arbitration and Conciliation Act, 1996, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im or demand or dispute against any petitioner out of the three petitioners concerned in these petitions, either immediately upon the petitioner's action of terminating the contract or even thereafter until the issuance of statutory notice by the three petitioners, much less before the petitioners terminated the agreements or even contemporaneously. 12.2 It is also pertinent to note that before or even immediately after termination of contract and even in its replies given to the petitioners in Company Petition Nos.181 of 2010 and 182 of 2012 in response to the statutory notice, the respondent never raised any dispute about accounts (as is sought to be raised by the respondent now, while resisting the petitions) and/or never claimed for settlement of accounts. 13. So far as the decisions on which learned counsel for the petitioners and the respondent have relied have also been taken into consideration. The facts involved in the said decisions, which are based on the facts involved in the respective cases, would not be applicable inasmuch as the facts of present case are materially different than the facts involved in the cited cases. Besides this, in view of recent decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion involves disputed questions of fact is concerned, it is necessary and relevant to observe that in present case there is no dispute about the fact that the respondent had entered into agreements with the three petitioners and/or about the fact that the three petitioners were obliged to deposit with the respondent specified amount as security deposit and the three petitioners had, accordingly, deposited amounts towards the security deposits with the respondent (the said amounts are still in the hands of respondent). There is also no dispute about the fact that the petitioners have terminated their respective contracts and the contract contains provision under which contract can be terminated. There is also no dispute about the fact that all the three petitioners terminated their respective contracts by issuing written intimation and thereafter or simultaneously demanded refund of the security deposit. It is also not in dispute that despite the demand the respondent has not repaid the amount of security deposit to the petitioners. Similarly, it is also not in dispute that until the statutory notice came to be served by the three petitioners and even until the petitions came to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt." 14.7 Having regard to the position as aforesaid and having regard to observations by the Apex Court in case of Booz Allen Hamilton Inc. ( supra ) and IBA Health (I) (P.) Ltd. ( supra ) the Court is not inclined to or convinced to accept respondent's aforesaid objections and/or to reject the petitions on the said grounds. 15. It is, however, necessary to examine as to whether the disputes sought to be raised by the respondent are bona fide, genuine and substantial or whether they are spurious, imaginary and in nature of afterthought only to delay or frustrate the debt. 15.1 On this count, at the outset it is necessary to note, two aspects. First, in view of the provisions contained under Section 433 and Section 434 of the Act once the petitioner establishes that any of the eventualities mentioned in Section 433 of the Act exists and record if the defendant neglects to make the payment despite statutory notice/demand and after expiry of time limit prescribed under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceeding clause i.e. clause 51 of the agreement. The said clause 51 provides that the agreement can be terminated by either party by giving 30 days' notice to other side in writing. 16.5 In light of the provisions contained under clauses 50 and 51 the petitioners claim that they have terminated the agreement by following the procedure prescribed by the agreement i.e. by giving notice of 30 days' in writing. The respondent would claim that they have terminated the agreement before the completion/expiry period of contract(s). 16.6 If the provision under clauses 50 and 51 are examined then it becomes clear that the said clauses allow complete liberty to both sides to terminate the agreement at any time. The said two clauses do not prescribe any time limit before which the agreement cannot be terminated. The said clauses also do not provide that the parties to the contract should allow the agreement to operate at least for the specified minimum period. Therefore, the respondent's objection on the ground that the petitioners could not have terminated the agreement within short span is not sustainable. 16.7 The issue regarding justification for or against the action of term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right of retaining the amount and the amounts are withheld in exercise of said provision. 16.11 Even in the reply affidavit in the petition the respondent has merely referred to the said provision and claimed that it has right to withhold the amount, however, any material to establish that the right has been exercised and the security deposit has been retained in exercise of clause 39 and the intimation has also been given is not brought on record. That is not even the case and claim of the respondent. 16.12 The other thing which is necessary for taking recourse under the said clause is to show that any dues and/or penalty have to be recovered from the petitioners, inasmuch as it is only for the said purpose i.e. for settlement of accounts that the respondent has the right to retain the amount of security deposit and upon settlement of account the deposit has to be refunded (after adjustment if any). 16.13 However, in present case, at any stage the respondent had not imposed any penalty nor it has claimed that it has dues to be recovered from the petitioners or any one or more of them. At any point of time any demand for any dues does not appear to have been raised. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has forfeited the security deposit on account of predetermination of agreement by them. 17.4 In present case of these three petitioners it is noticed that so far as the petitioner in Company Petition No.179 of 2010 is concerned, the respondent had not given any reply to the intimation of termination of agreement or to the statutory notice and for the first time defence and objections have been raised only in the reply affidavit. So far as the petitioner in Company Petition No.181 of 2010 is concerned, the respondent has not clearly and expressly mentioned that it has actually and in fact forfeited the deposit. In case of petitioner of Company Petition No.182 of 2010 the respondent did not give any reply to the petitioner in response to the intimation about termination of contract but it did reply the statutory notice and in its reply to the statutory notice the respondent has not clearly and expressly mentioned that it has actually and in fact forfeited the deposit and intimated the petitioner about its action. 17.5 Furthermore, it is interesting that the reference of the said right is, for first time, made in the reply to the statutory notice given through advocate in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r facts of these cases, claim that its difference is bonafide and genuine. 19.2 However, the above discussed details demonstrate that there is more than coincidence that not in case of one petitioner but in case of all three petitioners the respondent has not repaid or returned the amounts of security deposits and in all three cases it has come out with stock or similar contentions that settlement of accounts is pending (whereas at any point of time, as mentioned above any question related to settlement of accounts had never been raised by the respondent) and in all three cases, without having ever intimated the petitioners that the security deposits have been forfeited in exercise of rights conferred by the contract or the amounts have been withheld in accordance with the provisions in the contract, the respondent company has resisted the petitions on the ground mentioned hereinabove earlier. 19.3 Therefore, when it is noticed that in all three cases the respondent company has adopted similar modus operandi, the Court prima facie finds reason to believe that the defence raised by the respondent is an afterthought or it is, as described by the Apex Court, a mask to defeat t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed bona fide or not, the conduct of the parties in relation to the transaction in question, the character of the pleas and the circumstances which will be peculiar to each case will have to be considered. IV. Court's findings on bona fides of company's defence and orders which may be passed upon such findings: (1) After considering the material on record, if the Court comes to the conclusion that the defenceraised by the Company is not only not bona fide, but the defence is reeking with mala fides or the company's conduct leading to the dispute (in respect of which the Company's defence is found to be not bona fide) was dishonest, the Court would admit the petition and pass an order for advertisement. (2) Where the Court comes to the conclusion that the defence is not bona fide (as distinguished from the conclusion that the defence is mala fide), the Court may give the Company an opportunity to pay the debt to the petitioner within the stipulated time limit. If the debt is not paid, the Court would ordinarily admit the petition, unless a strong case is made out for not admitting the petition. The Court may, in its discretion, even pass a conditional order of admission witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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