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TMI Blog2013 (9) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... d Marks India Limited enter into a joint development with the respondent-company which ultimately resulted in Joint-Development Agreement dated 05.07.2008 coming into existence on account of the negotiation and discussion made by the petitioner. It is because of this precise reason the agreement dated 26.04.2008 between respondent and petitioner came into existence whereunder respondent agreed to pay to the petitioners a professional fee of Rs. 2.50 crores. The said contract is a contemporaneous contract entered into between respondent and petitioner. In other words, the performance of obligations under the said agreement was dependent on the performance of the obligations by the parties to the Joint-Development agreement dated 05.07.2008 - conditions agreed to between the parties would indicate that there was substantial modification amongst other conditions to the original agreement dated 05.07.2008. This would also indicate that claim of the petitioner which was based on the Joint- Development Agreement dated 05.07.2008 got eclipsed by virtue of the Addendum agreement dated 28.10.2009 and thereby benefits which would have accrued to the respondent got substantially reduced. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make proper use of the land and petitioners being professional agents/mediators in the field of real estate and development of land, their services came to be engaged by the respondent company. Petitioner using its long standing experience introduced M/s. Era Land Marks India Limited, New Delhi for entering into a joint development agreement in respect of the above said land with the petitioner and for the said purposes petitioners negotiated and mediated with said developer for a very good offer being given to the respondent Company which was the highest offer made by any developer during the said period. It is contended that pursuant to such negotiation, respondent company entered into a joint development agreement on 05.07.2008 with M/s. Era Land Marks India Limited, New Delhi and same was duly registered. 3.1 It is contended by the learned counsel that pursuant to the said joint development agreement entered into, it was agreed to by the respondent company to pay 1.25% of the agreed land value as on the date of joint development which was Rs. 200 crores, as professional fee to the petitioner namely, a sum of Rs. 2,50,00,000/- was agreed to be paid and accordingly an agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned from the website of the Ministry of Corporate Affairs as per Annexure-R-1 which would indicate the registered office of the respondent company is at 41/1, UIPAR Mansions, R.V. Road, Basavanagudi, Bangalore, Karnataka - 560004, and not at the address either specified in the statutory notice or in the address depicted in the cause title of the petition. As such he contends that there is no substantial compliance of section 434(1)(a) of the Companies Act, 1956 and as such the petition is liable to be dismissed. Even otherwise on merits he would contend that present petition has been filed under section 433(e) and petitioner has to necessarily establish any one or all the ingredients of Section 434(1)(a) to (c) and contends that undisputedly petitioner has not been able to demonstrate the alleged debt due having been admitted by the respondent or demand made by petitioners as contemplated under section 434(1)(a) has not been complied by respondent enabling the petitioner to seek for winding up of respondent-Company under section 434(1)(a). He would further contend that even under clause (c) of section 434(1) petitioner has not been able to demonstrate that said provision is attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay its debt, by taking into account the contingent or prospective liabilities of the respondent company. He draws the attention of the court in the instant case petitioner has neither pleaded nor proved these aspects and as such petitioner is not entitled for the relief sought for. 5. At the request of petitioner's counsel, the matter was listed on 21.06.2013 and a memo has been filed by the learned counsel for the petitioner enclosing the photocopy of the 'returned cover' which contains an endorsement 'no such company' which is claimed to have been despatched by the learned counsel for the petitioner through courier to the registered office of the respondent-company and the visiting cards of the tenants said to be in occupation of the said premises to contend that registered office of the respondent-company is not located in the address available with the ROC depicting the registered office of the respondent company as mentioned therein. He would also draw the attention of the Court to the reply notice dated 22.02.2012 issued by the respondent-company whereunder the respondent-company itself has admitted that its registered office is at the address to which the statutory notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the promoters/directors of the respondent-company and they were on the look out of a developer with repute and who was capable of investing huge amount and was approached by the petitioner who agreed to use their expertise in the field of real estate and secure a developer. In this direction, the petitioner has introduced M/s. Era Land Marks India Limited, New Delhi, to the respondent-company and after negotiation and discussion, the offer made by the said developer to the respondent-company which was the highest offer by any developer made during the said period came to be accepted by the respondent - company and accordingly a joint development agreement came to be entered into between respondent-company and M/s. Era Land Marks India Limited, New Delhi on 5.07.2008 - Annexure-A which was duly registered in the office of Sub Registrar, Kengeri. Prior to the execution of said joint development agreement, agreement dated 26.04.2008 - Annexure-B referred to herein above came to be entered into between the petitioner and the respondent-company. 9. It is not in dispute that pursuant to the agreement dated 26.04.2008 - Annexure-B entered into by the respondent-company with the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Rs. 35 Crores to Rs. 25 crores and hence it is contended that payments made to the petitioner is itself a excess payment and as such, they are not entitled to any further payment. RE : POINT NO.(1): 12. The learned counsel for the petitioner has vehemently contended that respondent itself has admitted its registered office is at the address mentioned in cause title and as such, it cannot now turn around and contend that its registered office is not at that address but elsewhere. 13. The Division Bench of this Court in Sundur Manganese and Iron Ores Ltd. v. Manganese Ore (India) Ltd. [2002] 37 SCL 159 (Kar.) has held that when a petition is filed under Section 433 (e) the notice of demand if not sent to the registered office but to the administrative office cannot be held to be sufficient compliance with the statutory requirement to raise a presumption that company is unable to pay its debts. It has been held as under: "7. The language employed in Section 434(1)(a) of the Act is significant. While the section provides that the mode of service can be either by 'registered post or otherwise', it does not provide the place of service as 'at the registered office or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its registered office is at the address reflected in the statutory notice and the memo filed on 21.06.2013 would also evidence this fact would not be a ground to accept the said plea, since consent does not confer jurisdiction. 15. The certificate of incorporation of respondent-company as per Extract produced at Annexure R-1 along with Statement of objection would indicate that registered office of the Respondent-Company is located at No.41/1, Uipar Mansion, R.V. Road, Basavanagudi, Bangalore and not at the address shown in the statutory notice. Hence, there is non-compliance of Mandatory requirement of Sec. 434(1)(a) of Companies Act. 16. In that view of the matter, point No.(1) has to be answered against the petitioner and in favour of the respondent. RE: POINT No.2: 17. The petitioner is seeking for winding up of the respondent - company on the ground that it is unable to pay the debt due to the petitioner in a sum of Rs. 1.43 Crores due under the agreement dated 26.04.2008 - Annexure-B. Respondent to stave off such a claim has filed detailed statement of objections contending inter alia that a bona fide dispute exists with regard to such payment and the basis for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Hegde Golay Ltd. v. State Bank of India. "A basic question arises, does the Court have a discretion under Section 222(e) and 223? The general rule is that where a petitioning creditor can prove that his debt is unpaid and the company is insolvent it is the duty of the Court to direct a winding up and the creditor is entitled to an order ex debito justitiae. On the other hand, it has been said that the latter is phrase which means no more than that in accordance with settled practice the Court can only exercise its discretion in one way namely by granting the order. These statements can be reconciled on the basis that although the matter is 'a complete and unfettered judicial discretion' the discretion is exercised in accordance with certain established principles, but the principles do not bind the Court in an all or nothing way. In accordance with these principles the creditor has a prima facie right to a winding up order which is subject to certain exceptions." Again, Palmer is quoted, as to the exceptional circumstances under which discretion to wind up would not be exercised:- "(1) Where the petitioner's debt is less than $200; (2) The debt is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actly under the provisions of the Companies Act. In the case of a suit filed under Order 37 of the Code of Civil Procedure, the defendant has to seek leave of the Court to defend against the claim. It has been held that if the defence could be honest and bona fide, leave should be granted; a decision whether the defence pleaded is bona fide or honest at the initial stage of a suit, can only be hazardous; but, still, the Court is called upon to apply its judicial mind on this question. Similarly is the situation when, the respondent company is asked to show cause against a winding up order, at the initial stage; the respondent, here, has to show cause as to why the petition filed should not be advertised; such an advertisement has adverse effects on the reputation of a company and therefore, it is given an opportunity to show cause against ordering the advertisement- (vide: The National Conducts (P) Ltd. v. S.S. Arora). Therefore, whenever the respondent company comes forward and sets forth its defence, this Court has to examine the nature of the respective cases pleaded by the parties and if a prima facie case is made out by the petitioner, the respondent should shoulder the onus o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a similar question arose in connection with the eligibility for promotion wherein : differential service experience based on differential educational qualifications had been prescribed and longer period of service experience was prescribed for diploma holder Junior Engineers in comparison to degree holder Junior Engineers for the post of Assistant Engineer. Explaining the rationale behind the permissibility of making such a distinction, this Court held that the difference between the service qualifications has been an essential criterion for promotion based on interest of an establishment. While considering the said question, this Court had also the occasion to consider the possibility of two views being taken while interpreting a particular set of service rules. In such a situation, this Court held that the rules should be interpreted in consonance with the practice followed by the department for a long time. In fact, while arriving at such a conclusion, this Court had also the occasion to consider the earlier case of N. Suresh Nathan (AIR 1992 SC 564: 1992 AIR SCW 181) (Supra)." 22. Section 433 of the Companies Act enables this Court to wind up a company if it is unable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that respondent - company enters into a joint development agreement with M/s. Era Land Marks India Limited on 05.07.2008 which is at Annexure-A. The said agreement stipulates the conditions required to be performed by each of the parties. All such reciprocal promises required to be performed as stipulated in the agreement is not required to be delved upon by this Court. However, some of the essential terms of the said contract which would have a bearing on the claim of petitioners are extracted hereinbelow: (1) The developer was required to pay a security deposit of Rs. 35 Crores to the respondent. (2) The undivided share to which the respondent-company was entitled determined at 37%. (3) Existing HUDCO loan raised by the respondent and its stake holders was agreed to be cleared by the said developer M/s. Era Land Marks India Limited within 90 days from the date of Joint-Development agreement. Undisputedly, petitioner had participated, negotiated and mediated for the parties to enter into joint development agreement. In fact, petitioners themselves agree in the present petition that they used their long standing expertise in the real estate field and their g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... background, it cannot be held or construed that the defence set up by the respondent- company to be either moon shine or a frivolous one to discard it or to construe the said defence raised by the respondent without any basis. In that view of the matter, I am of the considered view that the dispute raised by the respondent to deny the claim of petitioner is bona fide and one of substance and such dispute cannot be construed as frivolous or brushed aside as a cloak to hide its inability to pay the debt and prima facie respondent has established that plea putforward by way of defence in the statement of objections is a bona fide plea. In that view of the matter, point No.(2) formulated herein has to be answered in favour of respondent and against petitioner. 27. In view of the fact that arbitration proceedings are pending between respondent-company and the developer M/s. Era Land Marks India Private Limited , New Delhi, petitioner would be at liberty to work out its remedies after conclusion of arbitration proceedings and liberty is reserved to the petitioner in this regard. 28. For the reasons aforestated, Company petition is hereby dismissed. Parties are directed to bear their ..... 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