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TMI Blog2017 (6) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... he Organizing Committee. Based on such representation, the petitioner entered into an agreement i.e. Deal Memo dated 21st May, 2010 with the respondent on the terms and conditions set out in the said agreement. Under the said agreement, the respondent appointed the petitioner as its representative to negotiate on its behalf with the potential licensing and merchandising partners in India in relation to the Commonwealth Games Delhi 2010. Clauses 2.1, 2.2 and 2.3 of the said agreement are extracted as under :- "2.1 If PBPL enters into an agreement with a Partner/s following an introduction effected by TSEIPL during the Representation Period, executed either directly or until the Common Wealth Games 2010, PBPL will pay to TSEIPL a commission of 20% of the gross revenues due from each Parter to PBPL under each agreement executed between PBPL and the Partners ("L&M Agreement") for the entire duration of the L&M Agreement or any extension and renewal thereof (Commission). 2.2 All deals will be signed directly between PBPL and the potential licensee. 2.3 In all cases, PBPL shall invoice the Partners directly and collect the payment due from the Partners, PBNPL shall immediately then r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18% p.a. The said notice was duly served upon the respondent by U.P.C. and email and registered post. The said statutory notice was issued under sections 433 and 434 of the Companies Act, 1956. 7. On 31st January, 2011, the petitioner received a reply from the respondent to the said statutory notice. Though the respondent admitted the execution of the agreement between the petitioner and the respondent, it denied various other allegations made by the petitioner and also denied the demand made by the petitioner. Insofar as the cheque amount of Rs. 19,99,600/- which was issued by the respondent to the petitioner is concerned, it was alleged in the said reply that the said cheque was issued by the respondent in the form of guarantee and in anticipation, finalization or formalization of the contracts with the sub-licencees / partners. The respondent denied that any of the partners or sub-licencees made payment as alleged by the petitioner in the statutory notice. 8. On 17th February, 2012, the petitioner filed this petition inter-alia praying for winding up of the respondent. It is the case of the petitioner that the respondent was duly served with the copy of the petition and the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of K. Bhaskaran vs. Sankaran Vidhyan Balan, (1999) Supp.(3) SCR 271 and held that just as notice at the correct address of the addressee refused by the addressee is presumed to be served on him, a notice returned as unclaimed also similarly raises a presumption under section 27 of the General Clauses Act that the notice is duly served on the addressee. 12. This Court however, considered the peculiar facts of the present case that there was already a pending suit, which is being contested between the parties, there was an arbitration reference pending between the respondent company and Commonwealth Games Committee, involving a large claim and held that though there is presumption of law concerning deemed notice, interest of justice requires that the final winding up order passed in the petition is recalled and set aside in the peculiar facts and circumstances of the case and the petition accordingly came to be restored to file at the stage of hearing and final disposal. This Court directed that the Official Liquidator who was already appointed in the matter and who was incharge at the liquidation proceedings, shall continue to operate for the time being as the Provisional Liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Deal Memo dated 21st May, 2010 and submits that under the said agreement entered into between the parties, the petitioner had introduced nine clients i.e. partners / sublicencees to the respondent. The respondent executed the agreements with the eight clients introduced by the petitioner for an aggregate amount of Rs. 14,47,50,000/-. He submits that the respondent deliberately did not execute an agreement with Nestle Limited which contract was to be for Rs. 35,00,000/-. The petitioner is entitled to 20% commission on that amount also. 18. It is submitted by the learned counsel for the petitioner that under clause 2.3 of the said Deal Memo, the respondent had agreed to enter into an agreement with the partners introduced by the petitioner directly. It was agreed by the parties that in all cases, the respondent shall invoice the partners directly and collect the payment due from the partners. The respondent further agreed that the respondent shall immediately then remit the commission due to the petitioner. It was agreed that all the deals will be signed directly between the respondent and the potential licencees. Under clause 2.1, the respondent agreed to pay to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was alleged in the said reply that the sub-licencees mentioned by the petitioner had either not made such payments or payments made by few others were not for complete amount as stipulated in contract. It was further alleged that the sub-licencee, who had made partial payment were raising disputes and were asking for refund of amounts paid by them. He submits that the defence raised in reply to the statutory notice that the cheque for the amount of Rs. 19,99,600/- issued by the respondent to the petitioner was in the form of guarantee is frivolous. Learned counsel invited my attention to the order passed by the Punjab & Haryana High Court recording the statement made by the respondent that there was no dispute in respect of the payment of the said sum of Rs. 19,99,600/- to the petitioner under the said Deal Memo. 22. Learned counsel for the petitioner invited my attention to some of the defences raised in the affidavit in reply and would submit that such defences are extraneous to the claim of the petitioner and are totally frivolous and moonshine. He submits that the petitioner is not concerned with the case of the respondent that the said O.C., C.W.G. had filed an arbitratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the arbitrator's fees. It is submitted that the respondent is thus unable to pay its debts and thus deserves to be wound up on that ground and also on the ground of just and equitable. 26. Mr.Gandhi, learned counsel for the respondent on the other hand submits that under clause 2.3 of the Deal Memo, unless the respondent would have received the claim and cleared the amounts from the partners / sub-licencees introduced by the petitioner, the respondent was not liable to pay any commission to the petitioner. He invited my attention to some of the notices issued by some of the partners / sub-licencees introduced by the petitioner and would submit that such partners/sub-licencees introduced by the petitioner have called upon the respondent to return the amount paid by them to the respondent. He submits that the petitioner thus cannot make any demand in respect of the amount paid, if any, by such partners / sub-licencees introduced by the petitioner from the respondent. 27. It is submitted by the learned counsel for the respondent that if the respondent subsequently found that the said O.C., C.W.G. did not have any authority to award any rights in favour of the respondent. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and also an order of winding up against the respondent. He submits that if the petitioner would have disclosed the factum of filing a civil suit for recovery of the amount under the said Deal Memo, this Court would not have passed an order of admission of the petition or of winding up of the respondent. He submits that since the petitioner did not approach this Court with clean hands and have committed fraud upon the respondent, the petitioner cannot be granted any discretionary relief by this Court. In support of this submission, learned counsel for the respondent placed reliance on the judgment of the Supreme Court in case of Manohar Lal vs. Ugrasen & Ors. (2010) 11 SCC 557 and in particular paragraphs 48 to 52, the judgment of the Supreme Court in case of S.P. Chengal Varaya Naidu vs. Jagannath & Ors. (1994) 1 SCC 1 and in case of State of U.P. & Ors. vs. Ravindra Kumar Sharma & Ors. AIR 2016 SC 690. 32. Learned counsel for the respondent states that since the license which was to be granted by the O.C., C.W.G. did not fructify, the respondent suffered very heavy loss. The counter claim made by the respondent against the said O.C., C.W.G. is pending before the learned arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the respondent and the partners / sub-licencees or that the said O.C., C.W.G. were frustrated or successfully performed or not. The liability of the respondent to pay to the petitioner was on the basis of the amount due under the said agreements entered into between the respondent and the partners / sub-licencees introduced by the petitioner. 36. It is submitted that in clause 2.3 of the Deal Memo, the parties had provided the mode and manner of the payment which was not based on the entitlement of the respondent to recover the same from those parties or on the basis whether the respondent earned any profit or recovered any amount from those parties or from the said O.C., C.W.G. or not. The liability of the respondent had already triggered upon the execution of the agreements between the respondent and those partners / sub-licencees introduced by the petitioner. 37. It is submitted by the learned counsel for the petitioner that that even if the said O.C., C.W.G. has terminated the contract awarded, if any, to the respondent or even if those partners / sublicencees have called upon the respondent to return the amounts paid by them, the same would not have any bearing on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is thus clear that though the respondent had recovered more than Rs. 5,00,00,000/- from various licencees being siphoned of the said amount. 41. It is submitted by the learned counsel that the respondent itself had filed affidavits before the Punjab & Haryana High Court on 25th March,2013 and 16th September, 2013 and was fully aware of this winding up petition but did not appear in these proceedings deliberately. The respondent had suppressed about those proceedings and affidavits filed by the respondent before this Court in the company application filed by the respondent for recall of the order passed by this Court. He also invited my attention to the papers and proceedings in Criminal Miscellaneous Application No.13870 of 2014 filed by the respondent in which the respondent itself has made an averment that the respondent was proposing to file a suit against the petitioner. He submits that the petitioner did not suppress any facts as alleged by the respondent. 42. It is submitted that the suit filed by the petitioner was after filing of the company petition and thus could not have been mentioned in the company petition. He submits that the petitioner is entitled to pros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even according to the respondent, pursuant to the said Deal Memo executed between the petitioner and the respondent, the respondent has executed the agreements at least with seven partners / sub-licencees who were introduced by the petitioner having the contract value aggregating to Rs. 14,47,50,000/- and the respondent had received a sum of Rs. 4,75,32,060/- from those seven partners / sub-licencees though the respondent has denied having received a sum of Rs. 14,47,50,000/- from the partners / sub-licencees introduced by the petitioner, the respondent has admitted the receipt of Rs. 4,75,32,060/- from those seven partners / sub-licencees introduced by the petitioner. 46. It is not in dispute that the respondent has already paid a sum of Rs. 19,99,600/- to the petitioner under the said Deal Memo executed by and between the parties. The respondent has now given up the plea that the said amount was not paid by the respondent to the petitioner under the said Deal Memo. The respondent has refused to pay the balance amount on the ground that the agreements entered into between those partners / sub-licencees introduced by the petitioner with the respondent and between the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The respondent had also agreed to pay the commission @ 20% of the gross revenues due from each partner to the respondent under each agreement executed by the respondent and partners. It is clear that the said commission @ 20% payable to the petitioner by the respondent was of the gross revenues due to the respondent from each partner introduced by the petitioner and was not dependent upon the full amount to be received by the respondent. 50. In my view, the entitlement of the petitioner of the commission was under clause 2.1 of the said agreement, whereas the mode and manner of payment was agreed under clauses 2.2 and 2.3 of the said agreement. The respondent has admittedly executed at least seven such L & M agreements with the partners / sublicencees introduced by the petitioner which agreements showed various amounts due and payable to the respondent by those partners / sub-licencees. It is not the case of the respondent that the amounts mentioned in those agreements were not due to the respondent from those partners / sub-licencees introduced by the petitioner. It is also not in dispute that the respondent had recovered substantial amount from those partners / sub-licencees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Deal Memo as canvassed by the learned counsel for the respondent. 54. In my view the judgment of the Supreme Court in case of Smt.Sushila Devi & Anr. (supra) and in case of Har Prasad Choubey (supra) would not assist the case of the respondent. The Supreme Court in case of Smt.Sushila Devi & Anr. (supra) had considered a situation of partition of India on 15th August, 1947 and as a result thereof, one of the Tehsil became part of Pakistan. After considering the evidence led in that case to establish that even before the actual partition of India took place, because of the serious communal troubles, it was not possible for the respondents to go to that Tehsil either to cultivate the lands or even to collect the rent from those who were cultivating the lands, the Supreme Court held that it was impossible for the plaintiff to even get into Pakistan in view of the prevailing circumstances, to either take possession of the properties intended to be leased or even to collect rent from the cultivators and for that situation the plaintiffs were not responsible in any manner whatsoever. It is held by the Supreme Court that section 56 of the Indian Contract Act lays down a rule of posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the petitioner introducing those partners / sub-licencees and upon the respondent executing the agreement with them. In my view, this defence of the respondent is totally frivolous and is moonshine. 59. Insofar as the submission of the learned counsel for the respondent that the suits filed by the petitioner against the respondent for recovery of amount and the suit filed by the respondent against the petitioner for a declaration that the said Deal Memo was pending and thus this company petition cannot be entertained is concerned, in my view, there is no bar against the petitioner from filing winding up petition against the respondent on the grounds permissible under section 434 of the Companies Act, 1956 even if civil suit for recovery of money is filed. The winding up petition is not for recovery for any amount. In the civil suit filed by the petitioner, the petitioner has prayed for a decree for recovery of the commission amount with interest payable by the respondent to the petitioner. Both the proceedings can be simultaneously proceeded with. 60. Insofar as the submission of the learned counsel for the respondent that the petitioner has lost its right to file a writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at that time. 63. Insofar as the judgment of the Supreme Court in case of Manohar Lal (supra), in case of S.P. Chengal Varaya Naidu (supra), in case of Ram Chandra Singh (supra) and in case of State of U.P. & Ors. (supra) relied upon by the learned counsel for the respondent in support of the submission that the petitioner had alleged to have suppressed about filing of the civil suit for recovery of money against the respondent and thus no relief of any nature whatsoever shall be granted by this Court in favour of the petitioner is concerned, there is no dispute about the proposition of law laid down by the Supreme Court in the aforesaid judgments holding that a party who approaches the Court has not only to approach with clean hands but also clean mind, clean heart and clean objection. 64. It is held by the Supreme Court in case of S.P. Chengal Varaya Naidu (supra) that non-disclosure of relevant and material documents with a view to obtain advantage amounts to fraud on court and a judgment and order obtained by playing fraud is a nullity and non-est in the eyes of law. In my view, since the petitioner did not suppress any material facts from this Court when this Court admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It is held that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The 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. The Supreme Court has also held that if there is no dispute as to the company's liability, the solvency of the company might not constitute a stand alone ground for setting aside a notice under section 434(1)(a), meaning thereby, if a debt is undisputedly owing, then it has to be paid. If the company refuses to pay on no genuine and substantial grounds, it should not be able to avoid the statutory demand. The law should be allowed to proceed and if demand is not met and an application for liquidation is filed under section 439 in reliance of the presumption under section 434(1)(a) that the company is unable to pay it debts, the law should take its own course and the company of course will have an opportunity on the liquidation app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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