Jitender Lalwani & Ors vs Dhir International Pvt. Ltd

JAYANT NATH, J

This petition is filed under sections 433(e) 434 and 439 of the Companies Act, 1956 seeking winding up of the respondent company. The case of the

petitioners is that the petitioners had let out the premises being industrial property bearing No.299, Phase-II, Udyog Vihar, Gurgaon-122015, Haryana

to the respondent vide Lease Agreement dated 12.09.2002. As per the lease deed an aggregate rent of Rs.6,50,000/- per month was agreed to be

paid. A sum of Rs.40,00,000/- was also paid by the respondent as interest free security deposit. The monthly rent was to increase by 20% after every

three years. Hence, it is pleaded that the rent increased accordingly and became Rs.9,36,000/- w.e.f. 15.10.2008. Thereafter for the period 15.10.2011

to September 2014 the rent became Rs.13,47,840/-. It is the case of the petitioner that the respondents have been defaulting in payment of rent and for

the period from 15.10.2008 to 15.10.2015. There are arrears of rent of Rs.9,08,56,708/-. A legal notice was issued to the respondent under section 434

of the Companies Act. 1956 on 21.10.2015 seeking payment of Rs.10,13,17,662/-.

In the meantime, the learned Arbitrator was appointed and arbitration proceedings commenced. On 4.7.2016 the learned Arbitrator has given his

award in favour of the petitioner. An award of approximately Rs.20,40,07,330/- has been passed in favour of the petitioner. It is stated that thereafter

the respondent has also filed objections under section 34 of the Arbitration & Conciliation Act which were dismissed on 25.1.2018. In the meantime,

the respondent vacated the premises on 01.03.2018.

Learned counsel for the respondent has strongly opposed the present winding up petition. He has relied upon judgment of the Andhra Pradesh High

Court in the case of National Research Development Corporation vs. Electro Flux (P) Ltd., [2005] 127 CompCas 23(AP) and; judgment of Punjab

and Haryana High Court in the case of Talwar Brothers (P) Ltd. vs. Punjab State Industrial Development Corporation Ltd., Manu/PH/0042/1999 to

contend that as the petitioner has availed of an alternative remedy of filing execution proceedings which are pending adjudication and where the

respondent has filed objections, this court would not pass any winding up order against the respondent company as the petitioner has chosen its

alternative forum to adjudicate the issues.

I may look at the judgment relied upon by the learned counsel for the respondent. In Talwar Brothers (P)Ltd. vs. Punjab State Industrial

Development Corporation Ltd. (supra) the Punjab and Haryana High Court held as follows:-

“10. The courts have held that winding up petition cannot be treated as an alternative to the suit or the legal process of a suit. Certain controversies

can only be properly adjudicated in the proceedings other than winding up. In the present case, admittedly, the proceedings are pending before the

court of competent jurisdiction and any order passed by this court would apparently be affecting the orders of Hon'ble Supreme Court of India, which

is not permissible. The provisions of sections 433 and 434 of the Act do not vest any right in the petitioner, but cases have to be considered on their

own merits and keeping in view the facts and circumstances of each case by the court.

The entire controversy in the present case, can be viewed from another angle as well. It is a settled principle of law that if the dispute raised by

the respondent company in a winding up petition is bona fide and just, the winding up court would be very reluctant to pass any adverse order. I am of

the considered view that the respondent company has a bona fide, reasonable and just dispute to the claim of the petitioner company. In fact, the order

of Hon'ble Supreme Court of India is the complete defence of the respondent company at this stage. Furthermore, the objections relate to the very

validity and legality of the impugned award. One of the grounds raised is that the arbitrator could not have passed an order of eviction in relation to the

disputed property. It is not for this court to comment upon the merits or otherwise of this dispute but at least prima facie these disputes cannot be

termed to be mala fide or totally unfair or unreasonable. In the case of M/s. Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P) Ltd.

MANU/SC/0033/1971 : AIR 1971 SC 2600, the Hon'ble court had enunciated the principle which will regulate the fate of the winding up petition in

response to which a bona fide or a valid dispute has been raised.â€​

In that case the objections to the Award were pending and were being adjudicated upon. The objections related to merits of the case as to the very

existence and validity of the Award including the plea of jurisdiction. Pursuant to certain proceedings before the Supreme Court, the Supreme Court

had also permitted the respondents to raise their objections before the executing court. The above observations were made as there was a bona fide

dispute regarding the objections raised by the respondents.

Regarding the judgment of the Andhra Pradesh High Court in National Research Development Corporation vs. Electro Flux (P) Ltd. (supra), in that

case the court was of the view that as the petitioner has chosen an alternative remedy the company court would not exercise its discretionary powers.

In the present case the facts are materially different. The award that was passed in favour of the petitioner has subsequently been upheld and the

objections filed by the respondents under section 34 having been dismissed. The said objections were dismissed on 25.1.2018. Admittedly, no appeal

has been filed under section 37 of the Arbitration Act till date. The Award has attained finality and the decree is to be executed. Admittedly, despite

lapse of nearly nine months of dismissal of the objections the respondents have not made the necessary payment.

I may also note that though the learned counsel for the respondent has vehemently argued that objections have been filed by the respondent against

the execution, but he was unable to elaborate any details on merits regarding the objections. In fact learned counsel for the respondent admits that for

the balancesheets filed by the respondents for the year ending 31.3.2016 there is a debit balance of Rs.10,77,12,798 plus applicable service tax which

the respondent company is unable to pay.

In Mediquipsystems (P) Ltd. vs. Proxima Medical System GMBH, (2005) 7 SCC 42 the Supreme Court held as follows:-

“18. This Court in catena of decisions held that an order under Section 433(e) of the Companies Act is discretionary. There must be a debt due and

the company must be unable to pay the same. A debt under this section must be a determined or a definite sum of money payable immediately or at a

future date and that the inability referred to in the expression 'unable to pay its dues' in Section 433(e) of the Companies Act should be taken in the

commercial sense and that the machinery for winding up will not be allowed to be utilized merely as a means for realising debts due from a

company.â€​

In the present case, the debt is clearly is due and payable by the respondent.

Consequently, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to

take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in the Delhi editions of the

newspapers ‘Statesman’ (English) and ‘Veer Arjun’ (Hindi), as well as in the Delhi Gazette, at least 14 days prior to the next date of

hearing. The cost of publication is to be borne by the petitioner who shall deposit a sum Rs.75,000/- with the Official Liquidator within 2 weeks,

subject to any further amounts that may be called for by the liquidator for this purpose, if required. The Official Liquidator shall also endeavour to

prepare a complete inventory of all the assets of the respondent-company when the same are taken over; and the premises in which they are kept

shall be sealed by him. At the same time, he may also seek the assistance of a valuer to value all assets to facilitate the process of winding up. It will

also be open to the Official Liquidator to seek police help in the discharge of his duties, if he considers it appropriate to do so. The Official Liquidator

to take all further steps that may be necessary in this regard to protect the premises and assets of the respondent-company.

In the interest of justice the above order is suspended for four weeks to enable the respondent to pay the dues of the petitioner. In case necessary

payments are made in terms of the award passed by the learned Arbitrator dated 4.7.2016 the above order shall stand revoked.

List on 30.11.2018.