Tata Communications Ltd. vs Channel-99 Media Networks (P.) Ltd.

Ajay Rastogi, J.—Instant company petition has been filed u/ss 433 & 434 of Companies Act, 1956 (''Co. Act'') read with R.95 of Companies (Court) Rules, 1959 seeking winding up of M/s Channel 99-Media Network (P.) Ltd. (''respondent-Co.'').

As alleged, respondent-Co. Was incorporated on 02/05/2008 with the Registrar of Companies, Rajasthan and as per its memorandum & Article of Association of the Company, main objects to be pursued on its incorporation inter alia are to entertain and inform the people of Rajasthan State and rest of India through television broadcasting of authentic local culture & exhaustive, upto date news and current affairs; and to carry on business to establish, run, produce, promote, purchase, construct, manage TV channels, cinematography theatres, for hiring out or exhibiting cinema films or for staging drama, dances, musical & other advantageous programmes from time to time.

It has been averred that respondent-Co. approached petitioner-Co. to provide internet & telecommunication & services, and uplinking services to broadcasters of television channels. Respondent-Co. being a broadcaster placed a purchase/customer order for a DGE circuit, a Fibre Link from the office at M/s Channel 99 Media Network (P.) Ltd. to Tata Communications Ltd. (Petitioner-Co.) for a capacity of 4.0 Mbps for a period of one year and the said link/circuit was delivered as per terms & conditions of the said order on 09/04/2009. Petitioner-Co. also provided ILL (Internet) circuit for a capacity of 2 Mbps since 15/04/2009 and ILL (Internet) circuit for a capacity of 1.5 Mbps since 29/01/ 2010; but payments, as alleged, in terms of their invoices sent from time to time, were not made.

However, both the parties (petitioner & respondent-Cos.) entered into a memorandum of settlement (Ann.8) on 15/03/2010 and finally it was agreed that respondent-Co. would make payment of a total sum of Rs. 55,18,905 /- (Fifty five lacs Eighteen thousands Nine Hundred & Five only) to petitioner-Co. (Tata) as per payment schedule (Ann.A), which discloses that 12 post-dated cheques (Union Bank of India) each of Rs. 4,59,908/- payable on 5th of each month commencing from April, 2010 till March 2011 were handed over to petitioner Co. (Tata). It has been averred that when four cheques were presented but returned by Union Bank of India with the endorsement for want of sufficient funds in Bank account of respondent-Co. and after four post-dated cheques on being presented were dishonoured, as informed by the Bank that the respondent-Co. instructed its Bank not to make payments against post-dated cheques referred to in schedule of payment (Ann.A).

As alleged, when efforts made by petitioner-Co. having failed & continuously frustrated by respondent-Co. with a sole object to avoid payment to its creditors, statutory notice was sent on 29/06/2010 U/Ss 433 & 434, of Co. Act by registered post (Ann. 10), asking them to make payment of outstanding dues of Rs. 55,18,896/- along with interest payable w.e.f. 15/03/2010 till actual payment, but despite legal notice served, neither any reply thereto was sent by respondent Co. nor payment of outstanding dues was made. Hence instant company petition.

Notices were issued by the Court vide order dt.23/09/2010, pursuant to which, reply has been filed by respondent-Co., wherein this fact has not been controverted that they had business dealings with petitioner-Co. and that memorandum of settlement (Ann.8) was signed on 15/03/2010 and cheques were also handed over to petitioner-Co. as per Payment of Schedule (Ann.A) annexed to memorandum of settlement (Ann.8) and on presentation of cheques, they were dishonoured for want of sufficient funds in Bank account of respondent-Co.

However, objection raised by respondent-Company is that a condition was incorporated in memorandum of settlement (Ann.8) that final payment would be subject to reconciliation and confirmation but without reconciliation, cheques were submitted by petitioner-Co. for its encashment to the Bank without any intimation to respondent-Co., as a result, its Bank was instructed to stop payment of cheques. In support, Counsel for respondent-Co., placed reliance upon decisions of Apex Court in IBA Health (I) (P.) Ltd. v. Info-Drive Systems Sdn. Bhd [2010] 104 SCL 367/8 taxmann.com 1 & Vijay Industries Vs. NATL Technologies Limited,

However, it is relevant to observe that in course of submissions, on 04/08/ 2011, Counsel for respondent-Co. on instructions informed that they are ready to settle the dispute, which was seriously opposed on behalf of petitioner-Co., but this Court considered it appropriate to grant time for amicable settlement and directed Counsel for respondent-Co. to ask his client to remain present on next date (18/08/2011). Today, Counsel for petitioner-Co., submits that respondent-Co. never came forward for amicable settlement, pursuant to contention made on last date (04/08/2011). Despite the Court having granted time vide order dt.04/08/2011 to amicably settle the dispute but, it could not be finally resolved and the matter was taken up.

From material on record, no documentary evidence has been placed on record along with reply; in regard to the plea of defence taken by respondent-Co. for any reconciliation being controverted & disputed by petitioner-Co.; rather despite memorandum of settlement being signed by respondent-Co. on 15/03/2010 having agreed to make payment through post-dated cheques are handed over as per Payment Schedule (Ann.A) appended thereto (Ann.8), the payment was not made rather post-dated cheques as per payment schedule on being presented to the Bank of respondent-Co., were got dishonoured and stopped for payment by respondent-Co. Total amount of Rs. 55,18,896/- as on 15/03/2010 prima facie remained due as against respondent-Co., being payable to petitioner-Co. (Tata) as per statutory notice sent on 29/06/2010 (Ann.10).

Be that as it may, there is no prima facie evidence which could justify that there was bona fide dispute regarding payment being made in cash or claim being disputed, and the defence taken in the reply appears to be an afterthought; rather this gives an indication that there was no dispute regarding amount of outstanding dues as is evident from memorandum of settlement (Ann.8) & payment Schedule (Ann.A) attached thereto.

There cannot be a dispute on the legal aspect that winding up petition is maintainable if the Company fails to pay its debt and the relief as prayed for in the winding up petition can be refused if the debt is bona fidely disputed and the defence of the Co. is in good faith and its defence is likely to succeed in point of law while the Co. adduces prima facie proof of facts on which its defence depends.

It is settled law that for invoking Sections 433(e), read with S. 434(1)(a) of Co. Act in relation to winding up of a company on the ground of its inability to pay its debt, what is necessary is that despite service of notice by the creditor, the company which was indebted in a sum exceeding one lakh rupees than due, failed and/or neglected to pay the same within three weeks thereafter or to secure or compound for it to reasonable satisfaction of the creditor; and failure of the company to pay the agreed interest or the statutory interest would come within the purview of the word "debt"; and that section 433(e) of the Co. Act does not state that the debt must be precisely a definite sum and it is not a requirement of law that the entire sum must be definite and certain.

In reply to the winding up petition, further objection has been raised by respondent-Co. that there are other remedial measures for settlement of disputed amount, but at the same time, it has been averred that respondent-Co. is always ready to make payment of outstanding dues but only after adjustment & reconciliation; but what settlement is required to be carried out, has not been placed on record for consideration.

From the material on record, respondent company has miserably failed to prima facie establish his bona fide pleaded in defence in the reply to the winding up petition. As observed (supra), the defence now being raised for the first time in the reply to the winding up petition at hand is prima facie an afterthought being raked up to defeat the claim of petitioner-Co., and the Respondent-Company, despite persistent demands through repeated letters, besides legal notice sent through registered post, has neglected to pay outstanding dues, which prima facie establishes its inability to pay its debt.

For the reasons stated (supra), this Court prima facie finds that the respondent-company is unable to pay its debts.

Heard. Admit. Let the notices of winding up petition be published in daily news papers (1) Rajasthan Patrika (All Rajasthan) & (2) Times of India (Delhi Edn.) in the formate prescribed under the Co. Act & Co. (Court) Rules.

Let the petition be listed for further orders after the notices are published.