Gujarat High Court
Vidhya Pharmachem Pvt Ltd vs Osaka Pharmaceuticals Pvt Ltd on 17 March, 2015
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt
O/COMP/294/2013 CAV ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION NO. 294 of 2013
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VIDHYA PHARMACHEM PVT LTD....Petitioner Versus OSAKA PHARMACEUTICALS PVT LTD....Respondent ============================================================== Appearance:
MR PARCY KAVINA Sr. ADVOCATE With MR JR SHAH, ADVOCATE for the Petitioner MR S.N.SOPARKAR Sr. ADVOCATE With MR HARDIK D MUCHHALA, ADVOCATE for the Respondent ============================================================== CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT Date : 17/03/2015 CAV ORDER
1. Heard learned counsels appearing for the parties. The petitioner, a private limited Company, registered under the provisions of the Companies Act, 1956, has approached this Court invoking provision of Section 433(e) & 434 of the Companies Act, 1956, (hereinafter referred to as 'the petitioner Company' for the sake of brevity) for the following prayers.
(a) That this Hon'ble Court be pleased to admit and allow this petition.
(b) M/s. Osaka Pharmaceuticals Pvt. Ltd. the Company abovenamed be wound up by and under the supervision, direction, orders and control of this Hon'ble Court under the provisions of the Companies Act 1 of 1956;
(c) The Official Liquidator be appointed Liquidator of the said M/s. Osaka Pharmaceuticals Pvt. Ltd. with all necessary powers under the provisions of the Companies Act, 1 of 1956 to take charge of the assets and the business of the said Company and/or Page 1 of 30 O/COMP/294/2013 CAV ORDER to conduct its affairs in the course of winding up and disburse the payments and assets to the petitioners and Creditors.
(d) Pending the admission and hearing and final disposal of the Petition, a Provisional Liquidator be appointed of the said M/s. Osaka Pharmaceutical's Pvt.Ltd. with all powers under the Companies Act 1 of 1956, including powers to take immediate charge of the affairs, assets and the business of the said Company and to take appropriate steps for disbursement of recoveries effected and of the assets available after liquidation of the said Company to the benefit of the Creditors including the Petitioners;
(e) Pending admission and hearing and final disposal of this petition, the Company M/s.
Osaka Pharmaceuticals Pvt. Ltd. be restrained from alienating, dealing with and disposing of any of its assets or encumbering the same in any manner whatsoever;
(f) Ad-interim orders in terms of prayer clauses (c) and (d) above;
(g) Cost of the petition.
(h) For such other and further reliefs as the nature and circumstances of the case may require.
2. Facts in brief leading to filing this petition, as could be culled out from the memo of petition, deserve to be set out as under.
2.1 The main object of the petitioner Company is to carry on manufacturing and dealing in pharmaceutical products. On 02.05.2013, the Memorandum of Understanding executed between the petitioners and the respondent Company for supplying of various pharmaceutical products and on account of the said products sold, supplied and Page 2 of 30 O/COMP/294/2013 CAV ORDER delivered by the petitioners, the respondent Company agreed to hand over possession of shares of the Company to the petitioners worth Rs.3,72,50,000/-. As per the the MOU, the respondent Company was liable to make the payment of the aggregate admitted and confirmed amount of Rs.7,21,45,364/- to the petitioners. As claimed by the petitioners, the respondent Company did not issue post dated cheques and committed defaults in making payment of the admitted amount and committed various breaches of the said MOU. In pursuance of the various orders placed by the respondent Company, the petitioners sold, supplied and delivered various pharmaceutical products after 01.10.2012 and the petitioners raised invoices in respect thereof.
2.2 As per Clause 3 of the MOU, the respondent Company shall pay interest to the petitioner at the rate of 18% per annum for delayed payment beyond the schedules described under the Schedule A and B. The petitioner states that as the respondent Company has committed default in making payment of the admitted amount mentioned in Schedules A and B of the said MOU aggregating to Rs.7,21,45,364, the Company is liable to pay interest at the rate of 18% per annum on the said amount.
2.3 As per the say of the petitioner, despite repeated reminders, the respondent Company has failed to make payment of Rs.7,21,45,364/- under the said MOU and Rs.20,36,624/- due under the various pharmaceutical products sold, supplied and delivered after 01.10.2012 and the amount of interest at Rs.1,21,86,959/- calculated at the Rate of 18% per annum on the aforesaid two amounts Page 3 of 30 O/COMP/294/2013 CAV ORDER i.e. Rs.7,21,45,364/- and Rs. 20,36,624/-.
2.4 In response to the statutory notice dated 12.08.2013, issued by the petitioners to the respondent Company, the respondent Company vide letter dated 02.09.2013, replied to the petitioner that only a sum of Rs.1,42,94,000/- is payable by the petitioner to the respondent Company. In response to the letter dated 02.09.2013, issued by the respondent Company in reply to the statutory notice, the petitioner replied the respondent Company vide letter dated 20.09.2013 and called upon the respondent Company to make payments, as per the MOU. The petitioner states that the respondent Company issued cheque for a sum of Rs.60,00,000/-, which was dishonoured. Being aggrieved and dissatisfied with these, the present petition is filed with payers for winding up of the respondent Company and appointment of Official Liquidator.
3. Learned counsel for the petitioner Company submits that the respondent Company is not a viable and solvent company and does not have capacity to make the payment to its creditors, as it would be clearly seen at page no.115, last entry that the amount of Rs.60,00,000/- came to be paid to the petitioners not from the respondent Company but from the other company i.e. Atlantis Lifesciences Pvt. Ltd., though earlier cheque of same amount was issued by respondent Company and which was dishonoured by their bankers. Therefore, this petition be allowed and the respondent Company be wound up and Official Liquidator be appointed for taking charge of the Page 4 of 30 O/COMP/294/2013 CAV ORDER assets of the Company.
4. Learned counsel for the petitioner further submitted that respondent Company has committed default in making payment of the same to the petitioner under the said MOU. The respondent Company was failed to pay TDS and issued C-Forms. Petitioner are supplying raw materials of pharmaceuticals to the respondent Company as per their purchase order and against the said supply it was agreed that that they would handover the share of Respondent Company i.e. 42.50% to the petitioner for Rs.4,22,00,000/- and was also agreed that the remaining outstanding amount would be released on due dated i.e. after 90 days, but instead of 42.50% they had issued 24.40% shares against the goods supplied for Rs.4,22,00,000/- to the petitioners for which the share certificate was never given to the petitioners but the necessary procedure came to be adopted before the Registrar of Companies.
5. Learned counsel for the petitioner further submitted that after number of correspondences exchanged between them, the said MOU came to be prepared and accepted by them. The respondent Company agreed to buy- back their shares at Rs. 4,22,00,000/- and against the payment of the same, the Company has paid a sum of Rs.50,00,000/-, which is set out in the MOU. The respondent Company was bringing new investor named as Mr. Rahul Kapoor, who suppose to purchase the said shares from the respondent Company and also agreed to stand as guarantor in their Bank by replacing the petitioner. The respondent Company by letter dated 10.04.2013, informed Page 5 of 30 O/COMP/294/2013 CAV ORDER Bank of Baroda that Mr. Rahul Kapoor will be depositing Rs.1.2 Crores by 13.4.2013 against the purchase of shares of respondent Company held by the petitioner.
6. Learned counsel for the petitioner further submitted that it is significant to note that the date of the letter being 26.12.2013 i.e. after the date of the MOU, notice dated 12.08.2013 and reply to the petitioner's notice dated 02.09.2013, therefore, it is apparent that the said letter is fabricated. He further submits that for recovery of the amounts i.e. Rs.4,31,57,507/-from Rajat Pharmachem Ltd., the petitioner has filed two proceedings i.e. Summary Suit No.504 of 2013 and Company Petition No.419 of 2013 for recovery of the sum of Rs.6,99,73,224/-, therefore, the said Company has issued such false and frivolous letters in favour of the respondent Company and the date of the said letter i.e.26.12.2013 was after the date of MOU, as stated hereinabove.
7. Learned counsel for the petitioner further submitted that one of the Director of M/s. Navjeevan Pvt. Ltd was witness of the MOU and petitioner has filed criminal proceedings under Section 138 of the Negotiable Instruments Act against M/s. Navjeevan Pvt. Ltd for the recovery of the dishonored cheque, as petitioners were to receive the amounts for supplying the raw materials to M/s. Navjeevan Pvt. Ltd.
8. Learned counsel for the petitioner further submitted that certificate issued by the Chartered Page 6 of 30 O/COMP/294/2013 CAV ORDER Accountant is misconceived and respondent Company is not entitled to receive Rs.47,18,355/- from the petitioners.
9. Learned counsel for the petitioner further submitted that the respondent Company was interested only in delaying the hearing of the petition by filing one after the other affidavits with false contention and fabricated documents. He submits that statement made in para 4 of the Additional Affidavit, which is in respect of the Erica Healthcare Pvt. Ltd, is misconceived.
10. Learned counsel for the petitioner further submitted that para 5 of the Additional Affidavit is in respect of Debit Notes, which are misconceived. The Debit Notes dated 31.12.2010 for Rs.4,20,000/-, dated 31.12.2010 for the alleged material loss to third party on sale by the petitioner on respondent's behalf or claim settled by respondent Company of Rs.21,50,000/-, as alleged. The Debit Note dated 31.12.2010 for sum of Rs.30,00,000/- for commission on sales receivable by the respondent from the petitioner for use of respondent's brand name for export as alleged or otherwise. The aforesaid Debit Notes are apparently prepared and fabricated and the same are annexed by the respondent Company for the first time. He submits that petitioners have never received the said Debit Notes or accepted the same at any stage. The said debit notes did not reflect while confirming the amount payable to petitioner as on the date of the MOU dated 02.05.2013.
11. Learned advocate for the petitioners further Page 7 of 30 O/COMP/294/2013 CAV ORDER submitted that the statements pertaining to M/s. Multytrade Pvt. Ltd. or its group Company M/s. A.S.Foods are misconceived. The dates of the said purported payments are important to note as the said dates are 14.9.2012 to 27.9.2012 and the MOU has been executed on 2.5.2013. He submits that the amount of Rs.1,11,49,822/- not considered in working of the amount payable by the respondent to the petitioner or entered the same in the MOU, as alleged. Therefore, considering all these aspects petition deserves to be allowed.
12. Learned counsel for the respondent Company has submitted that the present petition for winding up of the respondent Company under the provisions of Section 433(e) and (f) read with Section 434(1)(e) of the Act is not maintainable, as the company is commercially solvent and is regular in making payment of the Government Revenues. He submits that it is settled legal principle of law that unless the amount is admitted and determined, there is no debt in the eye of law and hence the present petition may not be entertained by this Court. He further submits that the alleged amount claimed by the petitioner is not an amount that would constitute a debt or a liquidated sum and has never been acknowledged or admitted to be due and payable by the respondent Company. The present petition is essentially one based on accounts and therefore, winding up petition under Section 433 and 434 of the Companies Act, 1956 is not maintainable. Hence the present petition itself is in any event not maintainable and ought to be dismissed on this ground alone.
Page 8 of 30O/COMP/294/2013 CAV ORDER 13. Learned counsel for the respondent Company
submitted that vital material facts concerning the matter from this Court have been suppressed. The director of the petitioner Company approached one of the Director of the respondent Company for doing business jointly with respect to the pharmaceutical products in the new Company in the name of and style of Osaka Pharmaceutical Private Limited for which they have taken loan of Rs.20 Crores from Oriental Bank of Commerce and they have given their guarantee and also Corporate guarantee of their respective Companies. The petitioners were to bring a sum of Rupees 15 crores in the respondent Company. The respondent Company accordingly issued 24.75 Lacs number of shares to the petitioner Company and 24.75 Lacs to M/s Atlantis Lifesciences Pvt. Ltd. As, Mr. Prakash Shah joined as director in the respondent Company, they started business jointly in the name of the respondent Company.
14. Learned counsel for the respondent Company further submitted that Mr. Prakash Shah wants to quit from the respondent Company and settle the accounts, and in good faith director of the respondent Company agreed to take over the respondent Company and pay the amount in installment. The Director of the respondent Company shocked to note that Mr. Prakash Shah has produced false accounts and has even not given various credits for the accounts in which the respondent Company had made certain payments on behalf of the petitioner Company and certain receivables from the petitioner Company. He submits that petitioner Company have tried to defraud the said Mr. Muchhala and have created false accounts with a view to Page 9 of 30 O/COMP/294/2013 CAV ORDER cheat him.
15. Learned counsel for the respondent Company submitted that the Winding Up Petition filed by the petitioner is totally baseless and is filed to harass and malign the reputation of the respondent Company. The true facts are not placed before this Court and the true facts are those as stated in the reply to the statutory notice dated 02.09.2013. He submits that Winding up Petition can be filed against a Company declared to be commercially insolvent and unable to pay the debts admitted by it. The respondent Company is fully functional company with a work force of about 500 employees and is into the business of manufacturing and and exporting pharmaceutical products. The debt of Rs.7,21,45,364, as alleged by the petitioner is arbitrarily arrived at and is totally baseless. He further submits that respondent Company has to recover money from the petitioner for the amount paid by it to other parties on behalf of the petitioner.
16. Learned counsel for the respondent further submitted that the total alleged amount of Rs.7,21,45,364/-, a sum of Rs.4,22,50,000/- was demanded by the petitioner towards buyback of its 24.40% stake in the said respondent Company pursuant to the MOU dated 02.05.2013. The buyback can only be done by complying the provisions of the Companies Act, 1956 and cannot be enforced under the winding up petition. As per the MOU, Rs.50,00,000/- was already paid by the respondent Company to the petitioners towards the said Buyback, but the said amount cannot be treated to be given against the said Page 10 of 30 O/COMP/294/2013 CAV ORDER Buyback and the same has to be treated as payment made to the petitioner. He further submits that the said MOU was not enforceable as it violated the provisions of the Companies Act, and hence the said buyback was not enforceable. As a result, the respondent Company was not liable to pay the amount of Rs.4,22,50,000/- which was arbitrarily demanded by the petitioner and the petitioner was liable to repay the amount of Rs.50,00,000/-, which was received for the said buyback.
17. Learned counsel for the respondent Company further submitted that Rs.3,48,95,364/-, which the petitioner states to have been receivable towards goods sold by it to the respondent Company is baseless, as correct facts of the said matter are reflected in the books of accounts of both the companies. He submits that prior to execution of the said MOU, the accounts of the respondent Company were handled and maintained by Mr. Prakash Shah, Director of the petitioner Company. The copy of the statement at Annexure-A, clearly shows that respondent Company has to recover an of amount of Rs.47,18,355/- from the petitioner. An amount of Rs.7,94,000/- was receivable by the respondent Company from the petitioner, as agreed by the Erica Healthcare Pvt. Ltd, as reflected in its letter dated 26.12.2013. He submits that an amount of Rs.85,00,000/- was paid by the respondents to Rajat Pharmachem Ltd. on behalf of the petitioner and the said amount is also receivable from the petitioner. A confirmation letter given by Rajat Pharmachem Ltd. along with confirmation of account given on e-mail are annexed at page nos.119 to 126. An amount of Page 11 of 30 O/COMP/294/2013 CAV ORDER Rs. 1,11,50,000/- was paid by one A.S.Food Private limited to the petitioners on behalf of the respondents, which was also receivable by the respondent Company. The letter confirming such payment being made along with copies of the respective ledger accounts is annexed at page no.127.
18. Learned counsel for the respondent Company further submitted that an amount of Rs.5,92,000/- is receivable from the petitioners, as the said amount was to receive from Navjeevan Pvt. Ltd. and the said Company has adjusted the said amount from petitioners. The letter confirming such payment being made along with copies of the respective ledger accounts of the respondents and Navjeevan Pvt. Ltd is annexed at page nos.128 to 130 of the memo of the petition. A meeting was held on 05.07.2013, for resolving the pending issues and in the meeting it has decided that Mr. Muchhala should bring cheque of Rs.60,00,000/-. Subsequently on or about 20.09.2013 while reconciliation, it was observed that the cheque of the said amount was missing and respondent Company on the said day sent instruction to the Bank for stop payment. Upon coming to know of the said illegal misuse of the cheque by the petitioner Company, the Respondent Company lodged complaint in the Police Station, Mumbai.
19. Learned counsel for the respondent Company further submitted that petitioner Company through the letter dated 12.10.2013 issued notice under Section 138 of Negotiable instrument Act against them. He submits that respondent Company was not liable to make the payment of Page 12 of 30 O/COMP/294/2013 CAV ORDER the above dishonoured cheque and they have already filed criminal complaint with respect to stealing of the cheque, but with a view to avoid unnecessary harassment to the directors of the respondent Company they decided to pay the said sum of Rs.60,00,000/- without prejudice to their rights and contentions with the statuary period of 15 days so the petitioners cannot file the frivolous complaints under Section 138 of the Negotiable Instrument Act against the respondent Company. The respondent Company vide letter dated 30.10.2013, replied to their said notice under Section 138 of the Negotiable Instruments Act and paid the sum of Rs.60,00,000/-. He submits that the petitioners have intentionally suppressed this letter and are trying to show that the sum of Rs.60,00,000/- has been paid by the respondents. The respondents Company vide letter dated 10.11.2013, acknowledged the receipt the said amount.
20. Learned counsel for the respondent Company further submitted that present petition filed by the petitioner is not simply for recovery of debt but for recovering of disputed amount which the respondent Company has disputed and are in fact contending that they are entitled to recover the sum of Rs.47,18,355/- from the petitioners and for this purpose they appointed Charted Accountant who confirmed that the sum of Rs.47,18,355/- is due and payable by the petitioners to the respondent Company. He submits that in the circumstances, the petitioner Company cannot adopt the proceedings for winding up of the disputed claim and various High Courts and Supreme Court time and again held that the proceedings under section 433 and 434 of the Companies Act, 1956 cannot be initiated for Page 13 of 30 O/COMP/294/2013 CAV ORDER recovery of dues against a company which are not admitted by Company.
21. Learned counsel for the respondent Company thereafter submitted that the respondent Company is not indebted to the petitioners to the tune of Rs.7,41,81,988/- or any other amount as falsely alleged. On the contrary, petitioner is liable to pay the sum of Rs.47,18,355/- to the respondent, as per the certificate issued by the Chartered Accountant.
22. Learned counsel for the respondent Company thereafter submitted that M.O.U. dated 02.05.2013 is not enforceable in law as the same postulates that the respondent Company to purchase its own shares in violation of the provisions of law. He submits that respondent Company have already paid the amount onwards the supply of alleged pharmaceutical products and hence, the petitioners are bound and liable to pay the sum of Rs.47,18,355/-. The respondent Company is not liable to pay the amount as mentioned in the MOU. The respondent Company has already given due credit for the supply of the goods and nothing is due and payable by them and in fact it is the petitioner Company bound and liable to pay to the respondent. He submits that after execution of the said MOU it was revealed that the petitioner Company has suppressed vital entries and payment and therefore the respondent was not liable to pay however time and again the respondent Company called upon the petitioner to furnish the details of the alleged amount which they failed and neglected to do.
Page 14 of 30O/COMP/294/2013 CAV ORDER 23. Learned counsel for the respondent Company
relied upon the letters dated 12.08.2013, 02.09.2013 and 20.09.2013 for its true and correct meaning and correct interpretation thereof. He submits that the Cheque for Rs.60,00,000/- was encashed illegally by the petitioner company and the complaints made therein by the respondents. He submits that petitioners have purposely and with oblique motives suppressed the reply of the statutory notice under Section 138. He submits that petitioner company are not entitled to any amount as claimed in particular of claims and it is the petitioner company who are liable to pay the sum of Rs.47,18,355/- to the respondent Company.
24. Learned counsel for the respondent Company thereafter submitted that validity of the M.O.U. is not being challenged, rather the amount specified in the MOU is being challenged. However, it is pertinent to note that any buy-back of shares must be as per the provision of the Companies Act, 1956 and the applicable provisions of the Companies Act, 2013. He submits that Atlantis Lifesciences Pvt. Ltd. purchases materials from the respondent, had a debit balance in the books of respondent when the payment of Rs.60,00,000/- was made and has even in the past made payments to petitioner on behalf of the respondent.
25. Learned counsel for the respondent Company thereafter submitted that all the companies incorporated under Companies Act, 1956 are strictly bound by the provisions of the same and Section 77-A of the Act, states Page 15 of 30 O/COMP/294/2013 CAV ORDER that any buy-back of its own shares by a Company, shall be in accordance with the provision and not otherwise. Hence, the statement of the Petitioners is not correct that compliance with the provisions of the Act, for buy-back of shares, is not mandatory.
26. Learned counsel for the respondent Company thereafter submitted that the petitioner itself has confirmed the debit balance of the Respondent of Rs.6,69,45,572/- as on 30.09.2012 by its letter addressed to the respondent dated 04.11.2012. This letter was exchanged before the execution of MOU dated 02.05.2013. He submits that before the signing of the said MOU, a debit note for rate difference of Rs.3,19,86,408/- was raised on 20.04.2013 by respondent on the petitioner on 20.04.2013 based on the working which was confirmed by Mr. Prakash Shah, director of the petitioner by countersigning the summary of working prepared which also bears the signature of Mr. Nitin Muchhala of the respondent. The amount thereafter payable by respondent to petitioner then came out to be Rs.3,49,59,164/-. However, the amount wrongly mentioned by petitioner and respondent in the said MOU dated 02.05.2013 is Rs.3,48,95,364/-.
27. Learned counsel for the respondent Company thereafter submitted that the extracts of ledger, which is produced at para-27, page-104 of the petition, were found recently and it reflects debit given to Erica Healthcare Private Limited for Rs.7,94,029/-, which means they have been subsequently deleted by the petitioner from their books. Learned counsel has relied upon debit note dated Page 16 of 30 O/COMP/294/2013 CAV ORDER 31.12.2010 for rate difference of Rs.4,20,000/-, a debit note dated 31.12.2010 for material loss to third party on sale by the petitioner on respondent's behalf, claim settled by respondent of Rs.21,50,000/-, a debit note dated 31.12.2010 of Rs.30,00,000 for commission on sales receivable by the respondent from the petitioner for use of the respondent's brand name for export sales. All the debit notes bear acknowledgment by the petitioner. These debit notes did not reflect in the books of respondent while confirming the amount payable to petitioner as on the date of said MOU dated 02.05.2013 and were found subsequently when Mr. Nitin Muchhala took charge of the accounts of the respondent.
28. Learned counsel for the respondent Company thereafter submitted that Rs. 1,11,49,822/- was receivable by the respondent from M/s Trinity Multytrade Private Limited and upon request of the respondents, M/s. Trinity made the below payments to petitioner through its group company M/s. A.S.Foods:-
Amount Dated
(Rs.)
35,00,000 14.09.2012
14,95,000 17.09.2012
33,54,822 26.09.2012
13,00,000 27.09.2012
15,00,000 27.09.2012
1,11,49,822 Total
He submits that petitioner gave a debit for
these payments in its books and credited respondent's
account for the same amount as evident from the ledger provided by the petitioner to M/s Trinity which is annexed Page 17 of 30 O/COMP/294/2013 CAV ORDER hereto as Exhibit-R-8. Exhibit - R-9 is respondent's ledger in petitioner's books which was provided by the petitioner to the respondent, wherein credit is not given for the amount of Rs.1,11,49,822/-, hence not considered in working out the amount payable by respondent to the petitioner and entered in the said MOU. He submits that in the aforesaid circumstances, the petition be dismissed with costs.
29. Learned counsel for the respondent Company further submitted that further affidavit is filed to bring on record the last three years financial statement i.e. for the years, 2011, 2012 and 2013 along with Auditors' reports of the respondent Company, the copies of which are annexed and marked as Annexure A-1 to Annexure-A-3 respectively.
30. Learned counsel for the respondent Company has relied upon the following authorities namely;
(i) in case of Amalgamated Commercial Traders (P.) Ltd. Vs. A.C.K. Krishnaswami And Another, reported in 1965 (Vol.35) Company Cases 456.
(ii) in case of Madhusudan Gordhandas And Co. Vs. Madhu Woollen Industries Pvt. Ltd., reported in 1972 (Vol.42) Company Cases 125.
(iii) in case of Pradeshiya Industrial And Investment Corporation Of Uttar Pradesh Vs. North India Petro Chemical Ltd. And Another, reported in 1994 (Vol.79) Company Cases 835.
(iv) in case of Tata Iron And Steel Co. Vs. Micro Forge (India) Ltd., reported in 2001 (Vol.104) Company Cases Page 18 of 30 O/COMP/294/2013 CAV ORDER
533.
(v) in case of Mediqup Systems Pvt. Ltd. Vs. Proxima Medical System GMBH, reported in 2005 (Vol.124) Company Cases 473.
(vi) in case of IBA Health (I) P.Ltd. Vs. Info-Drive Systems Sdn.Bhd., reported in 2010 (Vol.159) Company Cases
369.
(vii) in case of Softsule Private Ltd. In re P.G. Bhatia & Co. Vs. Softsule Private Ltd., reported in 1977 (Vol.47) Company Cases 438.
(viii) in case of Official Liquidator Of Aryodaya Spinning And Weaving Mills Co. Ltd. Vs. Charansingh Dhupsingh And Others, reported in 2005 (Vol.125) Company Cases 765.
(ix) in case of New Swadeshi Mills Of Ahmedabad Ltd. Vs. Dye-Chem Corporation, reported in 1986 (Vol.59) Company Cases 183.
(x) in case of Ficom Organics Ltd. Vs. Laffans Petrochemicals Ltd., reported in 2000 (Vol.99) Company Cases 471.
31. The Court is of the view that from the record, proceedings and submissions of the counsels, the following indisputable aspects emerged, which is required to be enlisted hereinbelow in order to appreciate the controversy between the parties.
(i) The fact remains to be noted that the petitioner is a Company, which has relied upon the MOU dated 02.05.2013 for claiming the outstanding amount from the respondent Company and on its failure, has invoked provisions of Sections 433(e) and 434 of the Companies Page 19 of 30 O/COMP/294/2013 CAV ORDER Act, 1956 (hereinafter referred to as the 'Company Act' for the sake of brevity). The said Memorandum of Understanding is admittedly between the two Companies i.e. petitioner Company as well as respondent Company, as could be seen from the documents which is produced at Annexure- A, page 21 onwards.
(ii) The said document contains the passing of Board Resolution of OSAKA dated 05.02.2013, which have been set out at page no.23.
(iii) It also refers to propose withdrawal of the guarantees offered by the Director of petitioner Company, as could be seen from page no.23. The MOU further refers to an unequivocal understanding at page no.23 onwards which specifically mentions the sum of Rs.3,72,50,000/- (Three Crore Seventy Two Lacs Fifty Thousand), as per Schedule A.
(iv) The MOU further refers to an amount of Rs.3,48,95,364/- (Three Crore Fourty Eight Lacs Ninety Five Thousand Three Hundred Sixty Four) Schedule B for the goods supplied.
(v) It also refers to an interest of 18% on the sum due, if not paid as per the Schedule.
(vi) There is no dispute qua the existence of MOU by the parties.
(vii)The petitioner Company has also placed on record at Page 20 of 30 O/COMP/294/2013 CAV ORDER Annexure-B the statement of goods supplied to OSAKA by the petitioner worth Rs.20,36,625/-. The documents have been produced on record indicating the invoices etc.
(viii) On account of failure on the part of the respondent, as it is alleged, the petitioner Company issued statutory notice on 12.08.2013, reiterating the contentions.
(ix) The reply was sent on 02.09.2013, in which the respondent Company raised dispute qua the liability and said that Rs. 92,94,000/- was paid on behalf of the petitioner to some 3rd party. The amount of Rs. 50,00,000/-, which was paid on 23.02.2013, was wrongly paid to the petitioner Company indicating that Rs.1,42,94,000/-, is recoverable from the petitioner Company by the respondent Company. It was further contended that the buy-back of the shares is not permissible beyond provisions of Section 77(A) of the Companies Act.
(x) The rejoinder was given to this reply on behalf of the petitioner on 20.09.2013, inter alia contending that in fact the amount of Rs. 50 lakhs was acknowledged while scheduling the amount and, therefore, it cannot be said that Rs. 50 lakhs was wrongly paid. It was further contended in the rejoinder that the MOU cannot be sought to be wriggled out by this. It was also contended that a cheque of Rs.60 lakhs was issued towards part payment of the liabilities which also came to be bounced on account of the instructions on short payment and ultimately the Page 21 of 30 O/COMP/294/2013 CAV ORDER said amount was paid on receiving of the notice under Section 138 of the Negotiable Instrument Act.
(xi) The petition is filed and the reply, rejoinder and affidavits have been exchanged. The first affidavit in-reply starting from page No.97 contains following averments in paragraph No.13 at page no.100 "in good faith Mr. Muchhala agreed to take over the Company and pay the amount in installment"
(xii)At page No.101 in paragraph Nos.16 and 17, there are allegations qua one of the Directors and signatory of the authority of the MOU committed fraud.
(xiii) In paragraph Nos.25, 26, 28, 29, 32, 34 and 37, at page no.103 onwards, the following is mentioned:
Para-25:- I say that the said MOU was not enforceable as it violated the provisions of the Companies Act, 1956, and hence the said buyback was not enforceable. As a result, the Respondent was not liable to pay the amount of Rs.4,22,50,000/- (Rupees Four Crore Twenty Two Lakhs Fifty Thousand Only) which was arbitrarily demanded by the Petitioner and the Petitioner was liable to repay the amount of Rs.50,00,000/- (Rupees Fifty Lakhs Only) which was received by it under the pretext of the said Buyback. However, the Petitioner has not complied with the same and the same amount stands receivable in the books of accounts of the Respondent from the Petitioner.
Para-26:- I further state that the amount of Rs.3,48,95,364/- (Rupees Three Crore Forty Eight Lakh Ninety Five Thousand Three Hundred and Sixty Four Page 22 of 30 O/COMP/294/2013 CAV ORDER Only) which the Petitioner states to have been receivable towards goods sold by it to the Respondent is baseless as it is pursuant to partial disclosure of facts and the correct facts of the said matter are reflected in the books of accounts of both the companies. It is pertinent to note that the prior to the execution of the said MOU the accounts of the Respondent were handled and maintained under the authority and instructions of Mr. Prakash Shah of the petitioners who is Director of the Petitioner Company. Pursuant to the said MOU when the accounts were checked and reconciled it was observed there are may irregularities in the same and there are may payments made to the Petitioners by Respondents and/or on behalf of the Respondents and certain receivables from the Petitioner Company were not accounted in the books of accounts.
Annexed and marked hereto as Annexure-A is the copy of the statement of reflecting the true and correct facts which clearly stipulate that it is the Respondent who has to recover an amount of Rs.47,18,355/- (Rupees Forty Seven Lacs Eighteen Thousand Three Fifty Five Only) from the Petitioner.
Para-28:- I further state that an amount of Rs.85,00,000/- (Rupees Eighty Five Lakhs Only) was paid by Respondent to Rajat Pharmachem Ltd. on behalf of the Petitioner. Hence the amount of Rs.85,00,000/- (Rupees Eight Five Lakhs Only) is receivable by the Respondent from the petitioner. Hereto annexed and marked as Annexure-C as confirmation letter given by Rajat Pharmachem Limited along with confirmation of accounts given on e-mail by the Petitioner Company.
Para-29:- I further state that an amount of Rs.1,11,50,000/- (Rupees One Crore Eleven Lakh Fifty Thousand Only) was paid by the one A.S. Food Private Page 23 of 30 O/COMP/294/2013 CAV ORDER limited to the petitioners on behalf of the Respondents. Hence the amount of Rs.1,11,50,000/- (Rupees One Crore Eleven Lakh Fifty Thousand Only) is receivable by the respondent from the petitioner. The letter confirming such payment being made along with copies of the respective ledger account of the respondent and A.S.Food Private limited is Annexed herewith as Annexure-D. Para-32:- I say that since there was substantial discrepancy in the accounts, Mr. Muchhala informed Mr. Prakash Shah of the petitioner Company that unless the amounts have been crystallized after conducting proper audit and true and correct figure have been arrived at, the respondent Company shall not make payment, however at the instance of one Mr. Dushyant Bhuta (consultant of the petitioner Company) who approached Mr. Muchhala to act as mediator to settle the pending issues between Mr. Muchhala, and the petitioner.
Para-34:- I say that on 13th July, 2013 Mr. Muchhala went to the office of Dushyant Bhuta at Masjid Bunder where the earlier meeting referred herein above was held with a cheque of Rs.60,00,000/- bearing no.132461 drawn on Oriental Bank of Commerce Andheri Kurla Road branch Andheri and the same was shown to Mr. Dushaynt Bhuta and was kept back in the wallet by Mr. Nitin Muchhala. Mr. Nitin Muchhala had also carried one more cheque of Rs.21,000/- drawn on Dena Bank in favour of Mr. Dushaynt Bhuta which was handed over to him during the visit. Subsequently the matter with respect to the finalization of the accounts was discussed however no amicable solution was arrived at and therefore Mr. Muchhala left the office without any result. Subsequently it is on or about 20th September, 2013 while reconciliation, it was observed that the said cheque of Rs.60,00,000/- was Page 24 of 30 O/COMP/294/2013 CAV ORDER missing. The respondent Company immediately on the said day sent instruction to the Bank for stop payment however it was revealed that on the same day the petitioner Company had deposited the said cheque for payment. Mr. Muchhala then realised that it is on 13th July 2013 during the said meeting the said cheque must have been stolen/removed from the wallet and same was misused by the petitioner Company and was deposited on 20th September, 2013.
Para-37:- I say that as pointed out hereinabove the respondent Company was not liable to make the payment of the above dishonoured cheque and the respondent have already filed criminal complaint with the police station with respect to stealing of the cheque but with a view to avoid unnecessary harassment to the directors of the respondent Company especially to the directors who are staying at Vadodara the respondent Company decided to pay the said sum of Rs.60,00,000/- to the dishonored cheque without prejudice to their rights and contentions with the statutory period of 15 days so the petitioner Company cannot file the frivolous complaints under Section 138 of the Negotiable Instrument Act against the respondent Company and its directors.
Accordingly the respondent Company through their advocate's letter dated 30th October 2013 replied to their said notice under Section 138 of the Negotiable Instruments Act and paid the sum of Rs.60,00,000/- without prejudice to their rights and contentions and to recover the same back from the petitioner company. The copy of the said letter dated 30th October, 2013 was delivered to the advocate for the petitioner on 31 st October, 2013. It is relevant to note that in the present Page 25 of 30 O/COMP/294/2013 CAV ORDER petition the petitioners have purposely suppressed this letter and are trying to show that the sum of Rs.60,00,000/- has been paid by the respondents.
(xiv)At paragraph No.25 of the rejoinder starting from page No.146, it is averred that in paragraph No. 27 of the affidavit in-reply, the date of letter being 26.12.2013 i.e. after the date of MOU, which happened to be 12.08.2013, and also the reply to the petitioner's notice dated 02.09.2013, the said letter is merely a creation and fabrication with a view to mislead the Court. The said amount is disputed by the petitioner. The said Erica Healthcare Pvt. Ltd. have filed Case No. 2405/SS/13 at Metropolitan Magistrate Court, Borivali against the petitioners, it is giving confirmation to the respondent Company.
(xv) In paragraph Nos. 26, 27 and 28, the petitioners have made averments in rejoinder explaining as to how and in what manner the claims with regard to Rajat Pharmachem Ltd. and M/s. Navjeevan Pvt. Ltd. etc. is not supporting the cause of the respondent.
32. The aforesaid discussions and narration of almost indisputable aspects indicate that the claim of the petitioner Company for realizing the amount cannot be said to be so disputed as to totally oust the petitioner Company from the arena of operation of Section 433(e) and 434 of the Companies Act. The decision cited at the Bar on behalf of the petitioner Company though indicate that in case if there is a disputed claim and if the defense is put up, then the Court would not accept the claims of the Page 26 of 30 O/COMP/294/2013 CAV ORDER petitioner Company for seeking winding up of the Company in question. This proposition of law cannot be disputed by anyone. As against this, the authorities cited at the Bar also go to show that the defense put up for resisting the claim of the claimants by the respondent Company whether is a genuine and substantive defense and only after recording its satisfaction qua the existence, substantive defense and/or dispute qua the claim in question, the Court will have to decline exercise of the power under Section 433(e).
33. In the instant case, if one looks at the MOU and the averments made thereunder, one would come to a conclusion safely that there is a clear acknowledgment of the liability to be discharged by the respondent Company. The respondent Company's attempt to indicate that there exists a dispute or a genuine dispute on the strength of the first amount of Rs.3,72,50,000/- being dependant upon a contingency is though appearing to be attractive, in fact a lame excuse and substance. The Counsel for the respondent Company contended that the MOU could not have been in respect of buying back shares of the Companies in light of the provisions of Section 77(A), unfortunately the submission canvassed in respect of Section 77(A) and its interpretation is required to be borne in mind while examining this contention. The respondent Company's counsel to project the said amount to be contingent is required to be rejected, as first of all there cannot be any absolute proposition of law that Section 77(A) completely prohibits the buying back, on the contrary the plain and simple reading of Section 77(A) denotes contrary Page 27 of 30 O/COMP/294/2013 CAV ORDER to what has been canvassed on behalf of the respondent Company. In fact, the respondent Company has not shown anything further than contending that the said being an amount payable only on account of fulfilling the requirement of Section 77(A), the same cannot be said to be added. As against this, the claim of the petitioner Company deserves to be noticed that the petitioner Company was claiming an outstanding amount on account of supply of goods and in light thereof the MOU was executed. Therefore, the defense raised on account of provision of Section 77(A), in my view would be of no avail to the respondent Company.
34. Assuming for the sake of examining that the amount of Rs.3,72,50,000/- could be classified to be an amount payable on fulfillment of certain conditions, but so far as, other amounts are concerned, namely an amount of Rs.3,48,95,364/- and the interest thereon, there exists no effective pleadings by the Company indicating any substantial dispute, in my view the said dispute put is nothing but moonshine for avoiding the final outcome and, therefore, this Court is of the considered view that the same is of no avail to the respondent Company.
35. The conduct of the respondent Company and its Director in respect of the amount of Rs.60 lakh's cheque, lodging of police complaint and then making the payment is clearly pointing towards propensity of the respondent Company and its management in avoiding its liabilities.
36. The respondent Company's attempt to indicate Page 28 of 30 O/COMP/294/2013 CAV ORDER the dispute on account of its dealing with Rajat Pharmachem Ltd. and M/s. Navjeevan Pvt. Ltd. etc. have been aptly met by the petitioner in its rejoinder, as it is discussed hereinabove in indisputable aspects portion of this order, therefore, this Court need not dialect thereupon, at this stage.
37. The Court is, therefore, of the considered opinion that the petitioner Company has made out a case for admission. This brings the Court to consider whether the respondent Company is required to be afford an opportunity to discharge its liability to the petitioner Company. The answer is 'Yes' and, therefore, while admitting the petition, the Court is inclined to defer the advertisement for a period of three months from today. After the expiry of the period, in case if, there exists a liability to be enforced, then it would be open to the petitioner to urge to this Court for further action of issuance of notice etc.
38. As a result thereof, Admit. The advertisement is deferred. The respondent Company, if do not discharge their liability within three months from today, it would be open to the petitioner Company to urge for appropriate relief and release of advertisement and appointment of Official Liquidator.
FURTHER ORDER The request for staying of this order for the period of 4 weeks is rejected, as otherwise also the order Page 29 of 30 O/COMP/294/2013 CAV ORDER envisages an opportunity to the respondent Company for discharging its liability and the operative portion is so clear, which gives time to the respondent Company. In this view of the matter, the request is rejected.
(S.R.BRAHMBHATT, J.) Pankaj Page 30 of 30