Karnataka High Court
Emc Information Systems International vs Wep Solutions India Limited on 27 April, 2015
Author: A.S.Bopanna
Bench: A.S. Bopanna
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27 TH DAY OF APRIL, 2015
BEFORE
THE HON'BLE MR. JUSTICE A.S. BOPANNA
COMPANY PETITION No.114/2013
BETWEEN :
EMC INFORMATION SYSTEMS INTERNATIONAL
A COMPANY FORMED UNDER THE LAWS OF
IRELAND AND HAVING ITS OFFICE AT
OVENS, COUNTY CORK, IRELAND
AND REPRESENTED BY ITS
AUTHORISED REPRESENTATIVE
MR. AJIT ERNEST ARANHA
... PETITIONER
(BY SRI PRAMOD NAIR, ADV.)
AND :
WEP SOLUTIONS INDIA LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE AT
No.40/1A, BASAPPA COMPLEX
LAVELLE ROAD
BANGALORE - 560 001
... RESPONDENT
(BY SRI. K.V. SATHISH, ADV.)
THIS PETITION IS FILED UNDER SECTION 433(E)
AND (F) READ WITH SECTION 439 OF THE COMPANIES
ACT, 1956, PRAYING THAT THE RESPONDENT VIZ.,
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WEP SOLUTIONS INDIA LIMITED HAVING ITS
REGISTERED OFFICE AT No.40/1A, BASAPPA
COMPLEX, LAVELLE ROAD, BANGALORE-560 001 BE
WOUND UP BY AN ORDER AND DIRECTION OF THIS
COURT AND ETC.
THIS PETITION HAVING BEEN RESERVED FOR
ORDERS, COMING ON FOR PRONOUNCEMENT, THIS DAY,
THE COURT PRONOUNCED THE FOLLOWING:
ORDER
The petitioner is before this Court seeking that the respondent company be ordered to be wound up in terms of Section 433(e) and (f) of the Companies Act since according to the petitioner, the respondent company is unable to pay its debts due to the petitioner company.
2. The case of the petitioner is that Paladion Networks Pvt. Ltd ('PNPL' for short) was awarded a contract for developing and providing Adaptive Authentication On-premise Architecture, Planning and Implementation Services to Punjab National Bank. PNPL in pursuance to the same placed an order with the 3 respondent company for procurement of the said services. The respondent in turn is stated to have engaged the services of RSA Security Ireland Ltd to perform the work as per the statement of work document executed on 31.12.2009. The petitioner herein was novated to perform the work which was required to be done by RSA Security.
3. The scope of work which was to be performed by RSA security is claimed to have been performed by the petitioner and submitted the invoices amounting to Rs.1,01,06,880/- for payment towards the services rendered. Though the respondent assured payment of the amount, the same was not paid and as such a demand notice dated 31.01.2012 was issued demanding the payment. The parties also exchanged e- mail correspondences and despite the assurances since the amount had not been paid, the petitioner got issued a 4 statutory notice dated 18.01.2013 seeking for payment. The notice was however replied by the respondent on 27.02.2013 wherein the very privity of contract between the petitioner and the respondent was disputed and the payment as claimed was also disputed. The petitioner therefore issued a rejoinder notice on 02.05.2013 and thereafter have filed the instant petition as the payment was not made.
4. The respondent company on appearance have filed their objection statement disputing the averments made in the petition and seeking dismissal of the same. The novation as claimed by the petitioner is disputed as there is no document to that effect. The respondent contends that they are not a party to any arrangement that may have been entered into between the petitioner and RSA Security. It is their case that the very nature of the transaction would indicate that PNPL, RSA Security and 5 Punjab National Bank are the necessary parties to determine and decide the claim of the petitioner. The understanding reached between the respondent and the RSA Security is to the effect that the payments would be made only when the milestones would be achieved and confirmation of such completion was given by Punjab National Bank. The respondent have referred to the statement of work as proposed between the PNPL and RSA Security. For the said reasons and the other reasons contended in the objection statement, it is the case of the respondent that the amount as claimed is not due and payable by the respondent nor is it a case where the respondents are unable to pay their debts. Hence, they seek dismissal of the petition.
5. In the light of the above, I have heard the learned counsel for the parties and perused the petition papers to determine as to whether the petition would 6 warrant admission and further process for winding up the respondent company as prayed by the petitioner ?
6. Learned counsel for the petitioner has referred to the letter dated 01.09.2010 at Annexure-B to contend that the statement of work entrusted to RSA Security has been thereafter entrusted to the petitioner which has been performed by them. In answer to the contention on behalf of the respondent that there is no fresh contract entered into between the petitioner and the respondent, the learned counsel for the petitioner would contend, though the word 'novation' has been used in the communication, it is in fact an assignment and substitution of the petitioner in place of RSA Security. Though such contention has been urged, this Court will have to keep in view the scope of this petition and take a decision in the matter.
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7. In that regard, the fact there is no agreement or contract to which the petitioner and the respondent are signatories is clear since no such document is produced before this Court. In such situation, when the respondent contends that there is no privity of contract between the petitioner and the respondent and further when the petitioner relies on the statement of work dated 31.12.2009 between the petitioner and RSA Security and seeks to bind it on the respondent based on other transactions and correspondence, this Court cannot accept it on its face value. In a matter of the present nature, it would require evidence to be tendered and thereafter a conclusion will have to be reached. Hence, it cannot be said that the defence put forth is a moon-shine defence as it would raise several issues. 8
8. Further, even assuming the petitioner succeeds in establishing that there was privity of contract between the petitioner and the respondent keeping in view the nature of transaction, there are several other aspects which will require consideration based on evidence and in that circumstance, the presence of the other parties to the transaction also will be required. From the statement of work at Annexure-R-1, it is seen that the proposal was between PNPL and RSA Security, to which the signature of only one of the parties is affixed.
9. Learned counsel for the petitioner no doubt refers to the statement of work at Annexure-A to contend that the same is independent of the other transactions as the scope of work is well defined. The work to be performed by the petitioner in terms of what was agreed 9 with RSA Security is only to provide consultative assistance in the architecture and planning stages, is the contention. However, the said document would also indicate that the implementation of statement of works will be created upon completion of the statement of works in agreement with Punjab National Bank.
10. If the very nature of the transaction is kept in view and also the number of parties involved in the same, when the main contract is for developing and providing Adaptive Authentication On-premise Architecture, Planning and Implementation Services, the claim presently made in a proceeding only against the respondent is not sufficient. Though no opinion is expressed with regard to the ultimate liability of the respondent as claimed by the petitioner in a summary consideration of the present nature, certainly the dispute raised will have to be considered as bonafide one. Unless 10 a consideration is made in an appropriate proceedings, at this stage, it cannot be accepted that there is an undisputed debt payable by the respondent nor can it be held that the respondent is unable to pay its debts.
Hence, I see no reason to admit this petition. Leaving it open to the petitioner to avail their other remedies in accordance with law, the instant petition is dismissed. Parties to bear their own costs.
Sd/-
JUDGE akc/bms