Karnataka High Court
M/S Sri Renuga Garments vs M/S Primus Retail Private Limited on 8 October, 2012
Author: L.Narayana Swamy
Bench: L. Narayana Swamy
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 8TH DAY OF OCTOBER 2012
BEFORE
THE HON'BLE MR. JUSTICE L. NARAYANA SWAMY
COMPANY PETITION.NO.30/2012
C/W
COMPANY PETITION NOS.1/2012 AND181/2011
COP NO.30/2012:
BETWEEN:
M/s. Sri. Renuga Garments
Represented by Proprietor
N. Selvaraj, S/o Natarajan,
Aged 37 years,
No.2/67-B, Koolathottam,
Chithambalam,
Palladam-641664,
Tirpur District,
Tamil Nadu State. ... PETITIONER
(BY SRI.T.A.KARUMBAIAH, ADV..)
AND
1. M/s. Primus Retail Private Limited
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47.
2. Raju M. Mahathaney(Director)
M/s. Primus Retail Private Limited,
No.7, 2st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47.
2
3. V. Balaji Bhat
Co and Managing Director,
M/s Primus Retail Private Limited,
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47.
4. Ajay Mittal (Director)
M/s Primus Retail Private Limited,
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47.
5. P. Sudhir Rao (Director)
M/s Primus Retail Private Limited,
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47. ... RESPONDENTS
(BY SRI.ARAVIND KAMAT ADV, FOR ALTM LEGAL ADV FOR R1
R2 TO 5 ARE DELETED VIDE ORDER DATED 8.10.2012)
This petition filed under Section 433(e)(f) 434(I)(A), 439(I)(B)
of the Companies Act, 1956 R/w Rules 95 of the Companies act
(Court Rules) 1956, praying to winding up of the respondent
company, M/S. Premus Retail Pvt. Ltd., lNo.7 1st Cross 3rd Main,
Ashwini Layout, Ejipura, Bangalore-47 under the provisions of the
Companies Act, 1956.
COP NO.1/2012:
BETWEEN:
1. R.K. Tandon
S/o Janakraj Tandon
Aged about 68 years
2. P.K.Tandon
S/o Janakraj Tandon
Aged about 66 years
3. Rajesh Tandon Karta B.R.
Tandon UH U F
S/o Baldevraj Tandon'
3
Aged about 49 years
(1) to (3) have address at 143,
Janak Chaya,
Sher-E-Punjab Colony,
Mahakali Carve Road,
Andheri (E),
Mumbai 400 093.
4. S.K. Tandon
S/o Janakraj Tandon
Aged about 62 years
And at D-9/10, Hermes Drome-1
5th Floor, Viman Nagar,
Pune 400 014
5. Mr. M.S. Mehra
S/o Daulatram Mehra
Aged about 68 years
6. Mr. Sanjay Mehra
S/o Madhusudan Mehra
Aged about 47 years
7. Mr. Vinay Mehra
S/o Madhusudan Mehra
Aged about 43 years
(5) to (7) residing at
Sher-E-Punjab Colony,
Mahakali Caves Road, Andheri (E),
Mumbai 400 093.
... PETITIONERS
(BY SRI. ARUN KUMAR ADV., FRO CRESTLAW PARTNERS ADV.)
AND
M/s. Primus Retail Private Limited
A company incorporated under the provisions
Of the Companies Act,
1956 and having its
Registered office at
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47.
... RESPONDENT
4
(BY SRI. ARAVIND KAMATH , ADV FOR ALMT LEGAL ADV.)
This petition filed under Section 433(e)(f of the Companies
Act, 1956 praying to winding up of the respondent company, M/S.
Primus Retail Pvt. Ltd., be wound up under Section 433(e) and
433(f) of the Companies Act, 1956.
COP NO.181/2011
BETWEEN
Arvind Murjani Brands Pvt. Ltd.
Having its registered office at:
Arvind Mills Premises,
Naroda Road,
Railwaypura Post,
Ahmedabad 380 025
Represented herein by its
Authorised Signatory
Mr. Ravi Rao
(Vice President-Finance)
.....PETITIONER
(BY SRI N. LOMESH KIRAN AND DEEPAK S. SARANGMATH ADV
FOR INDUS LAW, ADVS.)
AND
M/s. Primus Retail Private Limited
Having its registered office at
No.7, 1st Cross, 3rd Main,
Ashwini Layout, Ejipura,
Bangalore-47
And represented herein by
Its Managing Director.
... RESPONDENT
(BY SRI. ARAVIND KAMATH, ADV FOR ALMT LEGAL ADV.)
This petition filed under Section 433(e)(f of the Companies
Act, 1956 praying to winding up of the respondent company, M/S.
Premium Retail Pvt. Ltd., under the provisions of the Companies
Act, 1956
5
These company petitions coming on for orders, this day, the
court made the following::
JUDGMENT
COP No.30/2012 is filed under Section 433(e) and 433(f) 434(1)(A), and 439(1)(b) of Companies Act, 1956, read with Rules 95 of the Companies Act (Court Rules), 1956, seeking winding up of the Respondent-company for non-payment of debts and a direction to appoint an Official Liquidator forthwith to take possession of assets, books of accounts and papers of the company.
2. COP No.1/2012 is filed under Section 433(e) and 433(f) of Companies Act, 1956, seeking winding up of the Respondent-company for non-payment of debts and a direction to appoint an official liquidator forthwith to take the possession of assets, books of accounts and papers of the company.
3. COP No.181/2011 is filed under Section 433(e) and 433(f) of Companies Act, 1956 seeking winding up of the Respondent-company for non-payment of debts.
4. The brief facts in COP.NO.30/2012 is as under: 6
It is the case of the petitioner that the petitioner- company is a proprietary concern carrying on garment manufacturing and its head office is at Kulla Thottam, Chithambalam, Palladam, Tirpur District of Tamil Nadu. The respondent-company purchased the materials by placing orders as per Annexure-C dated 09.06.2010 which are 15 in number. For having delivered the goods to the Respondent- company, invoices have been produced as per F1-to F15. In response to the supply of goods, the respondent-company has issued 14 post dated cheques, the same have been produced as per Annexure-G1 to G14 for a total amount of Rs.26,16,288/- and the receipt of same has been acknowledged as per Annexures-H and J issued to the petitioner-Company. In the letter dated 14.06.2011 Annexure-J, the respondent-Company has requested the petitioner-company for replacement of the cheques within 15 days as the post-dated cheques issued had lapsed. As the respondent-company failed to pay the amount, the petitioner issued a statutory notice as per Annexure-K dated 13.10.2011, the receipt of which is acknowledged, but no response was made. Pursuant to the said statutory notice, in 7 the interregnum, the respondent-company passed a resolution as per Annexure-D dated 8.4.2003 resolving to sell the Weekender Business. The company had entered into an agreement with M/s.Madusudan Securities Limited and the said agreement is entered only to avoid the dues payable to the petitioner. The decision of the Board as per Annexure-O, clarifies the debts payable by the respondent - company. Debt is admitted as per Annexure-J and K. As per Annexure-H, receipt of cheques is acknowledged.
5. Learned counsel for the respondent-company seeks time to explore the possibilities of amicable settlement.
6. The respondent-company is common in all these cases and the debt payable to the petitioners is admitted. Statutory notices under Section 434 of Companies Act have been issued and the same have not been replied. Court notice was issued to the respondent-company, petition copy is also served and representation is made on behalf of the respondent-Company, but statement of objection is not filed. With regard to settlement, no efforts have been made by the respondent-Company earlier.
8
7. The Brief facts of COP.1/2012 are as under:
It is stated that petitioners are the individuals and are absolute owners of the schedule property and leased the schedule property in favour of the respondent. The respondent-Company is incorporated under the Companies Act having its registered office at #7, 1st Cross, 3rd main, Ashwini Layout, Ejipura, Bangalore. For the purpose of jurisdiction, the petitioner has filed the petition before this Court. The CIN number of the respondent-company is U65999KA1995PTC019281.
8. The share capital of the respondent -Company is 30,11,000 equity share of Rs.10/- each amounting to Rs.3,01,10,000 and 964990 preference shares of Rs.1,000/- each amounting to Rs.96,49,90,000. The paid up share capital of the Company is 3001000 equity shares of Rs.10/- each amounting to Rs.3,00,10,000 and 964990 preference shares of Rs.1,000/- each amounting to Rs.96,49,90,000. 9
9. The main object of the Company as stated in its Memorandum of Association is as under.
i. to own, construct, take on lease or in any other manner and to run, render technical advice in constructing, furnishing, running and management of retail business including department stores, direct to home and mail order catalogue for all category of products and services dealing in all kinds of goods, materials and items in India or any part of the World.
ii. To design, manufacture, produce process, trade, import, export, purchase, sell, market, promote and otherwise deal in all kinds of garments, fabrick, accessories, footwear, and allied goods including perfumes, eyewear in India and abroad.
10. The respondent-company had expressed the intention to open up a shop known as "Weekenders" in the schedule property. Petitioners and the respondent entered into an agreement of leave and license dated 28.02.2008 as per Annexure-A. The respondent-company has agreed to pay Rs.1,00,000/- per month as rent and Rs.70,000/- towards amenities as per Annexures-A and B. The respondent- company had also agreed to pay municipal taxes etc. Since the respondent-company did not pay the rent agreed as per 10 Annexure-A, several E-mails have been sent as per Annexure- C series and when series of E-mails addressed to the respondent-company were not responded to, a notice is issued under Sections 433 and 434 of the Companies Act through Registered Post Acknowledgement Due on 22.10.2011. As per Annexure-E, the total amount due is as follows;
a) Rs.16,32,000/- being the amount outstanding towards the revised License Fees and Compensation for the period commencing April, 2010 upto March 2011.
b) Rs.1,59,120/- being the amount outstanding towards interest at the rate of 18% per annum on the revised License Fees and Compensation for the period commencing April, 2010 upto March, 2011.
c) Rs.5,88,336/- being the amount outstanding towards Service Tax for the period February 2008 till October 2011.
d) Rs.9,49,152/- being the amount outstanding towards Property Tax for the And, in all, Rs.47,65,336/- was demanded. The notice was sent through registered post acknowledgment due. The notice was served and acknowledgment is produced. The respondent failed to reply. Hence this petition. 11
11. As per the order dated 17.04.2012 petition was admitted and the petitioner was directed to takeout paper publication. Accordingly, the same was taken. Pursuant to the notice, no claims were made.
12. Learned counsel for the petitioners submits that statement of objections is not filed after service of notice. Therefore, he submits that it is to be considered as respondent-company has no objection and prayed to allow the petition.
13. Learned counsel for the respondent-company seeks some time to explore the possibility of settlement and submits that, if time is granted, the dispute would be amicably settled between the parties.
14. In response, learned counsel for the petitioners submits that though a proposal was sent, the respondent- Company has not considered the same. Learned counsel also referred the submission made by the petitioners' counsel in his argument that the Board of Directors passed a resolution 12 on 14.02.2011 to dispose of the assets of the company. Secondly, learned counsel for the petitioners relied on Annexure-P in COP No.181/2011 to submit that assets of the company have been eroded.
15. I have heard the learned counsel appearing for both sides.
16. The petitioners have produced the attested copy of lease agreement (leave and licence) as per Annexure-A. The agreement was entered into for 36 months. Renewable clause has also been incorporated. It was agreed that a sum of Rs.1,00,000/- per month would be paid subject to tax deductible at source and that the respondent should pay the rent on or before 10th day of every month, and delay in payment would attract interest at 18% per annum. It was also agreed that the licensee shall pay the tax which is required to be deducted at source under the Income Tax Act to the authorities within the statutory time frame. A similar agreement was also entered into to pay Rs.70,000/- towards amenities, under the same terms and conditions. Lease 13 agreement was registered at the Office of the Registrar, Andheri, Bombay.
17. Since the respondent-company failed to pay the rent as per Annexure-A, E-mails as per Annexure-C series were sent during August 2011, June 2011 and there are about 8 E-mail correspondence produced along with the petition. Statutory notice was issued on 22.10.2011 and the acknowledgement is produced. Considering all these facts, this Court admitted the petition and the petitioner has taken notice of admission of the petition in "The Hindu", English Newspaper and "Vijaya Karnataka", Kannada Newspaper and copies of the same have been produced.
18. As required under the provisions of the Companies Act, the respondent-company should have issued a reply to the Annexure-C. In response to the notice issued in the petition, statement of objection should have been filed in order to make a defence. Despite service of notice and entering appearance before this Court, statement of objections is not filed. Further, the submission made by the 14 learned counsel for the respondent-company is that some time may be granted to explore the possibility of amicable settlement, which itself is insufficient. Nothing prevented the respondent-company to make an offer earlier for establishing the bona fides. So far, nothing to that effect is forthcoming from the order sheet maintained by this Court. Therefore, an amount of Rs.47,65,336/- which is due to the petitioner is treated as debt under the Companies Act and that the respondent-company has failed to pay the debts.
19. The Brief facts of COP.181/2011 is as under:
It is the case of the petitioner that the petitioner- company had executed a National Sub-Franchise Agreement for Mono Brand Retailing for apparel stores with one Aryan Lifestyle Private Limited Company, wherein Aryan Lifestyle Private Limited was to open, operate and sub-franchise Tommy Hilfiger franchise stores in India. Aryan Lifestyle Private Limited further entered into an agreement through a deed of assignment with respondent-Company. Thereafter, the respondent-company assumed all the rights and obligations of the Aryan Lifestyle Private Limited. As such, the 15 petitioner had entered into an agreement with the respondent-Company as per Annexure-E dated 24.09.2010 and as per Annexure-A1 to the settlement agreement dated 25.9.2010, the total outstanding due to the company was Rs.5,02,49,008/- as on 15.10.2010. Since the said agreement has not been fulfilled, the respondent company again entered into an agreement with the petitioner as per Annexure-F dated 24.03.2011. According to the same, the respondent-
company had agreed to hand over six cheques towards installments of total amount of Rs.2,43,84,023/-, which is a part of agreement as per Annexure-F. The cheques were issued and the same were dishonoured and consequently, notice was issued under Section 138 of N.I. Act and the same was served and proceedings are pending. Notice was issued under Section 434 of Companies Act on 14.09.2011 as per Annexure-N and acknowledgment is produced to prove effective service.
20. Learned counsel for the petitioner submits that despite service of notice on the respondent-company, the same has not been replied. Even pursuant to the court notice, 16 statement of objection is not filed. Hence, learned counsel submits that a presumption is required to be drawn in favour of the petitioner in respect of the debt due and prays to wound up the company. Learned counsel draw my attention to Auditors' Reports as per Annexure-P dated 14.02.2011 wherein at para 4(c) an observation is made that the company has made cash losses and its net worth has been substantially eroded. The company's ability to continue as a going concern will depend on its ability to obtain an extension in the period for redemption for these outflows, if not covered, or its ability to negotiate alternative source of funds to repay these balances along with the premium due on redemption as per the agreement with the debenture and shareholders and other operating outflows.
21. Learned counsel appearing for the respondent seeks some more time to negotiate with the petitioners. He further submits that despite granting time, the respondent-company has not come forward for negotiation.
22. I have heard the learned counsel appearing for both sides. 17
23. The petitioners have established that the due is substantive in nature. An agreement is entered with Aryan Lifestyle Private Company Limited as per Annexure-C and further agreement is entered into between Aryan Lifestyle Private Company Limited with the respondent-company as per Annexure-D. Fresh agreements are entered into between the petitioner and the respondent-company as per Annexures-E and F. As per Annexures- E and F, respondent-Company had agreed to pay Rs.2,43,83,043/-. For which, five post dated cheques for Rs.20,00,000/- each and 6th cheque for the remaining amount have been handed over. Statutory notice is issued under Section 138 of N.I. Act and under Section 433 of Companies Act, which is not denied by the respondent- company. Statement of objections is not filed by the respondent- company, even after service and notice and entering appearance in these petitions.
24. The petitioner has not taken paper publication after the matter was admitted. The same is dispensed with, since in the connected petitions, notices were published in "The Hindu", 18 English Daily Newspaper and "Vijaya Karanataka", Kannada Daily Newspaper.
25. Under these circumstances, this court comes to the conclusion that the respondent-company has reached the stage of commercial insolvency, more particularly in view of the resolution of the Board of Directors dated 14.2.2012, which is produced in COP No.30/2011 and as per the Auditors' Report produced as Annexure-P in COP NO.181/2011 which demonstrates that the respondent-company has inevitably failed to pay the debts.
26. Hence, I pass the following:
ORDER i. The petitions are allowed.
ii. The respondent-company is ordered to be wound up.
iii. The Official Liquidator to take possession of
papers, documents, records, etc. of the
respondent-Company.
iv. The petitioners are directed to deposit Rs.25,000/-
towards initial expenses with Official Liquidator. 19 v. The petitioner is directed to serve a copy of this order to the Registrar of Companies within thirty days from the date of receipt of a copy of this order.
vi. The petitioner is further directed to take out advertisement of this order in "The Hindu", English Daily Newspaper and in "Vijaya Karnataka", Kannada Daily Newspaper, within two weeks from the date of receipt of a copy of this order.
Sd/-
JUDGE Rms