Delhi High Court
M. R. A. Associates India Pvt. Ltd. vs Seven Seas Hospitality Pvt. Ltd. on 8 November, 2013
Author: R. V. Easwar
Bench: R.V.Easwar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 1st November, 2013
% Date of decision: 8th November, 2013
+ CO. PET. No.478/2011
M. R. A. ASSOCIATES INDIA PVT. LTD. ..... Petitioner
Through: Mr. Subhiksh Vasudev and Mr.
Srivats Kaushal, Advocates.
versus
SEVEN SEAS HOSPITALITY PVT. LTD. ..... Respondent
Through: Mr. S. C. Singhal, Advocate.
CORAM:
HON'BLE MR. JUSTICE R.V.EASWAR
JUDGMENT
R. V. EASWAR, J.:
1. This is a petition filed under Section 433 (e) of the Companies Act, 1956 seeking winding-up of the respondent-company for non-payment of the dues of `21,20,232/-.
2. The petitioner is a company engaged in rendering integrated services relating to infrastructure development. The respondent-company had planned to build a five star Hotel in Rohini, Delhi and sought the assistance of the petitioner to provide management services for the project. On 17.12.2010 a techno-commercial proposal was submitted by CO. PET. 478/2011 Page 1 of 13 the petitioner which explained the scope of "construction management services" at pre-construction, post-construction and during the construction phases. The proposal, towards the end, enumerated the terms of engagement. The fees payable for the provisional services was `6,00,000/- per month or part thereof; in addition thereto, the travel expenses, boarding and lodging, etc., site office and pantry expenses were also payable. The payment terms were that one month professional fees is to be paid in advance and the invoice payment shall be made within 7 days of the submission thereof. The engagement could be terminated by either side after giving 2 months‟ advance notice.
3. On 18.12.2010, an e-mail was sent by the respondent to the petitioner accepting the proposal and mentioning that a sum of `1 lakh was given in cash as advance. It was also stated that the duties of the petitioner would start at 20.12.2010 and the petitioner shall meet Mr. Sachdeva and Mr. S. C. Gupta, who were deputed by the respondent to show to the petitioner the site and for meeting the contractors. The mobile number of Sachdeva was also given.
4. It is not clear what exactly happened between the petitioner and the respondent thereafter, but it would appear that the arrangement between them was soon terminated. According to the petitioner, invoices were CO. PET. 478/2011 Page 2 of 13 raised by it as per following details: -
Date of Invoice For the period Total amount
(including service tax)
30.01.2011 December, 2010 2,34,832/-
30.01.2011 January, 2011 6,61,800/-
5. In addition to the above the petitioner also issued receipt for `1 lakh received by it on 16.12.2010 as advance. The invoices were not paid by the respondent.
6. Reminders were, therefore, issued by the petitioner on 01.03.2011, 21.03.2011, 25.03.2011 and 01.04.2011. In these reminders, the respondent was asked to pay `21,20,232/- as detailed below: -
"MRAPL/Seven Seas/Fees Date:1-03-11
To,
M/s Seven Seas Hospitality Pvt. Ltd.
Lawrence Road
New Delhi
Kind Attn : Mr. Jagannath
Sub: - Bill for Project Management Services for Hotel at Mangalam Place, New Delhi.
Ref: E Mail Dt 30 Dec 2010 Unpaid amount for the month of CO. PET. 478/2011 Page 3 of 13 December 2010 `2,12,903.00 Unpaid amount for the month of January 2011 `6,00,000.00 Project Management Services rendered for Feb 2011 `6,00,000.00 The termination fees for the project (as per agreed terms it was 2 months but we raising only for a month as a goodwill gesture) `6,00,000.00 Add service tax @ 10.3% `2,07,329.00 Less Received `1,00,000.00 ____________ Total `21,20,232.00 _____________ (Rupees Twenty One Lac Twenty thousand two Hundred thirty two Only) For M.R.A. Associates India Private Limited Sd/-
(Aroon Kumar Aggarwal) IT PAN NO.: AAFCM3239H, SERVICE TAX NO.: AAFCM3239HST001 "
7. Since no reply was received from the respondent, the petitioner sent a reminder by e-mail on 06.04.2011. Since there was no response to this also, a further reminder was sent by e-mail as well as by registered post. Even these did not evoke any response. Therefore, the petitioner sent a demand notice on 09.08.2011 under Section 434 (1)(a) of the Act CO. PET. 478/2011 Page 4 of 13 calling upon the respondent to pay the amount of `21,20,232/- with interest @ 18% per annum from April, 2011 till 31.07.2011 with further interest @ 18% per annum till actual payment. The notice was served on the respondent but did not evoke any response. The service of notice is not denied by the respondent.
8. The petitioner, therefore, filed the present winding-up petition on the ground that the company is unable to pay its debts.
9. According to the petitioner, the respondent was liable to pay the aforesaid amount for the services rendered by the petitioner and since there was no reply either to the statutory notice or to the reminders issued earlier it must be taken that the respondent has admitted the debt. It is stated that the conduct of the respondent shows that its defence is not bona fide or substantial but is mere moon-shine. It is further argued that there is sufficient evidence on record to show that the petitioner rendered services for which payment is due.
10. The respondent, however, states that there is no admission of any liability and that though there were certain negotiations between the parties, but no concluded agreement ever came into existence and the terms and conditions were not settled. It is submitted that the petitioner never rendered any consultancy services to the respondent and it has CO. PET. 478/2011 Page 5 of 13 failed to point out as to in what manner the consultancy services were rendered.
11. On a careful consideration of the facts, the material on record and the rival contentions, I am satisfied that the petitioner has made out a case for admitting the winding-up petition. The proposal of the petitioner was accepted by the respondent and the fact that there was no contract which was reduced into writing cannot lead to the conclusion that the petitioner did not render any services. The respondent paid an advance of `1,00,000/- to the petitioner and stipulated that the duties of the petitioner would start from 20.12.2010 on the site. The petitioner was also directed to meet Mr. Sachdeva and Mr. Gupta deputed by the respondent to show the site and meet the contractors. Thereafter, there is a series of correspondence which would prima facie show that the petitioner did commence the rendering of the services for which it was engaged. At page 26 of the petition, there is a letter written by Ahluwalia Contracts (India) Ltd., (hereinafter referred to as „AHLCON‟) to the respondent.
AHLCON was the company which was engaged by the respondent for construction of the hotel. A copy of this letter which is dated 29.12.2010 is seen marked to the petitioner for information. The letter speaks of corporate guarantees for performance and mobilisation advance to be CO. PET. 478/2011 Page 6 of 13 given by AHLCON to the respondent. This shows that the petitioner was kept in the loop. Another letter written by AHLCON to the respondent on the same day in connection with the execution of a power of attorney was also marked to the petitioner. On 02.02.2011, AHLCON wrote a letter to the respondent regarding requirement of steel. A copy of this letter was marked to the petitioner for information and necessary action. Enclosed to this letter is a comparative statement of steel reinforcement for the approval of the respondent. On 04.02.2011 another letter was written by AHLCON to the respondent with a copy thereof marked to the petitioner for information and necessary action. The subject of this letter was "progress of work". More specifically, the letter dealt with the problem concerning dewatering. There appears to have been a problem due to collection of sub-soil water. AHLCON was complaining to the respondent about the evasive conduct of the dewatering contractor. The photographs of the site were attached to this letter, to explain the problem. On 08.02.2011, a similar letter was written by the AHLCON to the respondent on the same subject, a copy of which was marked to the petitioner.
12. On 14.02.2011 AHLCON wrote another letter to the respondent on the subject of anti-termite treatment. A copy of this letter was also CO. PET. 478/2011 Page 7 of 13 marked to the petitioner. This letter appears to be a sequel to an earlier letter written by AHLCON to the petitioner itself on 10.01.2011 requesting the petitioner to arrange the material in advance so that the anti-termite work can start in time. Another letter of the same date written by AHLCON to MRA Associates, the petitioner, relates to the subject of extending the commencement date of the project. AHLCON has stated in the letter that they have not received the structural drawings which was delaying the construction and procurement schedule. A request was made to the petitioner to extend the commencement date of the project. On 14.01.2011 another letter was addressed by AHLCON to the petitioner regarding quotation for cement. The petitioner was requested to approve the quotations for cement and procure the cement as early as possible. There are letters dated 18.01.2011 on the subject of control points and architectural drawings. These letters were addressed to the petitioner by AHLCON. On 25.01.2011, AHLCON again wrote to the petitioner, the subject being the problems due to dewatering. The complaint in the letter is that due to the inefficiency of the dewatering contractor, there is a delay in the schedule which should be considered and extension of the commencement date should be given. A reply seems to have been written by the petitioner on the same day. In this reply there is reference to a verbal discussion on 21.01.2011 on the subject of the CO. PET. 478/2011 Page 8 of 13 dewatering. The letter states that AHLCON had excavated more than 1500 mm resulting in the sub-soil water coming up. They were advised not to excavate more than 1000 to 1500 mm. The petitioner blamed the lack of supervision of the work by AHLCON pointing out that no engineer was available to check the excavation which was being done at night.
13. The aforesaid correspondence between the petitioner and AHLCON and copies being marked to the petitioner in respect of the initial correspondence entered into between AHLCON and the respondent indicate that the petitioner did render some services to the respondent for which payment was due. As to what exactly was the amount due to the petitioner for the services may be in dispute but the fact that there was a dispute does not in all cases mean that no amount was due by the respondent. In Madhusudan Gordhandas & Co. Vs. Madhu Wollen Industries Pvt. Ltd. : AIR 1971 SC 2600, it was held by the Supreme Court that where there is no doubt that the company owes the creditor a debt entitling him to a winding-up order, but the exact amount of the debt is disputed, the Court will make a winding-up order without requiring the creditor to quantify the debt precisely.
14. The defence taken by the respondent is not of substance. Having CO. PET. 478/2011 Page 9 of 13 accepted the proposal of the petitioner and having paid an advance of `1,00,000/- and also having invited the petitioner to start work from 20.12.2010, there was no justification on its part to dispute the claim that the petitioner rendered services merely on the ground that no formal contract was concluded between the parties. The respondent could not have been unaware that copies of the letters written by AHLCON to it were marked to the petitioner. If no formal contract had been concluded and if the respondent had not engaged the services of the petitioner, the respondent ought to have told AHLCON that the petitioner had nothing to do with the hotel project and, therefore, copies of the correspondence need not be marked to the petitioner. Moreover, AHLCON could not have possibly come to know that the petitioner was engaged as consultant of the hotel project, except on being informed by the respondent. An advance of `1,00,000/- was given to the petitioner with a request to start the work on site from 20.12.2011. All this leads to the reasonable inference that the petitioner‟s services were engaged by the respondent. For the services, the petitioner has to be paid and merely because the amount payable is disputed and is not acceptable to the respondent, it cannot be said that there is no case for winding-up the respondent.
15. The learned counsel for the respondent in the course of the CO. PET. 478/2011 Page 10 of 13 arguments submitted that the petitioner did not submit a list of the various services it had claimed to have rendered, as stipulated in the proposal submitted by the petitioner. The rendering of services is quite different from the submission of the list of the services to the respondent as stipulated in the proposal. The fact that the petitioner did not submit a list of the services rendered by it in terms of its proposal does not take away anything from the fact that the services were actually rendered, if such services can be otherwise proved to have been rendered. Moreover, the conduct of the respondent does not bear scrutiny. It did not reply to the statutory notice sent by the petitioner under Section 434(1)(a). Before the issue of the statutory demand notice, the petitioner sent several reminders through registered post, e-mail, etc.; however, the respondent did not care to reply to any of these. The respondent also does not deny the receipt of the statutory demand notice. All the objections/ defences to the petitioner‟s claim are taken only in the counter affidavit for the first time. If the respondent really thought that there was no concluded contract and that the petitioner was not engaged for rendering any consultancy services, it ought to have responded to the reminders issued by the petitioner at the earliest. In Resham Singh & Co. (P) Ltd. vs. Daewoo Motors India Ltd. : (2003) 66 DRJ 511, Vikramjit Sen, J. (as he then was, of this Court) held that where there is no response to the statutory CO. PET. 478/2011 Page 11 of 13 notice, the respondent company runs the risk of the winding-up petition being admitted for hearing at the threshold stage itself. In the judgment of the Supreme Court cited supra it has also been held that the defence of the company should be in good faith and one of substance and not mere moon-shine.
16. The learned counsel for the respondent, in the course of his arguments, disputed the claim of the petitioners that the bills/ invoices were acknowledged by one Shefali, an employee of the respondent. He submitted that the said person was not in the employment of the respondent-company at the relevant dates and her signatures were forged. This defence was not taken by the respondent at any earlier point of time, though the petitioner had referred to the invoices and the reminders in its e-mails sent prior to the sending of the demand notice. There was no response to any of them, even the statutory notice. It is also not clear why, if no contract was concluded between the parties and no services were rendered by the petitioner, the respondent did not even ask for refund of the advance of `1,00,000/- paid to the petitioner. Thus, the contention of the respondent in paragraph 5(a) of the counter affidavit to the effect that the terms and conditions were not settled between the parties and that the petitioner never provided any consultancy services to CO. PET. 478/2011 Page 12 of 13 the respondent appears to me to be mere moon-shine and not bona fide.
17. For the above reasons I admit the winding-up petition.
List on 20.03.2014 for further proceedings.
(R.V. EASWAR) JUDGE NOVEMBER 08, 2013 hs CO. PET. 478/2011 Page 13 of 13