1. The petitioner in Company Petition No.179 of 2010 has taken out present petition seeking order of winding up against the respondent company and to appoint liquidator for winding up process.
1.1. At this stage, it is relevant to mention that besides the said Company Petition No.179 of 2010 two other petitioners have also filed petitions viz. Company Petition Nos.l81 of 2010 and 182 of 2010 against the respondent in Company Petition No.179 of 2010. The base and the subject matter of said two petitions is similar contract/s executed by the same respondent with the petitioners of said two petitions and except the difference in respect of the amount of security deposit paid by the three petitioners, the date of contract, the date of notice of termination and date of statutory notice, other relevant details and relevant provisions, terms and conditions of the contract contention of petitioner/s and the defence of the respondent company are similar. Even the relief prayed for in all 3 petitions i.e. order of winding up against the respondent company are common and similar. The learned advocate appearing for the three petitioners and the respondent company are also same and they have advanced common submissions. Therefore, all the three petitions are decided by this common order.
2. I have heard learned counsel for the contesting parties and examined the record of the captioned three petitions.
3. The petitioner companies seek that the Court be pleased to pass order of winding up against the respondent company because the respondent company has, according to the petitioner, lost capacity to discharge its financial obligations and it is unable to pay its debt. To support and justify the said allegations against the respondent company, the petitioners have, in the memo of the three petitions, stated that the respondent company is indebted to the petitioner for a sum of Rs.2 lakhs so far as petition being Company Petition No.179/2010 and for Rs.5 lakhs so far as Company Petition No.181/2010 and for Rs.9 lakhs so far as Company Petition No. 182/2010 are concerned. The said amounts were deposited by the petitioner companies towards security deposit in pursuance of identical agreements entered into between the petitioner companies and the respondent company. It is also claimed that the petitioners have terminated the agreement in accordance with the terms thereof and that therefore the respondent company is under obligation to return the amount deposited towards security deposit. However, despite repeated reminders and requests and even after due and proper service of statutory notice at the Registered Office of the respondent company, the payment has not been made. The petitioners, therefore, have filed present petition.
4. The respondent company has, after receiving the notice from the Court, resisted the petition by filing affidavit-in-reply. It is claimed, inter alia, that the petition raises and involves several disputed questions of fact and in view of the terms of the agreements which were executed between the parties, the respondent company has a substantive and bonafide defence. The respondent has also resisted the petition on the ground that the agreements between the parties contain arbitration clause and that therefore the petitioners should approach the arbitration forum or it should be relegated to the remedy of arbitration and petition may not be entertained. It is also claimed that the alleged debt is disputed and the petition is filed only for realizing or recovering the debt which is disputed and therefore the petition is not maintainable and does not deserve to be entertained.
5. The learned counsel for the petitioners has relied on the agreements to support the claim that the respondent is obliged to return the security deposits. On the other hand, the learned counsel for the respondent has also relied on the same agreements, however, on certain other clauses.
6. So as to consider and appreciate the rival contentions it is appropriate to keep in focus the below mentioned dates of the relevant events:
Company Petition No.179 of 2010
(i) 30.03.2009 The agreement was executed between the parties.
(ii) 24.12.2009 The petitioner terminated the said agreement.
(iii) 24.05.2010 The petitioner served statutory Notice
(iv) 07.11.2010 Since the petitioner did not receive any reply to the Notice nor the payment, the petition came to be filed.
(v) 20.01.2011 Court directed the office to issue notice to the respondent company.
Company Petition No.181 of 2010
(i) 30.03.2009 The agreement was entered into between the respondent and the petitioner of Company Petition No.181 of 2010.
(ii) 29.12.2009 Agreement was terminated by the petitioner.
(iii) 26.03.2010 Statutory notice was issued by the petitioner.
(iv) 27.04.2010 The respondent gave reply to the petitioner's communication dated 29.12.2009 terminating the contract.
(v) 16.11.2010 Date of submission of petition.
6.1. It is, however, pertinent to note that the contentions and/or objections and/or explanations and/or defence or even allegations which are raised in the reply affidavit filed in the petition were never raised by the respondent company in its reply against petitioner's communication dated 29.12.2009.
Company Petition No.182 of 2010 (I) 30.03.2009 The agreements between the respondent company and the petitioner was entered into and executed.
(ii) 24.12.2009 The petitioner terminated the said agreement.
(iii) 24.12.2009 The petitioner also demanded refund of the security deposit in the tune of Rs.9 lacs.
(iv)
---------- In this case the respondent company did not give any reply to the said communication dated 24th December 2009.
(v) 26.03.2010 The petitioner, therefore, issued statutory notice.
(vi) 27.04.2010 The statutory notice dated 26th March 2010 was, however, replied by the respondent.
7. The claim of the petitioners is based on the premise that the agreements obliged the petitioner to deposit the amount mentioned in the agreement as security deposit. The agreements also envisaged termination of the agreement by either party after following the procedure prescribed in the agreements. The petitioners claim that the agreements were terminated by the petitioners after following the procedure prescribed in the agreement and that therefore, according to the terms of contract/s the amounts deposited towards security deposits are required to be returned by the respondent to the petitioners. However, despite reminders and statutory notices the respondent has not refunded the security deposit amounts to the petitioners.
8. Per contra, the respondent would contend that the agreements were terminated illegally and arbitrarily and unilaterally by the petitioner. The respondent would further contend that the agreements envisage that in such event and circumstances the respondent can forfeit the security deposits. The respondent would also claim that the agreements allow the respondent to withhold the security deposits in certain eventualities and circumstances and according to the respondent such circumstances exist in present cases. The respondent would then claim that the action of not refunding the security deposit amounts cannot be construed as inability to pay the debt.
9. In light of rival contentions it is necessary to take into consideration and keep in focus the relevant provisions under the agreements, particularly those clauses on which the contesting parties rely viz. the clauses which provide for the obligation or right as regards security deposits (clauses 38 to 41), duration and termination of the agreement (clauses 49 to 51), no waiver clause (clause No.55), arbitration clause (clause No.58). The said clauses read thus:
"38. In order to ensure the due performance of the various obligations agreed to between the parties by way of the present agreement the CCA shall furnish a Refundable Security Deposit in favour of the Company in the sum of Rs.6.00 lacs (Rupees Six lacs only) as and when demanded by the company.
39. The aforesaid Security Deposit shall be retained by the company without interest, during the tenure of the present Agreement, and shall be refunded to the CCA after settlement of accounts, including, and inter alia, recovery of dues/penalty if any on the termination/completion of the agreement.
40. The company reserves the right to link value of security deposit with business.
41. The company reserves right to forfeit Security Deposit in part or in full in the event of violation, non-fulfillment and/or non compliance of any of the terms and conditions of the present agreement or predetermination of agreement by CCA and the decision of the Company in this regard shall be final and binding.
49. In case the CCA fails at any time to follow the instructions of the company as directed from time to time, and /or fails to perform his obligations under the present Agreement, the Company shall be entitled inter alia, to terminate this Agreement, and/or to suspend the business operations of CCA and/or levy a penalty at its discretion with a view to effectively control and supervise the operations.
50. This agreement comes into effect on date of this agreement and shall remain valid till 31.03.2013 or till such time it is terminated in accordance with the procedure set out hereinbelow.
51. This agreement can be terminated by either party by giving 30(thirty) days notice to the other side in writing.
55. Any delay or indulgence shown by the Company in enforcing the terms and conditions of this agreement or any forbearance or giving of time to the CCA shall not be construed as a waiver on the part of the Company or any breach or non-compliance of any of the terms and conditions of this agreement by the CCA shall in no manner prejudice the rights of the Company.
58. Any disputes or differences between the parties arising out of or in connection with this agreement or its performance shall,m so far as it is possible, be settled amicable between the parties.
a) If after 30 days of consultation the parties have failed to reach an amicable settlement on any and all disputes or differences arising out of or in connection with this agreement or its performance, such disputes or differences shall be submitted to Arbitration at the request of either party upon written notices to that effect to the other party and such Arbitration shall be in accordance with Arbitration and Conciliation Act, 1996, by a panel consisting of three Arbitrators.
b) While submitting the dispute or differences to Arbitration in accordance with Sub Section 52(a) above, the party so submitting shall in its notice specify the name of one Arbitrator appointed by it. Within 30 days or receipt of the Notice, the other party shall appoint an Arbitrator. The Third Arbitrator (who will act as the Chairman) shall be nominated by the two Arbitrators appointed as aforesaid or failing such nomination within 30 days of the appointment of the second Arbitrator, shall be appointed in accordance with the Arbitration Act.
c) The language of the Arbitration shall be English. The venue of the Arbitration shall be Surat.
d) The parties agree that the award of the Arbitrators shall be final and binding.
10. The learned counsel for the petitioner has, in support of his submissions, relied on the decision of the Apex Court in the case of Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. (Manu/SC/0401/1999)
11. The learned counsel for the respondent has, in support of his submissions, relied on the below mentioned decisions.
(1) Shin Satellite Public Company Limited v/s ATN International Limited (Manu/WB/0530/2011).
(2) Tata Elxsi Limited v/s Point Red Telecom Limited (Earlier Pointred Telecom Private Limited) (Manu/KA/0887/2011) (3) Mazboot Packers and Engineers Company v. Himachal Pradesh Horticulture Produce Marketing and Processing Corporation Ltd. (Manu/HP/0015/1998) (4) The Branch Manager, Magma Leasing and Finance Limited and Anr. v. Potluri Madhavilata and Anr. (Manu/SC/1672/2009).
12. It emerges from the factual background that so far as Company Petition No.179 of 2010 is concerned, in the said case the respondent had not given any reply to the petitioner's intimation terminating the contract and/or the statutory notice and all the defence or dispute which are sought to be raised are raised for the first time in the reply affidavit. It also emerges that in case of the petitioner concerned in Company Petition No.182 of 2010 the respondent never disputed the petitioner's action for terminating the agreement and/or the reasons for terminating the contract.
12.1. Another important aspect which emerges from the facts involved in the three petitions is that in any of the three cases the respondent never raised any claim or demand or dispute against any petitioner out of the three petitioners concerned in these petitions, either immediately upon the petitioner's action of terminating the contract or even thereafter until the issuance of statutory notice by the three petitioners, much less before the petitioners terminated the agreements or even contemporaneously.
12.2. It is also pertinent to note that before or even immediately after termination of contract and even in its replies given to the petitioners in Company Petition Nos.181 of 2010 and 182 of 2012 in response to the statutory notice, the respondent never raised any dispute about accounts (as is sought to be raised by the respondent now, while resisting the petitions) and/or never claimed for settlement of accounts.
13. So far as the decisions on which learned counsel for the petitioners and the respondent have relied have also been taken into consideration. The facts involved in the said decisions, which are based on the facts involved in the respective cases, would not be applicable inasmuch as the facts of present case are materially different than the facts involved in the cited cases. Besides this, in view of recent decision by the Apex Court in IBA Health (India) Private Ltd. [(2010) 10 SCC 553] the Company Court is supposed to examine as to whether the defence sought to be raised or the reason urged for denying the payment or making the payment are genuine, bona fide, substantive and real or they are illusory, spurious and afterthought. Having regard to the said decision by the Hon'ble Apex Court the rival contentions as well as factual aspects in present petitions have been examined.
14. It is in backdrop of such facts that the defence raised by the respondent company is required to be examined.
14.1. The first defence which is raised by the respondent company is on the ground of alternative remedy. On this count, the learned counsel for the respondent has contended that the agreement contains arbitration clause and that therefore the petition is not maintainable and should not be entertained. Another reason in support of the submission that the petition should not be entertained is on the ground that the petitioner should avail the remedy of civil suit since the petition involves disputed questions of fact.
14.2. Now, so far as the defence based on the ground of remedy of arbitration is concerned, the Apex Court has in case of Booz Allen & Hamilton Inc. v. S.B.I. Home Finance Ltd. [(2011) 5 SCC 532] held that the special statutory remedy provided by Sections 433 and 434 of the Act is concerned, it is a special remedy for specific relief viz. order of winding up and the remedy of arbitration is not an alternative to the said remedy.
14.3. It is settled position that the remedy under Section 434 read with Section 433 of the Act is not available and cannot be permitted to be used for enforcing recovery of debt, which is bonafide disputed. In present case, the petitioner has not prayed for order or direction against the respondent to pay its dues but the petitioner has prayed for order of winding up and that the said relief would not be available in arbitration proceedings. Hence, the said contention is not available to the respondent in present case. Similarly, remedy of civil suit for recovery of the dues also cannot be termed as alternative remedy for the relief prayed for by the petitioners in the subject petitions i.e. relief of order of winding up.
14.4. So far as the contention raised on the ground that the petition involves disputed questions of fact is concerned, it is necessary and relevant to observe that in present case there is no dispute about the fact that the respondent had entered into agreements with the three petitioners and/or about the fact that the three petitioners were obliged to deposit with the respondent specified amount as security deposit and the three petitioners had, accordingly, deposited amounts towards the security deposits with the respondent (the said amounts are still in the hands of respondent). There is also no dispute about the fact that the petitioners have terminated their respective contracts and the contract contains provision under which contract can be terminated. There is also no dispute about the fact that all the three petitioners terminated their respective contracts by issuing written intimation and thereafter or simultaneously demanded refund of the security deposit. It is also not in dispute that despite the demand the respondent has not repaid the amount of security deposit to the petitioners. Similarly, it is also not in dispute that until the statutory notice came to be served by the three petitioners and even until the petitions came to be filed the respondent has not raised any claim or demand, much less a counter claim against the petitioners. Actually even as of now any specific claim is not raised by the respondent against any of the three petitioners.
14.5. Recently, in the case of IBA Health (India) Private Ltd. [(2010) 10 SCC 553] the Apex Court has observed, inter alia, that, "......where the Company Court is satisfied that a debt upon which a petition is founded is a hotly contested debt and also doubtful, the Company Court is expected to go into the causes of refusal by the company to pay before coming to that conclusion. The Company Court is expected to ascertain that the company's refusal is supported by a reasonable cause or a bona fide dispute in which the dispute can only be adjudicated by a trial in a civil Court."
14.6. Thus, the process of examining the causes of refusal by the company is not forbidden or prohibited to the Company Court, particularly for the purpose of ascertaining as to whether the dispute sought to be raised is bona fide, substantial and genuine or not and/or as to whether it consists, as observed by the Apex Court some ingenious mask invented to deprive creditor and is not a mere wrangle. In this context it is appropriate to refer to the observations made by the Apex Court in para 20 of the decision in case of IBA Health (India) Private Ltd. (supra), which read thus:
"20.
The question that arises for consideration is that when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability? In such a situation, is there not a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt? A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. It is settled law that if the creditor's debt is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding up procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding up petition as a means of forcing the company to pay a bona fide disputed debt."
14.7. Having regard to the position as aforesaid and having regard to observations by the Apex Court in case of Booz Allen & Hamilton Inc. (supra) and IBA Health (India) Private Ltd. (supra) the Court is not inclined to or convinced to accept respondent's aforesaid objections and/or to reject the petitions on the said grounds.
15. It is, however, necessary to examine as to whether the disputes sought to be raised by the respondent are bona fide, genuine and substantial or whether they are spurious, imaginary and in nature of afterthought only to delay or frustrate the debt.
15.1. On this count, at the outset it is necessary to note, two aspects. First, in view of the provisions contained under Section 433 and Section 434 of the Act once the petitioner establishes that any of the eventualities mentioned in Section 433 of the Act exists and record if the defendant neglects to make the payment despite statutory notice/demand and after expiry of time limit prescribed under Section 434, then the right to maintain petition seeking order of winding up can be said to have been established, unless it is shown, to the satisfaction of the Court, by the respondent that the debt is bona fide disputed.
In present case, the petitioners have approached the Court with the assertion that they had deposited the amounts towards security deposit and the respondent has, despite requests and reminders and statutory notice, ignored, failed and neglected to refund the said amounts to all of them. Accordingly, the petitioners have claimed and asserted that the respondent unable to return the deposit amount and it has neglected to refund the security deposit. It is, thus, claimed that there is neglect and failure and inability to pay the debt.
16. The petitioners have relied on clause 51 of the agreement which provides that the agreement can be terminated by either party by giving 30 days' notice.
On the other hand, the respondent has relied on clause 39 and clause 41 of the agreement which allow the respondent the right to retain the security deposit and also confer the right to forfeit the security deposit. The respondent has claimed that its action is justified and competent in view of the said provisions.
16.1. Such defence and dispute raised on the strength of the provisions in the contract - agreement between the parties and in light of interpretation of the terms and conditions of the contract would be, ordinarily, considered bonafide dispute and defence provided court is satisfied that such defence is not raised as an afterthought, in which case court may further probe the matter.
16.2. So as to consider and appreciate the aforesaid rival submissions it is necessary to take into account the relevant provisions under the agreement. Since it is not in dispute that the terms and conditions of the three agreements are similar, provisions from one of the agreements can be considered.
16.3. The provision under clause 38 imposes obligation on the petitioner to deposit the amount mentioned in the said clause as security deposit. The petitioners have, accordingly, paid/deposited the respective amounts towards security deposits.
16.4. Clause 50 of the agreement prescribes duration of the agreement (i.e. until March 2013) and it also prescribes that the agreement can be terminated in accordance with the procedure set out in the succeeding clause i.e. clause 51 of the agreement. The said clause 51 provides that the agreement can be terminated by either party by giving 30 days' notice to other side in writing.
16.5. In light of the provisions contained under clauses 50 and 51 the petitioners claim that they have terminated the agreement by following the procedure prescribed by the agreement i.e. by giving notice of 30 days' in writing. The respondent would claim that they have terminated the agreement before the completion/expiry period of contract(s).
16.6. If the provision under clauses 50 and 51 are examined then it becomes clear that the said clauses allow complete liberty to both sides to terminate the agreement at any time.
The said two clauses do not prescribe any time limit before which the agreement cannot be terminated. The said clauses also do not provide that the parties to the contract should allow the agreement to operate at least for the specified minimum period. Therefore, the respondent's objection on the ground that the petitioners could not have terminated the agreement within short span is not sustainable.
16.7. The issue regarding justification for or against the action of termination of contract is not in issue at this stage or in these petitions and is not required to be examined for the purpose of considering petitioners' request for order of winding up. Only the fact that the agreement has been terminated and pursuant to such termination the petitioners demanded refund of the security deposit, has to be taken into account. The respondent has not returned the said deposits.
The petitioners claim that it is neglect and failure. On the other hand, the respondent, as aforesaid, would rely on the provisions under clauses 39 and 41 which permit the respondent to retain or forfeit the security deposit.
16.8. The said clauses 39 and 41 have been extracted hereinabove earlier. The clause 39 provides, inter alia, that the security deposit can be retained by the company (i.e. respondent) without interest during the tenure of the agreement. The very same clause also places obligation on the respondent to refund the deposit amount after settlement of account including recovery of dues / penalty if any on termination or completion of the agreement.
16.9. When an agreement confers such authority (to withhold payment) on a party to the contract then the party who invokes the provision to explain or support any action then the said party should demonstrate that the action is actually taken and exactly when was it taken. This is necessary because in case of dispute the limitation - and calculation of limitation - shall commence from the date when the action is actually taken i.e. when cause of action arises. Hence, if the action is actually not taken or if it is not informed to the other side, then it would cause prejudice to other side. The first thing which the said clause demands is an overt action on part of the respondent i.e. of retaining/withholding the security deposit. The amount should be actually retained/withheld on occurrence of any of the specified events and the other side should be informed about the action.
Mere existence and conferment of right does not mean that the right is exercised and the amount is withheld. In case of even any one of the three petitioners such overt action has not been taken by respondent.
16.10. Either at the point when the petitioners informed the respondent about termination of contract or immediately thereafter the respondent never informed the three petitioners that it has exercised the right of retaining the amount and the amounts are withheld in exercise of said provision.
16.11. Even in the reply affidavit in the petition the respondent has merely referred to the said provision and claimed that it has right to withhold the amount, however, any material to establish that the right has been exercised and the security deposit has been retained in exercise of clause 39 and the intimation has also been given is not brought on record. That is not even the case and claim of the respondent.
16.12. The other thing which is necessary for taking recourse under the said clause is to show that any dues and/or penalty have to be recovered from the petitioners, inasmuch as it is only for the said purpose i.e. for settlement of accounts that the respondent has the right to retain the amount of security deposit and upon settlement of account the deposit has to be refunded (after adjustment if any).
16.13. However, in present case, at any stage the respondent had not imposed any penalty nor it has claimed that it has dues to be recovered from the petitioners or any one or more of them.
At any point of time any demand for any dues does not appear to have been raised. Even in the reply affidavit any specific details about any dues, if any, are not mentioned.
16.14. Any intimation at any point of time prior to the presentation of the petitions and/or before filing the reply affidavit had not been sent by the respondent to the petitioners expressly asking for settlement of accounts on the ground that it had any dues to recover from all or any one of them or it had imposed any penalty on all or any of the petitioners in accordance with the terms of the agreement for any default on part of the petitioners.
16.15. Any material to demonstrate and establish that the eventuality of settlement of accounts and / or recovery of dues or penalty exists and for that purpose the deposits are retained, is not placed on record by the respondent.
17. Now so far as clause 41 is concerned, it is necessary to mention at the outset that with reference to the said clause also the respondent has not shown that it has taken any overt action and has in fact and actually forfeited the security deposit of all three petitioners.
17.1. If the contract authorises forfeiture of security deposit and if such power is exercised and forfeiture is effected, then it must also be intimated to the affected party. However, in present case either immediately after receiving the intimation terminating the contract or within reasonable time thereafter the respondent had never intimated the petitioners that their security deposit were forfeited.
17.2. Forfeiture of deposit implies and demands overt action to such effect by the person on whom such right is conferred. Mere existence of and conferment of right does not mean it has been actually and in fact exercised. Furthermore, there should also be reasonable, cogent and sustainable justification to forfeit the security deposit. In present case clause 41 itself prescribes the circumstances in which security deposit can be forfeited in part or in full. It provides, inter alia, that in the event of violation of terms and conditions of the agreement or non-fulfillment of the conditions of the agreement or on predetermination of the agreement by CCA i.e. the petitioner the security deposit can be forfeited.
17.3. In present case, it is not shown that upon termination of the contract by the petitioners the respondent actually and in fact forfeited the security deposit and informed the petitioners that it has forfeited the security deposit on account of predetermination of agreement by them.
17.4. In present case of these three petitioners it is noticed that so far as the petitioner in Company Petition No.179 of 2010 is concerned, the respondent had not given any reply to the intimation of termination of agreement or to the statutory notice and for the first time defence and objections have been raised only in the reply affidavit. So far as the petitioner in Company Petition No.181 of 2010 is concerned, the respondent has not clearly and expressly mentioned that it has actually and in fact forfeited the deposit. In case of petitioner of Company Petition No.182 of 2010 the respondent did not give any reply to the petitioner in response to the intimation about termination of contract but it did reply the statutory notice and in its reply to the statutory notice the respondent has not clearly and expressly mentioned that it has actually and in fact forfeited the deposit and intimated the petitioner about its action.
17.5. Furthermore, it is interesting that the reference of the said right is, for first time, made in the reply to the statutory notice given through advocate in case of two petitioners whereas in the reply given by the respondent such reference was not made.
18. All the above mentioned aspects when considered conjointly coupled with the fact that the respondent has adopted similar modus operandi in case of all three petitioners. It is not that in case of one petitioner and because of the facts and circumstances of a particular petitioner's case that the respondent did not refund the security deposit, but the way in which the respondent has not returned the security deposit amounts to all three petitioners and then raised similar dispute - defence in all three cases shows that when all facts are considered from this perspective, they bring out a clear modus operandi.
18.1. A conjoint consideration of the above discussed aspects and facts and the aforesaid perspective would, ordinarily, demonstrate and establish the neglect by the respondent in refunding the security deposit to the petitioners and would lead the court to conclude or at least infer that the defence is a facade and excuse or it is afterthought to avoid the petition.
18.2 It is pertinent that in case of the three petitioners the respondent has not refunded a total sum of Rs.16 lacs (between the three petitioners) and upon service of statutory notice, in its reply through advocate it has for the first time made reference of its right to forfeit the security deposit of the two petitioners.
19. On conjoint consideration of above mentioned aspects it prima facie appears that the dispute or defence sought to be raised by the respondent in case of all three petitioners are in nature of afterthought and they are not genuine and bona fide but are, as described by the Apex Court, ingenious mask invented by the respondent to defeat the petition and seem to have been raised only with a view to shielding or hiding its neglect as well as inability to refund the security deposit and delay or frustrate the obligation to refund the deposits.
19.1. The respondent would claim that the petition and its couple of contentions have been raised which call for defence call for interpretation of the terms of the agreement executed between the parties. When such issues arise in a matter, it can, ordinarily, be claimed that triable issues are involved. On the same premise, with reference to the three petitions the respondent could, but for the above discussed peculiar facts of these cases, claim that its difference is bonafide and genuine.
19.2. However, the above discussed details demonstrate that there is more than coincidence that not in case of one petitioner but in case of all three petitioners the respondent has not repaid or returned the amounts of security deposits and in all three cases it has come out with stock or similar contentions that settlement of accounts is pending (whereas at any point of time, as mentioned above any question related to settlement of accounts had never been raised by the respondent) and in all three cases, without having ever intimated the petitioners that the security deposits have been forfeited in exercise of rights conferred by the contract or the amounts have been withheld in accordance with the provisions in the contract, the respondent company has resisted the petitions on the ground mentioned hereinabove earlier.
19.3. Therefore, when it is noticed that in all three cases the respondent company has adopted similar modus operandi, the Court prima facie finds reason to believe that the defence raised by the respondent is an afterthought or it is, as described by the Apex Court, a mask to defeat the petition and petitioners' request.
20. Furthermore, from the said fact viz. similar modus operandi in all three cases and similar line of defence in all three cases and refusal to return the amount of security deposits in all 3 cases and similar circumstances which led all 3 petitioners to terminate their respective contracts within short time coupled with the fact that in all 3 cases the respondent came out with similar and identical defence, styling it as dispute, only after the service of statutory notice and before that it had never raised any demand, claim or dispute - even about Accounts - against even a single petitioner provide a strong prima facie reason to believe that the dispute sought to be raised by the respondent seems to be afterthought and the respondent company prima facie appears to be unable to pay its debts as it has failed and neglected to return the amounts of security deposit to not one but three companies. Therefore, it becomes relevant and necessary to examine as to whether there is any bona fides in the dispute sought to be raised by the respondent or not.
20.1. One of the recognized and established tests for such purpose is to ask the respondent to deposit the amount while keeping the petitions pending and before passing the order of admission or before permitting publication of advertisement after admission of the petition.
20.2. In this context reference needs to be made to the observations in the decision in case of Conart Engineers Ltd. v. Laffans Petrochemicals Ltd. [(2001) Vol. 103 Company Cases 396] wherein this Court has observed, inter alia, that:
"The Court has to examine the nature of the respective cases pleaded by the parties and if a prima facie case is made out by the petitioner, the company should shoulder the onus of disproving it, by showing that its defence is in good faith and is one of substance and it is likely to succeed in point of law. The defence must be substantial and not mere moonshine. So also where the dispute is a mere after thought, an adverse inference may have to be drawn against the Company that the defence being an afterthought, is a mere cloak to cover up its inability or refusal to pay. Adverse inference may also have to be drawn where the cheque/s issued by the Company for the debt in question or a part thereof is/are dishonoured. For determining whether a debt is disputed bona fide or not, the conduct of the parties in relation to the transaction in question, the character of the pleas and the circumstances which will be peculiar to each case will have to be considered.
IV. Court's findings on bona fides of company's defence and orders which may be passed upon such findings:
(1) After considering the material on record, if the Court comes to the conclusion that the defenceraised by the Company is not only not bona fide, but the defence is reeking with mala fides or the company's conduct leading to the dispute (in respect of which the Company's defence is found to be not bona fide) was dishonest, the Court would admit the petition and pass an order for advertisement.
(2) Where the Court comes to the conclusion that the defence is not bona fide (as distinguished from the conclusion that the defence is mala fide), the Court may give the Company an opportunity to pay the debt to the petitioner within the stipulated time limit. If the debt is not paid, the Court would ordinarily admit the petition, unless a strong case is made out for not admitting the petition. The Court may, in its discretion, even pass a conditional order of admission without an order for advertisement while giving the finding that the company's defence is not bona fide.
(3) Where the Court gives only a prima facie or tentative finding that the company's defence is not bona fide, before admitting and advertising the petition the Court must also give a prima facie or tentative finding that the Company is commercially insolvent, that is, the Company is unable to pay its debts as a going concern.
(4) Where the Court gives a finding that the defence raised by the Company is a bona fide one, i.e. substantial, non payment of such debt cannot amount to neglect to pay debt as contemplated by Sec. 434(1)(a) and the petition would have to be dismissed. In such a case, the Company Court may give only a prima facie i.e. tentative finding because the controversy can be finally decided in the civil suit.
(5) If the case falls in the grey area, that is, the Company's defence is neither found to be substantial nor a moonshine and, therefore, the Court is not in a position even tentatively to give a finding one way or the other whether the defence is bona fide or not, the Court may require the company to deposit the claim amount or a part thereof in the Court and require the petitioner to prove its claim before the Civil Court to which the amount deposited will be transferred or the Court may require the Company to give security for the amount claimed."
21. Having regard to the facts of the three cases on hand and the above mentioned observations, it appears that below mentioned directions would be appropriate and would also serve the interest of justice and will be in consonance with the provisions of the Act and settled legal position. Therefore, below mentioned order is passed at this stage.
22. The respondent is directed to deposit in the Registry of this Court, within 30 days from receipt of the certified copy of present order, 30% of the deposited amount by each of the three petitioners, i.e. Rs.4.80 lakhs (Rupees Four Lakh Eighty Thousand only).
23. The Registry shall list the three petitions being Company Petitions Nos.179 of 2010, 181 of 2010 and 182 of 2010 on 16th July 2012 for further orders.
(K.M.THAKER, J.) jani Top