Company Petition No. 157 of 2016 · The High Court
Case Details
- 1 - NC: 2025:KHC:11627 COP No. 157 of 2016 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE M.G.S. KAMAL COMPANY PETITION NO. 157 OF 2016 …PETITIONER BETWEEN: N. RAGHAVENDRA PRASAD AGED ABOUT 55 YEARS S/O. NAGARAJAN, NO.179, S.C. ROAD, SESHADRIPURAM, BENGALURU - 560 020 (BY SRI. ABHINAV R., ADVOCATE) AND: 1. M/S. ELMEASURE INDIA PVT. LTD. A COMPANY INCORPORATED UNDER THE COMPANIES ACT AND HAVING ITS REGISTERED OFFICE AT NO.755, 4TH PHASE, 707, YELAHANKA NEW TOWN, BENGALURU - 560 064 2. MR. SAM CHERIAN CHAIRMAN/DIRECTOR, M/S. ELMEASURE INDIA PVT. LTD., NO.755,4TH PHASE, 707, YELAHNAKA NEW TOWN, BENGALURU - 560 064 3. MR. T.K. BABU DIRECTOR, M/S ELMEASURE INDIA PVT. LTD., Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:11627 COP No. 157 of 2016 NO.755, 4TH PHASE, 707, YELAHANKA NEW TOWN, BENGALURU - 560 064 4. BINDUBABU DIRECTOR, M/S. ELMEASURE INDIA PVT. LTD., NO.755,4TH PHASE, 707, YELAHANKA NEW TOWN, BENGALURU - 560 064 5. THANKAMMA CHERIAN DIRECTOR, M/S. ELMEASURE INDIA PVT. LTD., NO.755,4TH PHASE, 707, YELAHANKA NEW TOWN, BENGALURU - 560 064 …RESPONDENTS
Legal Reasoning
(BY SRI. GANESH BHAT Y.H., ADVOCATE) THIS PETITION IS FILED UNDER SECTION 433(E) AND (F) READ WITH SECTIONS 434 AND 439 (1) (B) OF THE COMPANIES ACT, 1956, PRAYING TO THE 1ST RESPONDENT MAY BE ORDERED TO BE WOUND UP BY AND UNDER THE DIRECTIONS OF THIS HON'BLE COURT UNDER THE PROVISIONS OF SECTION 433(E) AND (F) AND 434 OF THE COMPANIES ACT, 1956, AND ETC. THIS PETITION, COMING ON FOR DISMISSAL FOR NON-PROSECUTION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.G.S. KAMAL - 3 - NC: 2025:KHC:11627 COP No. 157 of 2016 ORAL ORDER Petitioner has filed the present petition under Section 433(e) and (f) read with Sections 434 and 439(1)(b) of the Companies Act, 1956 (for short, ‘1956 Act’) seeking an order for winding up of the respondent-company. The Directors of the respondent-company have also been arrayed as party respondents in this petition. 2. Case of the petitioner is that the respondent company had availed loan from Kotak Mahindra Bank, Lavelle Road Branch, Bengaluru, in an approximate sum of Rs.10 crores. That the Directors of the respondent-company were on a look out for another financial institution/bank to take over the said loan at a lesser rate of interest. It is at this point of time respondent-company approached the petitioner seeking his services to facilitate in the process of taking over of the said loan from Kotak Mahindra Bank from any other financial institution. In this regard a purported agreement/memorandum of understanding dated 14.10.2015 said to have been entered into by the respondent-company with the petitioner herein. In terms of the said memorandum of understanding, respondent-company is said to have agreed - 4 - NC: 2025:KHC:11627 COP No. 157 of 2016 to pay total service charges to the petitioner at the rate of 3.5% of the loan amount to be sanctioned together with applicable service taxes. In terms of the said agreement, respondent-company stated to have agreed to pay 1.75% of the aforesaid consideration immediately on receipt of the loan sanction letter from the financial institution/bank and on acceptance of the same by the respondent-company. That the balance of 1.75% of the consideration to be paid upon release of the entire loan amount. 3. It is further alleged that the aforesaid loan that was availed by the respondent company from Kotak Mahindra Bank was taken over by Vijaya Bank, who had issued loan sanction letter dated 11.12.2015 sanctioning loan amount of Rs.1191.77 lakhs. That the petitioner was instrumental in the said Vijaya Bank sanctioning the said loan. That the petitioner is therefore entitled for a sum of Rs.41,71,195/- being the service charges at the rate of 3.5% of the said loan amount. 4. Thus, based on the terms of memorandum of understanding and the subsequent loan transaction as stated above, the petitioner claims that he is entitled for payment of his service charges as mentioned in the aforesaid memorandum - 5 - NC: 2025:KHC:11627 COP No. 157 of 2016 of understanding and that despite he having raised the demand by issuing a legal notice dated 28.04.2016, respondent- company has not paid the same but has issued untenable reply dated 10.05.2016. As such, it is contended by the respondent- company is not able to repay the debt. Hence, the petition. 5. Objections statement have been filed to the said petition by the respondent-Company denying the averments and allegations made in the petition. It is contended that petitioner had induced the respondent-Company to enter into memorandum of understanding dated 14.10.2015. But the petitioner has failed to render the services as agreed. The loan sanctioned by the Vijaya Bank vide sanction letter dated 11.12.2015 was not the loan as required by the respondent- Company. The said Bank had not offered loan with an lesser rate of interest. It had not agreed to waive or provide any concession. Petitioner had no role in said Vijaya Bank sanctioning the loan. 6. Additional statement of objections is filed contending that the respondent-Company is solvent and active operating its businesses all over India and abroad. That it has employed 460 employees. That the respondent-Company is earning - 6 - NC: 2025:KHC:11627 COP No. 157 of 2016 profit year after year. The respondent-Company financial statement for the years 2015-16 to 2023-24 is provided showing the yearly growth and yearly increasing numbers of employees. It is contended that the respondent-Company has never admitted or acknowledged the alleged due as claimed by the petitioner. On the other hand, the respondent-Company had denied and disputed the false claim made by the petitioner by its reply dated 10.05.2016, even prior to filing of present petition for winding up. That there is no debt within the meaning of the provisions of Section 433 of the Act, 1956 to be discharged by the respondent-Company. That there is a bonafide dispute to be adjudicated between the parties. Hence seeks for dismissal of the petition. 7. Learned counsel for the petitioner vehemently submits that since the respondent-company has failed to discharge its obligation in paying the service charges as agreed in the memorandum of understanding, which falls within the definition of ‘debt’ and the respondent-company not being able to discharge the same is liable to be wound up. - 7 - NC: 2025:KHC:11627 COP No. 157 of 2016 8. Learned counsel for the respondent-company on the other hand submits that the respondent-company has in turn has filed a suit in O.S.No.122/2017 against the petitioner for breach of terms of the memorandum of understanding. It is submitted that the said suit is still pending consideration in which the petitioner herein has filed an application for stay of the said proceedings on the ground of the pendency of the present petition. He further submits that, the very terms of the Memorandum of Understanding would indicate that only when the respondent-company accepts the terms of the loan transaction and only when the same was materialized, only then there would be an obligation on the part of the respondent-company to make the payment of service charges. He submits that in the instant case, the loan which was availed by the respondent company had not been facilitated by the petitioner in the first instance. Secondly, respondent company has neither accepted interest rate and terms and conditions of the loan sanction letter dated 11.10.2015 nor Vijaya Bank has released any loan amount to the respondent company. As such, the respondent company is not liable to pay service charges of 3.5% of the alleged loan and the - 8 - NC: 2025:KHC:11627 COP No. 157 of 2016 service tax as claimed by the petitioner. That the petitioner has failed to render any services in terms of the Memorandum of Understanding dated 14.10.2015. The said Vijaya Bank has not been made party to the present petition who would have been in a position to clarify if the petitioner was instrumental in the said bank sanctioning the loan. He submits that there is a bonafide dispute with regard to the terms of the memorandum of understanding applicable to the loan transaction. He also submits that very enforceability of the agreement requires adjudication. Therefore, unless and until said dispute is resolved in a properly constituted suit, involving complex fact situation in the matter, the company petition of this nature cannot be maintained. 9. Heard and perused the records. 10. Petitioner claims that he facilitated in respondent company availing loan from Vijaya Bank, Overseas Branch using his expertise and a sanction letter dated 11.12.2015 for a sum of Rs.1191.77 lakhs as per Annexure-F was issued by the said Vijaya Bank. That in terms of the Memorandum of Understanding dated 14.10.2015 respondent company was - 9 - NC: 2025:KHC:11627 COP No. 157 of 2016 liable to pay Rs.41,71,195/- being the service charges at the rate of 3.5% of the sanctioned loan amount. 11. The relevant clauses of the terms of memorandum of understanding dated 14.10.2015 which is the basis for the petition read as under; “Whereas the First Party has taken loans from a Bank to the tune of approximately Rs.10 Crores at certain terms and conditions. The First party is looking for the takeover of this loan by another Financial Institution / Bank who are willing to offer the loans at lesser interest rates and possibly offer some additional loan amount to the tune of about Rs. 2 - 4 Crores depending on the eligibility conditions of the Financial Institution. Whereas the Second Party is agreeable to assist in obtaining such loan as required by the First Party from Financial Institutions or Banks or NBFCs or Private Funding parties or such other Financial Institutions. The First Party hereby authorizes the Second Party to undertake in assisting to get the takeover / additional loans totaling to about Rs. 9 -14 Crores (herein after referred to as the loan sanction amount) depending on the eligibility and appraisal procedures of the financial institutions. The First Party shall submit all the necessary papers / documents as required by the financial institution. The First Party hereby agrees to cooperate as per the instructions from the Second Party until the loan is sanctioned successfully an all formalities related to the loan are completed. The Second Party will inform the First Party the interest rates and indicative processing fee after ascertaining from the financial institution. On accepting the same, the First Party will sign the loan application forms. - 10 - NC: 2025:KHC:11627 COP No. 157 of 2016 The First Party hereby agrees to pay a total service charge of 3.5% of loan sanctioned amount (takeover and / or additional loans) plus applicable service tax. The First Party agrees to pay 1.75% of the Loan Sanctioned Amount to the Second Party immediately upon the receipt of the Loan Sanction Letter from the Financial Institution / Bank and acceptance by the First party on the interest rate and terms and conditions of the sanction letter. The First Party agrees to pay the balance value of 1.75% of the Loan Sanctioned Amount to the Second Party immediately upon the release of the loan amount by way of takeover of the existing loan from the present Financial Institution group. The loan amount credited to the First Party by the Financial Institution would be after deductions of the necessary charges, amounts payable to the existing bankers of the First Party, if any, etc. as indicated in the Loan Sanction Letter. The service charges payable to the Second Party is based on the total loan sanctioned amount (Takeover and / or Additional Loan). The First Party undertakes to pay all other expenses like processing fees of the bank, Mortgage Charges, Valuation and Legal Scrutiny fees, Promoters Equity /Share Amount, Preparation of other documents required for processing the said Loan, or any other charges required by the Financial Institution which is not included in the above mentioned service charges.” 12. Thus based on the aforesaid agreement the present petition is filed seeking to wind up the respondent-Company. It is settled position of law that payment of any amount or debt based on contingent terms and conditions cannot be termed as an ‘ascertained debt’ for the purpose of Section 433 of the - 11 - NC: 2025:KHC:11627 COP No. 157 of 2016 Companies Act, 1956. The terms of the agreement as noted above would indicate that the consideration payable is contingent/depending upon the loan that may have to be facilitated by the petitioner to be availed by the respondent- company, subject to acceptance of the terms of such sanctioned loan by the respondent-company. 13. The respondent-Company has disputed the claim of the petitioner at the first instance by its reply notice letter dated 10.05.2016 to the notice of demand dated 28.04.2016 issued by the petitioner. Wherein the respondent-Company had specifically contended that terms and conditions, rate of interest and other factors contained in the sanction letter issued by the Vijaya Bank were not beneficial and were not as per its requirements which was duly intimated to the petitioner as well as the said Bank. As such, the respondent-Company had not accepted or availed the loan from Vijaya Bank. That the petitioner without rendering any services was causing issuance of several e-mails and correspondence putting forth untenable claim. Thus it is clear that the respondent-Company had raised the dispute and had even denied availing of the loan from Vijaya Bank much prior to filing of the present petition. - 12 - NC: 2025:KHC:11627 COP No. 157 of 2016 14. Besides, no details are forthcoming as to the efforts allegedly made by the petitioner in purported sanction of loan amount by the Vijaya Bank except referring to the sanction letter dated 11.12.2015. Admittedly a suit in O.S.No.122/2017 has been filed against the petitioner for breach of terms of the aforesaid Memorandum of Understanding. 15. Further, in the statement of objections and in the additional statement of objections it is contended that the respondent-company is actively carrying on its business activities successfully and expanding its business all over India and overseas. The details of its business turn over for the year 2015-16 to 2023-24 is provided showing the respondent company being solvent and running profitable ventures. It is also stated that the said company is having 460 employees on its rolls. It is also contended that respondent company has repaid the loans it had availed from Kotak Mahindra Bank, PNB Housing Finance Limited, Axis Bank Limited, HDFC Bank Limited and ICICI Bank Limited. The respondent company has never admitted or acknowledged alleged debt claimed by the petitioner but has raised the dispute denying the alleged liability even prior to filing of the petition. - 13 - NC: 2025:KHC:11627 COP No. 157 of 2016 16. In the light of the dispute with regard to the very availing of the loan by the respondent-company through the petitioner as contended in the statement of objections and in the light of the terms and conditions of memorandum of understanding extracted hereinabove, this Court is of the considered view that the debt as sought to be enforced by way of this petition does not appear to be a ''defined'' or ''an ascertained debt'' within the meaning of Section 433, of the Companies Act, 1956 warranting winding up of the petition. An Order for winding up under the provisions of Section 433 (e) of the Companies Act, being a discretionary, in the absence of petitioner making out definite case of existence of a definite debt, an order for winding up cannot be passed. Further, the very enforceability of the terms of the agreement, and its due performance requires adjudication which cannot be gone into in the instant petition. 17. In the fitness of things and in the light of the suit already having been filed by the respondent-company as noted above, this Court is of the considered view that reserving liberty to the petitioner to avail remedy for recovery of service - 14 - NC: 2025:KHC:11627 COP No. 157 of 2016 charges, if any, as claimed and if permissible under law, the petition is dismissed. 18. It is made clear that the time spent in prosecuting the matter may be taken into consideration for the purpose of limitation. 19. All contentions are kept open to be urged by the parties in the proceedings that may be initiated by the petitioner as noted above. Sd/- (M.G.S. KAMAL) JUDGE NC List No.: 1 Sl No.: 10