1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.727 OF 2007 Neoteric Informatique Pvt.Ltd. ..Petitioner. V/s. Zee Entertainment Enterprises Ltd. ..Respondent. Mr.Shyam Mehta a/w. Darshand Mehta i/b. Dhruve Liladhar & Co. for Petitioner. Mr.M.S.Doctor with Mr.P.D.Shah i/b. PDS Legal for Respondent. CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J DATE : JANUARY 22, 2008. DATE : JANUARY 22, 2008. DATE : JANUARY 22, 2008. P.C. : P.C. : P.C. : 1. Heard Counsel for the parties. Perused the pleadings and documents on record. 2. The Petitioner’s claim is based on the admission of liability by the Respondent to pay sum of Rs.1,25,00,000/-(Rs,One crore twenty five lakhs only) to the Petitioner, as recorded in the Memorandum of Understanding dated 1st December, 2006. The relevant recitals of the said Memorandum of Understanding reads thus: "Pursuant to the orders placed by PTL from time to time for purchase of computer software and hardware for its ZICA division, NIPL had supplied 50 computer machines to PTL 2 for installation at ZICA office situated at Essel World, Mumbai. The value of which was then outstanding Rs.1,58,38,878(Rupees One Crore Fifty lacs thirty Eight thousands eight hundred seventy eight only) as per the invoices raised by NIPL to PTL from time to time. After supply and installation of computers and in response to invoices raised by NIPL for value of the computers so supplied, PTL failed to make the payment of computers so purchased and accordingly NIPL had filed A criminal complaint in the court of Metropolitan Magistrate u/s 138 of the Negotiable Instrument Act and the same is pending for disposal. Mr.Atul Goel and Mr.Rajiv Garg, the erstwhile nominee Directors on the Board of PTL representing ZTL have filed a writ petition no.2005/2006 in the Hon’ble High Court of Bombay for quashing the summoning order issued against them in Criminal Complaint no.5244/SS/2005. In January, 2005, PTL and ZTL entered into a MOU for settlement of their equities and amongst other things agreed vide the said MOU, the ZICA division which was earlier sold and transferred by ZTL to PTL was transferred back to ZTL on ‘as is where is basis’. As a part of settlement arrived between ZTL and PTL, ZTL has agreed to pay Rs.1,25,00,000/- to NIPL on behalf of PTL and PTL has agreed to pay the balance of Rs.33,38,878/- in full and final settlement of all claims of NIPL’s to the tune of Rs.1,58,38,878/-. On payment of Rs.1,25,00,000/- by ZTL, NIPL agrees to release the software forthwith as per the list appended to this MOU and further agrees to absolve ZTL, its nominee Directors representing ZTL in PTL Board and ZTL employees from all claims of whatsoever nature with respect to the computers (including all Hardware and Software) supplied and installed at ZICA’s offices as annexed hereto." 3 3. On reading the Memorandum of Understanding, there is no doubt that the Respondent agreed to pay the sum of Rs.1,25,00,000/-(Rs.One Crore Twenty Five Lakhs only) to the Petitioner in view of the full and final settlement of claim petitioner NIPL to the tune of Rs.1,58,38,878/- payable by Padmalaya Telefilms Ltd. from whom ZICA division was sold and transferred in favour of the Respondent on ‘as is where is’ basis. Liability to pay Rs.1,58,38,878/- was primarily of said Padmalaya Telefilms Ltd. in relation to the said division, which stood transferred and taken over by the Respondent. Naturally therefore, all liabilities in relation thereto were taken over by the Respondent on ‘as is where is’ basis. There is nothing on record to even remotely suggest that the said arrangement has been reversed or not acted upon between the Respondent and Padmalaya Telefilms Ltd. In this view of the matter, it is not open to the Respondent to contend that the Respondent is not liable to pay sum of Rs.1,25,00,000/-(Rs.one crore twenty five lakhs only), which it agreed in terms of the Memorandum of Understanding. Inspite of repeated demands from the Petitioner, as the amount remained unpaid, Petitioner issued statutory notice on 8th march, 2007, which has 4 been duly served upon the Respondent. The Petitioner has produced acknowledgement of service at page 28 and 29 of the paper book. That fact is not disputed. The Respondents having failed to pay the amount, as demanded in the statutory notice, the Petitioners were left with no option but to institute present Petition. 4. Going by the averments in the Petition, which is supported by the documentary evidence, the Petition ought to succeed. 5. The Petition is however resisted by the Respondent on the argument that the relief claimed by the Petitioner is in the nature of granting relief of specific performance. It is submitted that there is dispute between the Respondent and Padmalaya Telefilms Ltd. As a result whereof, arrangement agreed between the Respondent and the said Padmalaya Telefilms Ltd could not be acted upon. For that reason, the Respondent is not liable to honour the commitment under the Memorandum of Understanding, which is pressed into service on behalf of the Petitioner. It is also contended that the Respondent had terminated Memorandum of Understanding by communication dated 4th December, 2006 sent to the 5 Petitioner under UPSC. It is lastly contended that the Respondent company has a sound financial position and is a profit making company. It is not as if the Respondent is unable to make payment of the dues. However, there are serious disputes about the liability and the petitioner can succeed in getting recovery of such amount only if the Petitioner were to ask for specific performance of the agreement in question. Essentially on this basis admission of the Petition has been contested. 6. The argument clearly overlooks the terms of Memorandum of Understanding. In the Memorandum of Understanding, it is clearly mentioned that the liability to pay Rs.1,25,00,000/-(Rs.One crore twenty five lakhs only) to the petitioner was accepted by the Respondent in relation to the ZICA division, which was sold and transferred to the Respondent on "as is where is" basis. It is not in dispute that the installation of computers software and hardware was only on the request of Padmalaya Telefilms Ltd. in relation to the said ZICA division. As the Respondent took over the said division from Padmalaya Telefilms Ltd., all liabilities in relation to the said division also stood transferred to the Respondent. Indeed, the Respondent limited its 6 liability to the extent of Rs.1,25,00,000/-(Rs.One Crore Twenty Five thousand only) instead of Rs.1,58,34,868/-. The balance amount was payable by the said Padmalaya Telefilms Ltd. This arrangement has been accepted between the parties. Having accepted that arrangement the Respondent becomes liable to pay the stated amount. The claim of the Respondent that the arrangement was terminated by the letter dated 4th December, 2006 sent to the Petitioner under UPSC will have to be stated to be rejected. I am in agreement with the stand taken on behalf of the Petitioner that no reliance can be placed on the circumstance pressed by the Respondent. The Petitioner has rightly relied in paragraph-17 of the Apex Court decision in the case of State of State of State of Maharashtra V/s. Rashid B. Mulani[(2006) 1 SCC Maharashtra V/s. Rashid B. Mulani[(2006) 1 SCC Maharashtra V/s. Rashid B. Mulani[(2006) 1 SCC 407] 407] 407], wherein it is held that the record relating to despatch of letter by certificate of posting will be of very little assistance, where the dispatch of letter is disputed or denied by the other party. In the present case, the Petitioner has denied receipt of any such letter. More importantly, even in this letter it is mentioned that the arrangement between the Respondent and Padmalaya Telefilms Ltd. was reversed on account of an unrelated property matter in view of the arrangement arrived at between the 7 Respondent and its group companies. That arrangement will have no effect and cannot bind the petitioner much less absolve the Respondent of the liability created under the Memorandum of Understanding dated 1st December, 2006 executed by the Respondent in favour of the Petitioner. Besides, the said communication dated 4th December, 2006 refers to the fact that the Respondent had kept amount of Rs.1,25,00,000/- ready for payment to the Petitioner vide Demand Draft No.751159 dated December 1, 2006 drawn on BNP Paribas. However, no such plea is taken in the reply filed before this Court. 7. Suffice it to observe that even if some arrangement was reached between the Respondent on the one hand and Padmalaya Telefilms Ltd. and other group of companies of the Respondent on the other, that arrangement cannot bind the Petitioner nor would absolve the Respondent of the agreement recorded in the Memorandum of Understanding dated 1st December, 2006. Thus understood, it is not open to the Respondent to contend that the liability of the Respondent is a disputed liability. On the other hand, I am of the view that the liability of the Respondent is undisputed and the Respondent cannot resile from the arrangement recorded in the 8 Memorandum of Understanding, particularly, when there is nothing on record to suggest that the ZICA division has been retransferred to Padmalaya Telefilms Ltd. The said division continues with the Respondent company. The computer installation and software were supplied in the said division, which has been taken over by the Respondent on "as is and where is" basis. As the liability of the Respondent is undisputed, the argument of the Respondent that the Respondent has sufficient means to pay the amount or that it is a profit making concern, has no relevance to deny the claim as prayed under the provisions of the Companies Act. This legal position is well established in the decision of the Apex Court in the case of Pradeshiya Industrial & Investment Pradeshiya Industrial & Investment Pradeshiya Industrial & Investment Corporation of U.P. V/s. North India Petrochemicals Corporation of U.P. V/s. North India Petrochemicals Corporation of U.P. V/s. North India Petrochemicals Ltd. & Anr.[(1994) 3 SCC 348]. Ltd. & Anr.[(1994) 3 SCC 348]. Ltd. & Anr.[(1994) 3 SCC 348]. The Apex Court has observed thus: "Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt(See A Company, Re.)" 8. Taking into consideration all these aspect I 9 have no hesitation in concluding that the Respondent company is unable to pay its debt on account of having failed and neglected to pay the outstanding dues of the Petitioner, inspite of statutory notice for which reason company Petition will have to be admitted. However, instead of straightway admitting the Petition, I am inclined to pass conditional order so as to give one opportunity to the Respondent. Accordingly, following order is passed. 9. The Respondent company shall deposit sum of Rs.1,25,00,000/-(Rs.One Crore Twenty Five Lakhs only) in this Court within six weeks from today, failing which the Company Petition to stand admitted without further reference to the Court. The Respondent shall inform the Company Registrar of having deposited such amount within six weeks, failing which the Company Registrar to proceed on the assumption that the Company Petition has been admitted in terms of this order. In that case, the Petitioner will be free to publish advertisement regarding admission of this Company Petition. 10. In case of default, the Petitioner shall advertise the admission of the Petition in two local news papers, namely, "Free Press Journal", 10 "Navshakti" and in the Maharashtra Government Gazette. The Petitioner shall deposit an amount of Rs.10,000/- with the Prothonotary & Senior Master towards the publication charges, within three weeks thereafter with intimation to the Company Registrar. 11. In the event, the Respondent deposits sum of Rs.1,25,00,000/-(Rs.One Crore Twenty Five lakhs only) within the specified time, the same will stand transferred to the suit account pending between the parties. It will be open to the Civil Court to pass appropriate order in relation to the disbursal and/or investment of the amount so deposited, as may be advised. All question in that respect are left open. In that event Company Petition will stand disposed off on the above terms. 12. Ordered accordingly. (A.M.KHANWILKAR,J) (A.M.KHANWILKAR,J) (A.M.KHANWILKAR,J)