1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. COMPANY PETITION NO.662 OF 2009 D.Dahyabhai & Co. Pvt. Ltd. ...Petitioner. Vs. M/s.Western Express Industries Ltd. ...Respondent. .... Mr.A.K. Manmadhan for the Petitioner. Mr. P.G. Sawant & Mr.R.K. Naik for the Respondent. ..... CORAM : DR.D.Y.CHANDRACHUD, J. November 7, 2009. P.C. The claim in the Company Petition for winding up, is based on the non-payment of licence fee under a Leave and Licence Agreement dated 23rd August 2004. The Petitioner is the owner of a land admeasuring 69,211 sq.ft., comprised in Survey No.37 (Part) Hissa No.2 (part) at village Sativali at Vasai upon which a structure has been constructed. A Company by the name of Techno Prints (India) Ltd. was the owner of the property. The Respondent had entered into a Leave and Licence Agreement on 20th February 2004 with the erstwhile owner. The erstwhile owner sold the premises to 2 the Petitioner at and for a consideration of Rs. 2.31 crores, following which the agreement between the Respondent and the earlier owner was cancelled and a Leave and Licence Agreement was entered into between the Petitioner and the Respondent on 23rd August 2004. In pursuance of the agreement, the Respondent paid to the Petitioner an interest free security deposit of Rs. 23.05 lakhs. According to the Petitioner, the licence fee was not paid. The Petitioner has instituted a suit on 6th September 2007 being Special Civil Suit No.651 of 2007 before the Civil Judge, Senior Division, Palghar for the recovery of possession,arrears of licence fee and mesne profits. 2. A statutory notice came to be issued by the Petitioner under Sections 433 and 434 of the Companies' Act, 1956, on 31st March 2008 which was replied to on 12th April 2008. 3. The defence principally is that the Petitioner has already instituted a suit before the Civil Judge, Senior Division at Palghar for the recovery of its dues. That apart, the attention of the Court has been drawn to the correspondence exchanged between the parties in 3 which the Respondent had drawn the attention of the Petitioner to the fact that the Petitioner had failed to obtain government clearance including the approval of CIDCO in order to enable the Respondent to commence manufacturing activities. For want of necessary approval, the Respondent has not been able to utilize the premises since for applying for the factory licence from the Directorate of Factories, the approval of CIDCO was required. The grievance is set out in the Respondent's letter dated 15th February 2005. By a further letter dated 23rd March 2005, the Respondent had called upon the Petitioner to arrange for and obtain an occupation certificate which, according to the Respondent, the Petitioner had failed to obtain. 4. In considering the rival submissions, it would, at the outset, be necessary to the Court to advert to an order passed by a Learned Single Judge of this Court, Hon'ble Mr.Justice S.C. Dharmadhikari, on 11th July 2008 in Company Petition 908 of 2007 instituted by the Respondent against the Petitioner for winding up. The Company Petition was instituted by the Respondent on the ground that it had made a total payment of Rs.48,63,647/- to the Petitioner on the 4 assurance that the Petitioner would obtain necessary clearance from the governmental authorities in order to enable the Respondent to commence manufacturing activities. The case of the Respondent was that it was on this basis that it had entered the premises, however, clearance from the statutory authorities including CIDCO was not obtained. On that basis the Respondent claimed that the sum which was paid to the Petitioner under the agreement could not be retained. The Learned Single Judge noted that the Petitioner have had instituted a suit before the Civil Judge, Senior Division, Vasai for possession, payment of arrears of licence fee and mesne profits. The Court noted that both the sides have alleged breach of their respective obligations either under the Leave and Licence Agreement or otherwise. The Learned Single Judge was of the view that since “contentious issues raised by the parties are subject matter of the pending suit”, it would not be just and proper to entertain the petition for winding up. In that connection the Learned Single Judge has observed thus : “ As to whether the leave and licence agreement speaks of any obligations on the part of the Respondent and their 5 failure to discharge them or whether the Petitioner could be said to be defaulter and, therefore, liable to make good the amount claimed herein are matters which can be gone into in the pending civil suit.” -5. The aforesaid order was undoubtedly passed in a petition for winding up instituted by the Respondent against the Petitioner. However, due notice was taken of the fact that both the parties have alleged that there were breaches on the part of the other in the performance of the obligation under the Leave and Licence Agreement. Since a suit by the Petitioner to these proceedings is pending before the Court of the Civil Judge, Senior Division, this Court observed that a petition for winding up would not be the appropriate remedy. This observation would have a significant bearing on the present proceedings as well. Whether there is a breach on the part of the Respondent in complying with the obligations under the Leave and Licence Agreement or, on the other hand, whether the Petitioner is in breach are matters which would fall for determination before the Civil Court. 6 -6, At this stage, it may be only noted that the Respondent relied upon clause 6.4 of the Leave and Licence Agreement which is to the following effect: “6.4 Both the licensor and the licensee shall furnish copies of all the documents viz., Memorandum and Articles of Association, Board resolutions covering authority to enter and execute this agreement and authorization in the name of the authorized signatory, statutory approvals/permission and also the copy of the title deed of the property in the name of the Licensor.” According to the Respondent, the obligation to obtain statutory approvals/permissions was that of the Petitioner. According to the Respondent, the Petitioner failed to obtain the approval of CIDCO which was recorded in the Respondent's letter dated 15th February 2005. Similarly, according to the Respondent, on 22nd March 2005, the Petitioner was called upon to forward an occupation certificate for the building. Finally, it may be necessary to note that the Respondent 7 has also drawn the attention of the Court to a letter dated 27th August 2008 addressed by the Gram Panchayat, Sativali to the Petitioner recording that certain unauthorised work has been carried out in the premises in question, consequent upon which, a notice to show cause has been issued to the Petitioner. All these circumstances are being referred to only with a view to emphasize that there are disputed questions of fact which must be resolved in the pending suit and it would be necessary to clarify that none of the observations in this order would amount to any adjudication upon the disputed questions which are raised in the rival contentions. The question as to whether there was any breach of the conditions of the Leave and Licence Agreement and if so, who is guilty of breach, must be decided in the suit for recovery filed by the Petitioner in which a claim for payment of arrears of licence fee is made. 7. In these circumstances, it would be manifestly inappropriate for this Court to exercise the jurisdiction in a Company Petition for winding up. The Petition shall accordingly stand dismissed. However, before concluding it would be necessary to 8 clarify that the Civil Court before which the suit is pending, shall dispose of the suit without considering itself to be bound by any of the observations contained in this order which were confined to the disposal of the Company Petition. Both the Learned Counsel for the Petitioner and the Learned Counsel for the Respondent are agreed that the suit which is pending before the Civil Judge, Senior Division at Vasai may be heard and disposed of expeditiously. Parties are agreed that they shall appear before the Civil Judge, Senior Division for receiving directions on 30th November 2009 which is the next date of hearing. The Trial Judge is requested to expedite disposal and to endeavour to do so by the end of April 2010. .....