1 jpc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 895 OF 2009 In the matter of winding up of M/s Metropolitan Infrahousing Pvt. Ltd. I C I C I Bank Limited ... Petitioners. .... Mr. Virag Tulzapurkar, Senior Counsel, i/b. Puranik & Co., for Petitioners. Mr. Naushad Engineer, a/w. Mr. S. Raghani, i/b. PDS & Associates, for M/s Metropolitan Infrahousing Pvt. Ltd. .... CORAM : S. J. KATHAWALLA, J. DATE : 23rd April, 2010 P.C.: 1. By this Company Petition the Petitioners have prayed for winding up of M/s Metropolitan Infrahousing Private Limited (“the Company”). 2. The Petitioners (ICICI Bank Ltd.) are a Banking Company within the meaning of the Banking Regulations Act, 1949. The Company (M/s. Metropolitan Infrahousing Pvt. Ltd.) was incorporated on or about 25th May, 2006. 2 3. Pursuant to the Debenture Trust Deed dated 21 st February, 1997, entered into by and between the petitioner and Pal Peugeot Limited (PPL) (now in liquidation), the Petitioners are acting as Debenture Trustees on terms and conditions more particularly set out therein. In their capacity as debenture trustees, the Petitioners filed a suit being Suit No. 3636 of 1999 in this Court against PPL for recovery of the amount of Rs. 36,79,22,640/- (Rupees thirty six crores seventy nine lacs twenty two thousand six hundred and forty only) payable to the debenture holders and also for recovery of a sum of Rs. 65,49,452/- (Rupees sixty five lacs forty nine thousand four hundred and fifty two only) being the arrears of the trusteeship remuneration due to the Petitioners and for various other consequential and ancillary reliefs ("the said suit"). In the said suit, by an order dated 13th June, 1999, the Court Receiver, was appointed as the receiver in respect of the movable and immovable properties of PPL. By an order dated 8th February, 2002, the Court Receiver was allowed to sell the immovable properties of PPL. The Court Receiver has held as many as five auction sales in the past seven years. However, all such auctions have failed. The said suit came to be decreed on 4th December, 2006 which decree was modified on 6th May, 2008. Till date, the decree has not been executed and the debenture 3 holders too have not recovered any amounts due to them by irtue of the debentures held by them. 4. Admittedly, though the suit was filed in the year 1999, the Company was incorporated only in the year 2006 and the Company (Metropolitan Infrahousing Pvt. Ltd.) has been holding debentures of PPL only since the year 2006/2007. As of date, the Company holds approximately 95% of the 3,41,98,066 debentures of PPL. However, according to the Petitioners since the year 1999, the Petitioners have incurred substantial expenses by way of security expenses for protecting and safeguarding the immovable properties of PPL and also to ensure that the properties are kept in good and proper condition. The Petitioners have since the year 1999 also incurred legal expenses. The Petitioners have on five occasions incurred expenses towards auction sales. The Petitioners have also not received their debenture trustee fees. It is therefore submitted that as on 30 th April, 2009, the Petitioners became entitled to receive an amount of Rs.3,83,40,118/- (Rupees three crores eighty three lacs forty thousand one hundred and eighteen) from the Company towards the security expenses, legal expenses, the debenture trustee fees and various other expenses incurred by them from time to time in terms of the Debenture Trust Deed. 4 5. The Petitioners have further submitted that vide their letters dated 7th July, 2008, 22nd August, 2008 and 12th December, 2008, they requested the Company to reimburse the said expenses, incurred by them. By letter dated 19th August, 2008, addressed by the Company to the Petitioners, the Company did not dispute their liability towards the dues of the Petitioners and clearly stated therein that they were willing to fund the expenses and only sought clarification of the refund thereof. However, no steps were taken by the Company to make the payments and hence it soon became clear to the Petitioners that the Company was adopting delaying tactics towards the payment of the legitimate dues of the Petitioners. The Petitioners also took out Notice of Motion No.1813 of 2009 seeking directions from this Court against the Company to reimburse the said expenses. By an order dated 16th June, 2009, this Court declined to pass any order in favour of the Petitioners and against the Company who was not a party to the Suit. However, liberty was granted to the Petitioners to take out appropriate proceedings against the Company for recovery of the money due, if any, from the Company. 6. According to the Petitioners due to continuous default in repayment of the security charges, legal charges and 5 their fees etc. by the Company, ultimately the Petitioners served upon the Company a statutory notice dated 20th July, 2009 for winding up under Section 433 and 434 of the Companies Act, 1956. However, the Company, with a view to delay/defeat the legitimate dues of the Petitioners, by its reply letter dated 11th August, 2009, raised several false and untenable claims and contentions. According to the Petitioners, under Clause 6 (c) of the Debenture Trust Deed dated 21st February, 1997, it is clearly laid down that the Petitioner Bank is entitled to have reimbursement of all the expenses incurred by them as debenture trustees for maintaining and preserving the properties and assets of PPL. It is submitted that since PPL is now in liquidation, it is just, equitable and in the interest of justice that the said expenses incurred by the Petitioners must be reimbursed by the Company having 95% of the total debentures, particularly, in view of the order dated 7th September, 2007 in chamber Summons No. 1160 of 2007 in Suit No.3636 of 2007 by which set off was obtained by the Company and letter of the Company dated 19th August, 2008 by which it was clearly stated that the Company was willing to fund the expenses. In the course of arguments, Mr. Tulzapurkar, Senior Advocate appearing for Petitioners has, also relied upon clauses 36(h) and 36(o) of the Debenture Trust Deed and the form of Debenture 6 Certificate annexed to the Debenture Trust Deed in support of his contention that the Company is bound to reimburse the expenses fees, etc. to the Petitioners under the terms of the Debenture Trust Deed dated 21 st February 1997. It is therefore submitted on behalf of the Petitioners that a sum of Rs.4,16,74,349/- is due and payable by the Company to the Petitioners as on 30th September, 2009 as per the particulars of claim annexed at Exh.R to the Petition together with interest thereon @ 15% per annum from 1st October, 2009 till payment or realization. 7. Apart from the detailed reply of the Company dated 11 th August 2009 to the statutory notice served by the Petitioners, the Company has also filed its affidavit in reply to the present Company Petition. The Company has in its reply submitted that the petition is misconceived and not maintainable in law and liable to be dismissed with costs. It is submitted that the Company is not liable to pay the alleged claim of the Petitioners and in any event, the Company has bona fide dispute as to the right of the Petitioners to recover the alleged claim from the Company. It is further submitted on behalf of the Company that there is no privity of contract between the Petitioners and the Company with regard to the Petitioners acting as the debenture trustees or for payment of the amount claimed by the Petitioners 7 in the above Petition. There is no reference to any documents or law under which the Company, as a majority debenture holder, is liable to pay the amount claimed by the Petitioners in the Petition. It is submitted that it is also evident from the reading of clause 44(B) of the Debenture Trust Deed that the Petitioners had agreed to seek the amount now claimed from the Company, from PPL and the Company is not, in any manner, liable to reimburse the Petitioners for the expenses allegedly incurred by the Petitioners. 8. It is further submitted by the Company that having agreed to act as debenture trustees under the Trust Deed dated 21 st February, 1997, the Petitioners are bound by the terms thereof. It is submitted that holding more than 95% debentures and thereby being the majority beneficiary of the proceedings from the sale of the property belonging to PPL is of no consequence for recovering the amounts which are sought to be recovered by the Petitioners in the above Petition. The Company has also submitted that the decree dated 4th December, 2006 is passed by this Court in Suit No. 3636 of 1999 filed by the Petitioners in their capacity as debenture trustees, in terms of prayer clauses (a)(i), a(ii), (b), (c), (d), (e), (f), (g), (h), (i) and (j) of the plaint against the PPL and in favour of the Petitioners. By 8 clause (d) and (j), all expenses incurred by the Petitioners for and after filing of the suit including insurance and security charges are duly payable from the sale proceeds fetched by auction of the properties of PPL. It is therefore submitted that this Court had already passed an order for reimbursement of the amount now claimed by the Petitioners from the Company under the Trust Deed from PPL and at no point of time had the Company agreed to reimburse any expenses incurred by the Petitioners in their capacity as trustees under the Trust Deed. 9. It is submitted on behalf of the Company that till date, the Company has not received any returns in lieu of the debentures held by them. It is also submitted that though the Petitioners have submitted that the Company will be entitled to the benefits of the decree being executed, the arrears of the workers of PPL are substantive and will be ranked Pari Passu with debenture holders. It is submitted that the Company is not indebted to the Petitioners in any manner. It is therefore denied that any amount is due and payable by the Company to the Petitioners. It is submitted that the Petition deserves to be dismissed with exemplary costs. 10. I have considered the submissions advanced on behalf of the Petitioners as well as the Company. The Debenture 9 Trust Deed dated 21 st February, 1997 is admittedly entered into by and between the Petitioners and PPL. The debenture holders are not parties to the said deed. The amount outstanding on the Debentures from time to time together with interest and other monies in respect thereof and all other costs, charges, expenses, fees ( including fees payable to the trustees) are secured by a mortgage and charge on all the immovable and movable assets of PPL described in the first and second schedules of the Debenture Trust Deed. 11. It is provided in clause 8 of the Debenture Trust Deed that all expenses incurred by the Debenture holders/trustees after an event of default has occurred in connection with the preservation of PPL assets and collection of amounts due under the Debenture Trust Deed shall be payable by PPL. It is further provided that the trustees shall hold in trust the monies received by them or the receiver in respect of the mortgaged premises or any part thereof arising out of any sale or any other realization whatsoever and they shall, in the first place, by and out of the said monies reimburse themselves and pay, retain or discharge all the costs, charges and expenses incurred in or about the entry, appointment of Receiver, calling in, collection, conversion or the exercise of the powers and trusts 10 under the said deed including the Receiver's and their remuneration and shall apply the residue of the said monies subject to the rights of the other first pari passu mortgagees as set out therein. Clause 31-B.1.(o) of the Debenture Trust Deed provides that PPL shall reimburse all sums paid or expenses incurred by the Trustees or any Receiver, etc. for all or any of the purposes mentioned in the Debenture Trust Deed and until payment or reimbursement of all such sums, the same shall be a charge upon the mortgaged premises in priority to the charge securing the debentures. Under clause 44 of the Debenture Trust Deed, it is agreed that the Trustees remuneration and all other costs, charges, expenses incurred by the trustees shall be paid to the trustees by PPL. 12. Clause 36 (h) and (o) of the Debenture Trust Deed, on which the Petitioners have relied, inter alia provides that the trustees shall not be bound to act at the request or direction of the Debentureholders under any provisions of the Debenture Trust Deed unless sufficient monies shall have been provided, or provision to the satisfaction of the trustees made for providing the same, and the Trustees are indemnified to their satisfaction against all further costs, charges, expenses and liability which may be incurred in complying with such request or directions. 11 The form of debenture certificate set out in the fourth schedule to the Debenture Trust Deed, provides that "The Trustees will act as Trustees for the holders for the time being of the Debentures (“the Debentureholders”) in accordance with the provisions of the Trust deed. The Debentureholders are entitled to the benefit of and are bound by and are deemed to have notice of all the provisions of the Trust deed. ..................". 13. From the aforesaid clauses of the agreement, it is clearly established that the liability to reimburse the trustees i.e. the Petitioners qua their fees and all the expenses incurred by them for the purpose of implementing/enforcing the terms and conditions provided in the Debenture Trust Deed is that of PPL and not of the debenture holders. In fact, it is also provided that once the monies are received by the trustees in respect of the mortgaged premises by sale etc. they shall, in the first place, reimburse themselves and pay, retain or discharge all the costs, charges and expenses incurred by them including their remuneration and shall thereafter apply the residue of the said monies subject to the rights of the other first pari passu Mortgagees. The question therefore of the Company paying the fees of the petitioner (debenture trustees) or reimbursing the costs,charges and expenses allegedly incurred by the Petitioners 12 under the terms of the Debenture Trust Deed does not arise. The action of filing the suit taken by the Petitioners is not at the request or direction of the Company. Even if the Petitioners were to take action as per the request /direction of any debenture holders, they were not bound to act unless sufficient monies were provided or provisions to the satisfaction of the trustees made or the trustees were indemnified to their satisfaction against all further costs, charges, expenses and liabilities, which may be incurred in complying with such request/directions. In any event, in the instant case, admittedly the Petitioners have not acted at the request or direction of the Company and clauses 36(h) or 36(o) of the Debenture Trust Deed are of no assistance to the Petitioners. Since the debentureholders are not made liable to pay the fees of the Trustees or to reimburse the trustees their costs, expenses etc. incurred by them, under Debenture Trust Deed, the provision in the debenture certificate that the debenture holders are bound by and are deemed to have notice of all the provisions of the Trust Deed also lends no assistance to the claim of the Petitioners in the present Company Petition. In view of the aforestated clear Agreement/Deed between the Petitioners and PPL, the Petitioners cannot be heard to say that they are entitled to receive their fees or to be reimbursed as regards security expenses, legal expenses, etc. by the Company, only 13 because the Company holds 95% of the debentures and is thus the majority beneficiary of the proceedings initiated by the Petitioners. 14. The Petitioners are also incorrect in contending that the Company, by its letter dated 19th August, 2008, did not dispute their liability towards the dues of the Petitioners and clearly stated therein that they are willing to fund the expenses and only sought clarification on refund thereof. The Company has, by its letter dated 19th August, 2008, shown its willingness to fund the expenses, upon being satisfied by the Petitioners as to how the Company will receive back the amounts so funded. The letter therefore clearly shows that the Company has not admitted that it is indebted to the Petitioners or is liable to pay the fees of the Petitioners or to reimburse the Petitioners towards the expenses incurred by them under the Debenture Trust Deed dated 21 st February 1997. In fact the Company has categorically stated in the said letter that the Petitioners are well aware that the expenses along with interest, incurred by the plaintiffs in the Suit (i.e. the petitioners herein) are recoverable from the sale proceeds as per the decree dated 4th December, 2006. Again, the prayers sought by the Company and granted by this Court in Chamber Summons No. 1160 of 2007 in Suit No. 3636 of 1999 14 also does not help the Petitioners in establishing that the amount claimed by them in the present Company Petition is due and payable by the Company to them. 15. Under the circumstances, the Petitioners have not made out any case of the Company being liable to pay or to reimburse any amounts whatsoever as claimed by the Petitioners. The Petitioners have failed to establish that the Company is indebted to the Petitioners for a sum of Rs. 4,16,74,349/- or any other sum as alleged or otherwise. No case for admission of the Petition is therefore made out and the Company Petition is dismissed. (S. J. KATHAWALLA, J.)