1 cp410-10.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.410 OF 2010 In the matter of the Companies Act, 1956; And In the matter of KLT Automotive and Tulbar Products Ltd Detlef Hasenfuss Proesq .. Petitioners Mr.H.Rehman i/by D.H.Law Associates for the petitioner. Ms.Usha Shrivastava i/by Consulta Juris for the respondent. CORAM : S.C.DHARMADHIKARI, J. 16th September 2011. P.C.: . This petition for winding up is based on the particulars of the claim, Annexure Q to the petition. The claim of Euros 64,214.56 is stated to have arisen on account of the arrangement between the petitioner and the respondent. It is stated that the notice preceding the filing of this petition termed as statutory notice under section 434(1)(a) of the Companies Act, 1956 enlists the claim. 2 cp410-10.doc 2 The claim arises out of Consultancy Agreement dated 1st September 2006 under which the petitioner’s services were engaged as consultant in the field of automotive management by the respondent. It was agreed that for the services rendered, the petitioner would receive sum of Euros 15,000/- per month excluding office expenses. Pursuant to the execution of the agreement, the services were provided, invoices were raised and except the five invoices from October 2008 to March 2009, all other invoices have been paid. It is stated that the respondent expressed financial difficulty on account of global slow down and therefore beyond this, there was no reason for not paying the sums under these invoices. This is nothing but an admission of liability. From the reasons that are set out in this e-mail of the respondent, it is apparent that it is unable to pay its debts and, therefore, it should be wound up. 3 In the statutory notice itself after referring to this e-mail dated 12th January 2009, there is reference to the petitioner’s e-mail dated 14th January 2009 that the petitioner would consider a proposal and requests the respondents to describe the role that the respondent 3 cp410-10.doc wants the petitioner to play in its re-location. The respondent has stated according to the petitioner by the letter dated 20th January 2009 that the assurance was given for payment and there were re- negotiation of the charges due and payable. It is stated that by a letter dated 5th March 2009, the petitioner rejected the proposal for reduction in the consultancy charges and conveyed its decision to terminate the Consultancy Agreement dated 1st September 2006 and demanded payment of the outstanding invoices. 4 In the statutory notice itself there is a reference to the letter dated 17th March 2009 of the respondent wherein according to the petitioner allegedly for the first time it was claimed that there was no value addition on account of the services and the services allegedly provided were far from satisfactory. These are the contents of the notice stated to be issued under section 434(1) of the Companies Act, 1956. Thus, it is not as if there was an agreement to pay the sum as claimed by the petitioner’s counsel. Further, from a reading of the statutory notice it is apparent that there was a dispute inasmuch as if the petitioner is claiming the amount under the invoices in question, the petitioner itself is aware of the stand of the 4 cp410-10.doc respondent. It is not as if the stand has been placed before the Court for the first time in the affidavit in reply. What has been pointed out by the respondent-Company in the reply to the statutory notice is that Consultancy Agreement was executed in certain circumstances and particularly when one Mr.Detlef Hasenfuss Proesq has been representing himself as an Executive Partner of the petitioner and he had entered into Employment Agreement with the respondent. The Consultancy Agreement was only additional to the employee contract as according to the respondent the petitioner- Mr.Detlef wanted to circumvent German law and avoid paying taxes in Germany. This is the admission in the petitioners e- mail dated 22nd January 2009 that is why the code of practice executed on 1st September 2006 clearly provides that the petitioner would charge fairly for the work which is undertaken. What has been stated further is that by a letter dated 17th March 2009, the respondent requested the petitioner to provide the assignment and work of value addition which came to be performed. These details are not forthcoming. There is no tacit or otherwise any understanding for payment of the dues as claimed and in fact the respondent completely denied its liability. They have also stated 5 cp410-10.doc that this issue has been raised on prior occasion and reference is made to e-mail dated 9th October 2007. The details of the expenses claimed, have not been provided. That is why the respondent accuses the petitioner of having suppressed material facts in the statutory notice. All that has been stated in the letter dated 20th January 2009, according to the respondent, is a suggestion and a request for the petitioner to move to India and enter into new agreement. Beyond this, it cannot be stated that there is any admission of the liability. In fact, certain amounts were sought to be recovered by the respondent from the petitioner as is clear from the replies and rejoinders as also further replies in the correspondence. 5 On a reading of this material, I am satisfied that this petition is instituted to recover money under Consultancy Agreement/ arrangement. This is a contractual dispute where the petitioner claims that certain sums under the invoices have not been paid whereas the respondent-Company disputes the work thereunder and raises issues with regard to the quality and output of the agreement. It also questions the arrangement and states that the whole purpose was to circumvent the German law. In such 6 cp410-10.doc circumstances, these are not matters where a presumption can be raised under section 433(e) of the Companies Act, 1956, that the company is unable to pay its debts. The dispute raised does not appear to be lacking in bonafides. It is a contractual dispute and when the quality of the services allegedly rendered is an issue between the parties, then, all the more a winding up petition is not the remedy nor is this Court a forum to resolve the said disputes. 6 For the aforementioned reasons, this company petition fails and it is accordingly dismissed. (S.C.DHARMADHIKARI, J)