1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.175 OF 2009 IN COMPANY PETITION NO.898 OF 2008 AND NOTICE OF MOTION NO.1436 OF 2009 IN APPEAL NO.175 OF 2009 Lonza India Pvt.Ltd. ...Appellant. vs. Corporate Management Council of India Pvt.Ltd. ...Respondent. --- Mr.Janak Dwarkadas, Sr.Advocate i/b. M/s.Kanga & Co., for Appellant. Mr.Virag Tulzapurkar, Sr.Advocate with Mr.S.S.Purohit i/b. Wadia Gandhy & Co., for Respondent. CORAM: D.K.DESHMUKH & R.S.MOHITE, JJ. DATED: 1st July,2009. 2 P.C.:- 1. Admit. By consent of parties, heard finally. 2. This appeal is directed against the order dated 12.2.2009 passed by the learned Single Judge of this Court in Company Petition no.898 of 2008. By that order, the learned Single Judge has directed the appellant-Company to deposit an amount of Rs. 3,50,00,000/- (Rupees Three Crores Fifty lakhs only) by a particular date, and failure of the appellant to deposit that amount was to result in admission of the petition. The respondent has filed a Company Petition under Section 433 and 434 of the Companies Act seeking winding up of the appellant-company on the allegations that it is unable to pay its dues. The relevant facts are that an agreement was entered into between the parties dated 3.4.2008. Pursuant to that agreement certain premises were to be given on leave and licence by the respondent to the appellant. The period of licence was to commence from 1.5.2008. The licence was for a period of 60 months. But the period of first 36 3 months was treated as lock-in-period. Admittedly, this agreement is terminated by the appellant on 16.4.2008. The period of licence was to commence on 1.5.2008. Thus, before commencement of the licence period the agreement was terminated. The respondent was claiming amount from the appellant relying on the recitals in the licence agreement. Clauses 5, 6 & 7 under Section IX are relevant, they read as under:- 5. This Licence is granted for a Fixed period of 60 months ending 30th April,2013. The first 36 months ending 30th April,2011 shall be a Lock-in-Period for both parties. 6. The liability of the Licensee to pay the Licence Fee for the entire duration of the Lock in period and Notice period of this Agreement is absolute and the same shall not be varied or reduced even if any item of the said furniture, fixture, fitting or Equipment is damaged, destroyed or discarded. 7. If the Licensee shall terminate this Agreement prior to expiry of Lock-in-period or subsequent notice period then in that event the Licensee shall be liable to pay to 4 the Licensor a sum equal to the balance period left of the Lock in period or notice period Licence fee. The Licensor shall be entitled to recover such amount from the Security Deposit. 3. According to the respondent, though the licence period had not started, the agreement between the parties had come into effect on the agreement being signed by the parties, and therefore, under clause 7 as the agreement was terminated prior to expiry of lock-in-period i.e. before the date 30.4.2011, the company was liable to pay to the respondent a sum equal to the amount of licence fee for balance period left of the Lock-in-period. The learned Single Judge has held that the sum mentioned in the clause 7 quoted above is payable by the Company to the respondent and he assumed that this is the amount of liquidated damages and he, in favour of the appellant, reduced the amount to Rs.3,50,00,000/- and issued the directions accordingly. 5 4. We have heard the learned Counsel appearing for both the sides. In our opinion, reading clauses 5, 6 and 7 of the agreement which have been quoted above, it cannot be said that the only meaning that can be attached to clause 7 is that even if the agreement is terminated before the licence period has commenced the appellant becomes liable to pay licence fee for the balance lock-in-period. In our opinion, it is possible to construe clause 7 to mean that if the licence is terminated or the agreement is terminated after the commencement of lock-in-period then liability is cast on the Company to pay licence fee for the balance period. In our opinion, two words used in clause 7 are crucial. One is that for clause 7 to be brought into effect the agreement has to be terminated prior to the expiry of the lock-in-period. In our opinion, one way of looking at it is that for expiry of the lock-in-period, it is necessary that the lock-in-period must commenced. The other crucial words in the clause, in our opinion, are sum equal to the balance period left of the lock-in-period . Therefore, it will not contemplate payment for the 6 entire lock-in-period as is claimed in this case. In our opinion, these words indicate that for this clause to come into force, the lock-in-period must have commenced and therefore, the payment is contemplated for the balance period left of the lock-in-period. This should not be understood to say that this is the only interpretation possible of clause 7. The other interpretation accepted by the learned Single Judge may also be possible. However, in our opinion, as the other interpretation is also possible and this was not a case where winding up petition can be admitted. In our opinion, when there is bonafide dispute on the interpretation of the terms or the words in the agreement, it would have been appropriate for the learned Single Judge not to entertain the company petition and leave the parties to their remedy under the Civil Law. In our opinion, remedy of filing winding up petition cannot be allowed to be used in a case where it is possible to take different view than the one propounded by the petitioner. In our opinion, the learned Single Judge, therefore, was not justified in entertaining the petition. 7 5. In the result, therefore, the appeal succeeds and is allowed. The order dated 12.2.2009 passed in Company Petition no.898 of 2008 is set aside. That Company petition is dismissed. Appeal is disposed of. Notice of Motion no.1436 of 2009 is also disposed of. (D.K.DESHMUKH, J.) (R.S.MOHITE, J.)