1 cp987-09 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.987 OF 2009 Murlidhar T. Tilwani ....Petitioner V/s. M/s.Dove Distribution International Pvt. Ltd. ....Respondent Mr.Nishant Sasidharan i/b L.J. Law for the Petitioner. Mr.S.N. Kantawala with Ms.Prajakta Mhatre i/b M/s.Thakore Jariwalla & Associate for the Respondent. CORAM : S.J. VAZIFDAR, J. DATE : 10TH AUGUST, 2010. P.C. :- 1. This is a petition for winding up the respondent company inter- alia on the ground that it is unable to pay its debts. 2. According to the petitioner the company is indebted to him in the sum of Rs.17,28,940 together with interest thereon. The petitioner's case is that the respondent and he had entered into a leave and license agreement dated 29th November 2007. The agreement was for a period of 33 months commencing from 1st November 2007 and ending with 31st July 2010. The license fee up to 31st July 2008 was Rs.1,36,000, thereafter and up to 31st July 2009 it was to be Rs.1,42, 800 and thereafter up to 31st July 2010 it was to be Rs.1,49,940. Clause 9 of the agreement reads as under : - “9. TERMINATION: 2 cp987-09 i) In the event of the Licensee committing a breach of this Agreement and failing to rectify the same within 90 days of the notice in writing by Owner in that respect, then and in that event, without prejudice to the other rights and remedies, this Agreement shall ipso facto come to an end without any reference, recourse, or notice in that behalf to the Licensee. (ii) Without prejudice to provisions of sub-clause (i) above, the term of 12 months is a lock-in period during which neither party shall be entitled to terminate this Agreement. It is clarified that the provisions of this para (ii) shall not prejudice or affect the provisions of para 9 (i). (iii) After the lock-in period of 12 months as provided in para 9 (ii) above, either party shall be entitled to terminate this agreement by giving 30 days prior notice in writing to the other.” 3. According to the petitioner the respondent wrongly and in breach of the said agreement vacated the said premises within two days after it was executed. Thus under the terms of the agreement the respondent was bound and liable to pay the amounts due under the agreement for the first 12 months even though it did not use the said premises. I do not for a moment suggest that the petitioner may not have a good case on merits. I however find that there are certain grey areas which require clarification. Such clarifications can be obtained only after the parties are afforded an opportunity of leading evidence. I would therefore leave the petitioner to pursue any other appropriate remedy for recovering the amounts claimed by him. 4. The respondent does not deny the execution of the agreement. The matter however does not rest there. The respondent's defense is that it wanted a lease agreement but the petitioner handed over the said 3 cp987-09 agreement which was not acceptable to it. The respondent further contended that the petitioner assured it that the changes being minor would be incorporated and an agreement accordingly would be executed and registered subsequently. However the petitioner failed to honor his word and therefore the negotiations did not materialize into a contract. 5. Normally when parties such as these execute such agreements it would be reasonable to presume that they did so knowing exactly what they were doing and that they considered themselves bound by the document. However there are certain aspects of this matter which leave me with a few doubts as a result whereof I am unable to reject the defense as not being bona-fide. 6. By a letter dated 1st August 2007 the respondent informed the petitioner that it was desirous of taking the said premises on leave and license basis. It further stated that the petitioner had permitted it to make the necessary furniture in the premises even before the execution of the agreement. It undertook to remove the furniture in the event of the agreement not being executed. 7. It is important to note however that the petitioner has himself annexed as Exhibit ‘A’ to the petition the respondent's resolution thereafter dated 3rd September 2007 whereby the board of directors consented for entering into a lease agreement. This is the first indication that there were discussions between the parties as to whether the agreement was to be one of lease or leave and license. 8. There then followed a few unusual features. As stated in the petitioner's notice dated 2nd January 2008 under section 138 of the 4 cp987-09 Negotiable Instruments Act the respondent sought permission to permit it to carry out certain interior work. Even according to the petitioner he put the respondent in possession much before the said agreement was executed. The petitioner stated in the notice that an agreement was prepared on 1st October 2007. Subsequently the respondent issued cheques dated 1st October 2007 in the sum of Rs.10,00,000 and Rs. 20,000 towards security deposit and stamp duty respectively allegedly with a request to the petitioner to deposit them immediately upon the execution of the agreement. Admittedly the agreement was prepared on 1st October 2007. The respondent had allegedly assured the petitioner that it would make itself available on 29th November 2007 for the purpose of registration. The agreement was executed by both the parties only on 27th November 2007 but was dated 29th November 2007. 9. It is unusual that the cheques issued on 1st October 2007 were not post dated but dated as of that date despite the fact that the leave and license agreement had not yet been executed. The petitioner himself admits this. It is also unusual that the agreement though prepared on 1st October 2007 was executed only 2 months thereafter on 27th October 2007. There may well be an explanation for this on behalf of the petitioner. However there may equally be an explanation for this on behalf of the respondent. For instance the delay would also be capable of indicating that negotiations were on between the parties as to whether they ought to enter into a lease or leave a license agreement. Why else would there be a delay in executing the agreement even though the respondent had been put in possession, the respondent had issued cheques towards stamp duty and 5 cp987-09 security deposit and the agreement had been prepared. It is undoubtedly true that the leave and license agreement was in fact ultimately executed. I am however unable to reject the suggestion that the parties were even at that stage not ad idem as to whether the agreement ought to be one of lease or leave and license without any evidence. 10. By a letter dated 1st December 2007 the respondent stated that it had on the previous day handed over the keys to the said premises and therefore requested the petitioner to return the cheque in the sum of Rs. 10,00,000. It further stated that it had instructed the bank to stop payment of the said cheque. It is indeed curious as to why the respondent vacated the said premises merely a couple of days after having executed the agreement. There is no clarity on this aspect. Without evidence it is not be possible to arrive at any definite view in this regard. I am not inclined to speculate in this regard especially in a winding up petition. 11. Added to this is the fact that the petitioner issued a notice under section 138 of the Negotiable Instruments Act only on 2nd January 2008 i.e. after one month. I appreciate that it is for the respondent to explain its conduct in this regard but considering all the facts and circumstances of the case it is desirable that the respondent is given an opportunity of defending itself in a trial. 12. The petitioner by its advocates letter dated 22nd April 2008 stated that the respondent had without his knowledge left the said premises by handing over the keys to one of his servants. However in his rejoinder the petitioner denied that the respondent had handed over the premises to him on any day. It is reasonable for the purpose of this petition 6 cp987-09 to presume therefore that the respondent had in fact handed over the keys to the petitioner's representative as contended by the respondent. The question is why then did the petitioner not record his surprise at this sudden and unusual conduct. The petitioner has said nothing about it in these proceedings. 13. The respondent has by no means established conclusively its defense. Prima- facie at least it appears that the onus will be heavily upon the respondent to establish its defense in a suit or any other proceeding that the petitioner may file/ adopt. Suffice it to state that in a winding up petition I do not find the record justifying an order of admission or even one putting the respondent to terms. 14. The petition is therefore dismissed. There shall however be no order as to costs.