Case: Rajat Pharmachem Limited Vs. Vidhya Pharmachem Private Limited

placed. As a result therefore, by virtue of recital 5 quoted above, the outstanding amount of Rs.2.5 crore stood payable. Secondly, the respondent has fulfilled all its obligations under the second MOU also dated 7th March, 2011, but has not received any money in respect of those investments. Even the mode of payment expressly agreed to under the MOU was not honoured. Invoices were raised in respect of all these transactions. The invoices have never been disputed. The amounts payable have never been disputed. The respondent also admitted the receipt of a sum of about Rs.2.30 crores and has given credit for the same.9. This brings us to the third MOU, which is dated 4th April, 2011. The same relates to the export orders to Nigeria. The recitals record that the appellant has had a strong presence in Nigeria for more than 17 years. Many of the appellants products were market leaders in Nigeria. The appellant had also registered 150 products with the Nigerian Drug Regulatory Authority in Nigeria. The recitals also record that the respondent was keen to exploit the Nigerian markets and had also started registering its products during the previous years. The respondent had registered and it proposed registering about 150 products in Nigeria. The parties decided to work together to exploit their respective strengths. Recital 7 stipulated that the total profits in the transactions would be shared equally. The operative clauses provided that the respondent would provide full support in sourcing the raw material and ingredients required to manufacture the finished formulations and supply the same to the appellant. The appellant, in turn, was responsible for manufacturing the products. The products were to be exported / sold to the purchasers in Nigeria through the respondent. These orders were, therefore, to be placed on the respondent. The petitioner was to inform the buyers of the same. The MOU concludes as follows :"This MoU has been made to define the broad parameters with in which both parties have decided to work. A detailed agreement shall be drafted to cover the fine points / micro workings of the arrangement."10. The only contention is that the appellant may be entitled to profits under the third MOU and the same can be determined only after the respondent furnishes accounts in respect thereof. The appellant, however, never called upon the respondent to pay any amounts towards its share of the profits under the third MOU. It never raised the issues prior to the petition. We do not wish to express any view about the merits of the summary suit filed by the respondent against the appellant.11. At the cost of repetition, the position as on date is that the previous dues are admitted. The dues under the second MOU dated 7th March, 2011, pertaining to the BCPL contracts have not been received by the appellant. Even after giving credit of the sum of about Rs.2.30 crores, a principal amount of about Rs.3 crores is due and payable by the appellant to the respondent. On the other hand, as far as the third MOU relating to the exports to Nigeria is concerned, the appellants claim to profits is, at least at this stage, doubtful. Indeed, as and when amounts are received from the purchasers, the appellant would be entitled to credit.12. Mr. Joglekar submitted that the third MOU must be read together and must also be implemented together. We will presume that to be so. However, as we mentioned earlier, clause 5 of the recitals to the first MOU dated 7th March, 2011, expressly stated that in the event of any of the business opportunities referred to therein not materializing, the amount of Rs.2.5 crores would be payable. Admittedly, the IDPL order was not placed. Thus, under the express provisions of the MOU, the amount of Rs.2.5 crores is payable in any event. In the circumstances, we see no reason to interfere with the impugned order insofar as it admits the petition.13. We, however, see no justification for the appointment of a provisional liquidator at this stage. The learned Judge has also passed the following order:"8.(c) pending the admission and hearing and final disposal of the petition, a Provisional Liquidator be appointed of the said M/s. Rajat Pharmachem Limited with all powers under the Companies Act I of 1956, including powers to take immediate charge of the affairs, assets and the business of the said Company and to take appropriate steps from disbursement of recoveries effected and of the assets available after liquidation of the said Company to the benefit of creditors including the petitioners."14. An interim order in these terms, in fact, has the effect of winding up the company even before the final winding up order. There may well be cases where the Court may consider it necessary to dispose of the assets even before the final order of winding up is passed. This, however, is not such a case. The impugned order does not indicate any reasons for passing such a drastic order at this stage. In any event, there would be no question of disbursing the recoveries that may be made at this stage.15. The impugned order insofar as it has granted reliefs in terms of prayer (c) of the above petition is, therefore, set aside. It is necessary, however, to direct the respondents to deposit in Court recoveries made pursuant to its transactions with BCPL. This is in view of what we have stated earlier regarding the second MOU dated 7th March, 2011, and the first respondents failure to pay or ensure payment of the amounts due from BCPL to the respondent.16. We appreciate that there are several pending orders, especially with BCPL. However, the respondent is not prevented from fulfilling those orders merely on account of the petition being admitted.17. There is no offer on the part of the appellant to deposit any amount. It is not necessary, therefore, for us to consider an order of deposit as a condition to avoiding the admission of the petition.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. The only contention is that the appellant may be entitled to profits under the third MOU and the same can be determined only after the respondent furnishes accounts in respect thereof.The appellant, however, never called upon the respondent to pay any amounts towards its share of the profits under the third MOU. It never raised the issues prior to the petition. We do not wish to express any view about the merits of the summary suit filed by the respondent against the appellant.11. At the cost of repetition, the position as on date is that the previous dues are admitted. The dues under the second MOU dated 7th March, 2011, pertaining to the BCPL contracts have not been received by the appellant. Even after giving credit of the sum of about Rs.2.30 crores, a principal amount of about Rs.3 crores is due and payable by the appellant to the respondent. On the other hand, as far as the third MOU relating to the exports to Nigeria is concerned, the appellants claim to profits is, at least at this stage, doubtful. Indeed, as and when amounts are received from the purchasers, the appellant would be entitled to credit.12.Mr. Joglekar submitted that the third MOU must be read together and must also be implemented together.We will presume that to be so. However, as we mentioned earlier, clause 5 of the recitals to the first MOU dated 7th March, 2011, expressly stated that in the event of any of the business opportunities referred to therein not materializing, the amount of Rs.2.5 crores would be payable. Admittedly, the IDPL order was not placed. Thus, under the express provisions of the MOU, the amount of Rs.2.5 crores is payable in any event. In the circumstances, we see no reason to interfere with the impugned order insofar as it admits the petition.13. We, however, see no justification for the appointment of a provisional liquidator at this stage.An interim order in these terms, in fact, has the effect of winding up the company even before the final winding up order. There may well be cases where the Court may consider it necessary to dispose of the assets even before the final order of winding up is passed. This, however, is not such a case. The impugned order does not indicate any reasons for passing such a drastic order at this stage. In any event, there would be no question of disbursing the recoveries that may be made at this stage.15. The impugned order insofar as it has granted reliefs in terms of prayer (c) of the above petition is, therefore, set aside. It is necessary, however, to direct the respondents to deposit in Court recoveries made pursuant to its transactions with BCPL. This is in view of what we have stated earlier regarding the second MOU dated 7th March, 2011, and the first respondents failure to pay or ensure payment of the amounts due from BCPL to the respondent.16. We appreciate that there are several pending orders, especially with BCPL. However, the respondent is not prevented from fulfilling those orders merely on account of the petition being admitted.17. There is no offer on the part of the appellant to deposit any amount. It is not necessary, therefore, for us to consider an order of deposit as a condition to avoiding the admission of the petition.