Disposed

M/S. Rtc Restaurants (India) Ltd. v. M/S. Out of Home Media (India) Pvt. Ltd. - U74300MH2006PTC163636

Bombay HC22 Jan 2014CP/323/2012

Case brief

AI extract

What is this about?

In a company winding-up petition, the High Court held that since the respondent company did not admit the full debt claimed and disputes regarding termination and liquid assets remained, the petition for winding up under Section 433(f) was not warranted.

What did the court decide?

Company directed to pay Rs.2,08,655/- by Jan 31, 2014; failure to pay invites ordinary admission and public notice; petitioner to return display panels by Feb 14, 2014.

M/S. Rtc Restaurants (India) Ltd. Vs M/S. Out of Home… — Company and Corporate | Bombay HC (2014)

¶1

Shephali

¶2

902.cp.323.12.doc

¶3

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 323 OF 2012

¶4

M/s. RTC Restaurants (India) Ltd.…Petitioners

¶5

Versus
M/s. Out of Home Media (India) Pvt. Ltd.…Respondents

¶6

APPEARANCES

¶7

Mr. Suhas Deokar i/ M/s. SSP Legal for the Petitioners.

¶8

Mr. Rohaan Cama a/w Apeksha Sharma i/b M/s. Kadam & Co. for
the Respondents.

¶9

CORAM:G.S.Patel, J.

¶10

DATED:22nd January 2014

¶11

P.C.:-

¶12

1.Heard Mr. Deokar for the petitioners and Mr. Cama for the
respondents.

¶13

2.The petitioners seek winding up of the respondents(“the
Company”). The petitioners claim that the Company is indebted to
them in the amount of Rs.64,09,630/-, and that the Company has,
without just reason, failed to pay this debt, which the petitioners
claim is admitted.

¶14

1 of 6

¶15

Shephali

¶16

902.cp.323.12.doc

¶17

3.The petitioners’ claim arises under an agreement entered
into between the parties on 1st March 2007. The respondent
approached the petitioners with a proposal for the installation of
display screens for advertisements and related material in various
restaurants operated by the petitioners.

¶18

4.The tenure of the agreement was initially three years. The
agreed compensation payable to the petitioners was Rs.22,500/-
per month for each of the petitioners’ 16 outlets. The petitioners
claim that they received compensation only till October 2008, but
not after. There is no dispute that at the time when the agreement
was executed, the company made an interest free security deposit
with the petitioner and that this was refundable. There is some
inconsistency about the amount of this deposit: the petitioner
claims it was Rs.10,80,000/-, while the Company says it was
Rs.11,15,000/-. That there was a security deposit made under the
agreement and that it has not been returned is, however,
undisputed.

¶19

5.On 28th November 2008, the Company terminated the
agreement. A copy of the termination letter is annexed to the
petition.

¶20

6.The petitioners maintained that they were entitled to
compensation for the entire period of the agreement, the
termination notwithstanding, it being their case that the
termination was wrongful. The petitioners’ advocates sent a
statutory notice under Section 433 of and 434 of the Companies
Act to the respondent on 24th July 2010. The Company’s

¶21

2 of 6

¶22

Shephali

¶23

902.cp.323.12.doc

¶24

advocates replied to this notice on 21st August 2010.

¶25

7.The Company has filed an affidavit in reply. In that affidavit
the company reiterates its position stated in correspondence, viz.,
that the agreement had been terminated by the letter dated 28th
November 2008. There was no protest in writing by the
petitioners. According to Mr. Cama, learned Advocate appearing
on behalf of company, the demand by the petitioner was made only
after the respondent sought a refund of its security deposit.

¶26

8.There seems to be some material to indicate that even after
the date of termination of the agreement by the respondent, parties
negotiated some sort of settlement. Those negotiations appear not
to have fructified. The petitioner claims that it is entitled to sustain
its monetary claim on the basis that the claim was never
terminated.

¶27

9.In the course of correspondence, the Company accepted a
liability to the petitioner in the sum of Rs.13,23,655/- as on 28th
February 2009. It asked the petitioner to adjust the security deposit
of Rs.11,15,000/-, and expressed its willingness to pay the balance,
a sum of Rs.2,08,655/-. This stand is reiterated in paragraph 3(l) of
the affidavit in reply. There is no affidavit in rejoinder.

¶28

10.There is a very serious dispute as to whether the agreement
was in fact validly terminated or not. If it was terminated, and the
petitioner accepted that termination, it would not be able to sustain
the present claim. There is also a subsidiary dispute about an
amount of TDS. The petitioner claims that tax has been deducted

¶29

3 of 6

¶30

Shephali

¶31

902.cp.323.12.doc

¶32

at source, but not paid in to the exchequer and no TDS certificates
have been issued. The Company denies this, and claims that it has
accounted for the tax deductions as well.

¶33

11.These are not defences that can be said to be frivolous,
without merit or insubstantial. Whether the Compny agreed to
temporarily suspend or keep in abeyance its termination while
negotiations were ongoing, or whether it rescinded it altogether are
matters that will require the taking of evidence. It is difficult to see
how, on this basis, it can be said that there is an admitted liability by
the Company for the whole of the petitioners’ claim other than the
amount of Rs.2,08,655/-. There is no material to support the view
that the Company is unable to pay its debts, that it is commercially
insolvent or that an order of winding up is warranted under Section
433(f) of the Companies Act, 1956.

¶34

12.Lastly, the Company claims that the petitioner continues to
have in its possession several of the Company’s display screens. It
seeks an order of return of these screens. Ordinarily, this is not a
claim that could be granted in a petition against the Company.
However, in paragraph 14 of the petition, the petitioner says:

¶35

“14. … “The screens of the respondent company were the property of the respondent company and the petitioner company has no right to remove those from the site. The petitioner company was not able to remove screens from the premises post the expiry of the agreement on 31.3.2010 and the petitioner continued to suffer losses as the site in the restaurant cannot be utilized by the petitioner nor can be given to other OOH company.”

¶36

13.Clearly, the petitioner cannot continue to retain the

¶37

4 of 6

¶38

Shephali

¶39

902.cp.323.12.doc

¶40

Company’s display panels or screens. It does not even claim to
want to do so. On the contrary, it complains about their non-
removal. There should, therefore, be no difficulty in allowing the
Company’s request in this regard. To drive the Company to file
separate proceedings for this limited purpose seems to me
needlessly technical, especially in view of these averments in the
petition.

¶41

14.In view thereof, the petition can be disposed of on the
following terms:

¶42

(a) The Company shall pay an amount of Rs.2,08,655/- to the petitioners on or before 31st January 2014. On payment of this amount, the petition will stand dismissed with no order as to costs.

¶43

(b) Upon payment of Rs.2,08,655/- as aforesaid the petitioner shall be at liberty to file a suit for any amount or claim in excess of that amount in relation to the subject matter of the petition. This would include the claim for TDS. The Company will also be at liberty to file a counter-claim or an independent suit. All these proceedings will be decided on their own merits. This order shall be without prejudice to all the rights and contentions of all the parties.

¶44

(c) If the amount of Rs.2,08,655/- is not paid by the Company to the petitioners by 31st January 2014–

¶45

5 of 6

¶46

Shephali

¶47

902.cp.323.12.doc

¶48

(i) The petition shall stand admitted without further reference to the Court. Mr. Cama waives service under Rule 28 of the Companies (Court) Rules, 1959.

¶49

(ii) It shall then be advertised in two local newspapers, viz., Free Press Journal (in English) and Navshakti (in Marathi), as also in the Maharashtra Government Gazette.

¶50

(iii) The petitioners shall deposit an amount of Rs.10,000/- with the Prothonotary & Senior Master, with intimation to the Company Registrar, towards publication charges by 14th February 2014; failing which the petition shall stand dismissed for non-prosecution without further reference to court.

¶51

(d) The petitioner shall return all the display screens or panels belonging to the Company and installed at the petitioners' sites or locations by 14th February 2014. In default, the Company may take such steps or proceedings as it thinks fit.

¶52

(G. S. PATEL, J.)

¶53

6 of 6

M/S. Rtc Restaurants (India) Ltd. v. M/S. Out of Home Media (India) Pvt. Ltd. - U74300MH2006PTC163636

Case brief

What is this about?

What did the court decide?

M/S. Rtc Restaurants (India) Ltd. v. M/S. Out of Home Media (India) Pvt. Ltd. - U74300MH2006PTC163636

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Canara Bank Vs the Official Liquidator, High Court of Bombay of M/S.Shree Ma Pharmachem Ltd.(in Liqn)

M/S. Viraj Electric Corporation Vs M/S. Vhb Life Sciences Ltd. - U74900MH2007PLC171648

Ms. Veena Bakshi Vs in Depth Entertaining Arts Pvt. Ltd.

Magcon and 5 Ors. Vs Bombay Cranes Pvt. Ltd. and 3 Ors.

Shri Harbhajan Singh K. Jandir, Proprietor of Mannu Carrier Corporation Vs Gannon Dunkerley and Company Ltd. - U51109MH1924PLC001107

Vijay Nilkanthrao Bhorkar Vs Sai Shraddha Hotels and Restaurant Private Limited Cin No. U55100MH1999PTC120037