M/S. Sbarro Restaurants (India) Ltd. Vs M/S. Out of… — Company and Corporate

902.cp.351.12.doc

Shephali

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 351 OF 2012

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

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

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APPEARANCES

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

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

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CORAM:G.S.Patel, J.

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DATED:22nd January 2014

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P.C.:-

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1.Heard Mr. Deokar for the petitioners and Mr. Cama for the
respondents.
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 Rs22,06,635/-, and that the Company has,
without just reason, failed to pay this debt, which the petitioners
claim is admitted.

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3.The petitioners’ claim arises under an agreement entered
into between the parties on 15th May 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.

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4.The tenure of the agreement was initially three years. The
agreed compensation payable to the petitioners was Rs.15,000/-
per month for each of the petitioners’ seven 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 of Rs.3,15,000/- with the petitioner and that this
was refundable. On 28th November 2008, the Company
terminated the agreement with effect from 17th February 2009. A
copy of the termination letter is annexed to the petition.

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5.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
advocates replied to this notice on 21st August 2010.

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6.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

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petitioners.

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7.In the course of correspondence, the Company accepted a
liability to the petitioner in the sum of Rs.2,27,358/-. It asked the
petitioner to adjust the security deposit of Rs.3,15,000/-, and to
refund the balance Rs.87,642/-. This stand is reiterated in
paragraph 3(f) of the affidavit in reply. There is no affidavit in
rejoinder, nor was this stand controverted by the petitioner in prior
correspondence. For over a year from the date of the reply to the
statutory notice (21st August 2010) till the filing of the petition on
6th September 2011, the petitioner made no further demand.

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8.There is a very serious dispute as to whether or not the
agreement was validly terminated. If it was, and the petitioner
accepted the termination, the petitioner would not be able to
sustain the present claim. This is not a defence that can be said to
be frivolous, without merit or insubstantial. This is not a case
where, without a termination, the Company simply refused to pay
its dues arising under the agreement. Indeed, it accepted that some
amount was due, and suggested that this amount be adjusted
against the security deposit. The claim is on the basis that though
there was a termination of the agreement by the Company, it was
wrongful. It is difficult to see how, on these facts, 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.2,27,358/-. 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. Prima-facie it seems that the Company has a counter-

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claim against the petitioner.

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9.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. this would not, ordinarily,
be a claim that could be granted in such a petition. However, in
paragraph 14 of the petition, the petitioner says:

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“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.”

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10.Clearly, the petitioner cannot continue to retain the
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. The petitioner can have no lien or charge on those
screens, nor has it made any such claim.

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11.The petition is dismissed. The petitioner is at liberty to file a
suit for its claim, and to adjust the admitted amount of
Rs.2,27,358/- as also the balance of the security deposit, of
Rs.3,15,000/- (i.e. Rs.87,642/-) against its claim in suit. The
Company is also, of course, at liberty to adopt such proceedings as

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it thinks fit for any claim that it may have, including filing its own
suit or a counter-claim. In view of the clear statement in the
petition, the petitioner shall return the Company’s display panels
or screens on or before 14th February 2014. If it fails to do so, the
Company may take such proceedings as it thinks fit.

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(G. S. PATEL, J.)

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

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

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