Allowed

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

Bombay HC21 Jan 2014CP/372/2011

Case brief

AI extract

What is this about?

In this company petition, the petitioner sought winding up of the respondent company due to commercial insolvency arising from unpaid dues under film production agreements. The respondent failed to appear or file a reply, leaving unsubstantiated allegations of breach. The court found the company financially insolvent and made the petition absolute.

What did the court decide?

The petition made absolute in terms of prayer clauses (a) and (b); the company is ordered to be wound up.

1.This petition was admitted on 4th July 2012. It was directed to be advertised. An affidavit dated 28th August 2012 of one Sandeep Shinde, a clerk in the petitioner’s advocates’ office, proving publication has been filed. None appears for the respondent.

2.The petition is for winding up of M/s. In Depth Entertaining Arts Private Limited (“the Company”). The petitioner is a film director and writer of film scripts, screenplays, dialogue, etc. She started work on a film script entitled “The Coffin Maker” some time in March 2006. The petitioner was introduced to a director of the Company some time in February 2009. She narrated her script concept to the Company’s director, who showed interest in producing the film. A Writer's Agreement was executed on 28th March 2010, under which the petitioner was engaged by the company to write and develop the script from the original concept or story, and also write the screenplay and dialogue. A second Director’s Agreement was also executed on 28th March 2010 under which the Company engaged the petitioner as a director of the film.

3.The terms of the two agreements were substantially similar. The petitioner’s engagement both as writer and director was to continue from the date of the two agreements till the film was complete, received its censor certification, was released for general public exhibition, and the petitioner fulfilled all her obligations under the agreements. The petitioner was entitled to receive Rs.10 lakhs as consideration under the Writer’s Agreement and Rs.25 lakhs as consideration under the Director’s Agreement.

4.The petitioner’s case is that the Company failed to perform its obligations under the two agreements although the petitioner performed all her obligations in a timely manner. The Company also did not pay the petitioner the entire amounts due under the two agreements.

5.According to the petitioner, against the Rs.10 lakhs due to her under the Writer’s Agreement, the Company has paid her only Rs.1.5 lakhs. The balance, Rs.8.5 lakhs, is yet unpaid. Similarly, against her dues of Rs.15 lakhs under the Director’s Agreement, the petitioner received only Rs.3 lakhs in all, and an amount of Rs.12 lakhs is still due to her. The last cheque issued to the petitioner by the Company was dated 28th September 2010 in part payment of the second installment under the Director’s Agreement. It was for Rs.2,25,000/-. It was dishonoured, the Company having stopped payment. Thus, a total of Rs.20,50,000/- is due to the petitioner from the Company, along with interest at 18% per annum from 15th March 2011 till payment or realisation.

6.Through her advocate, the petitioner served a statutory notice on the Company on 15th March 2011. The Company replied, vide its advocate’s letter dated 8th May 2011. It denied all liablity. It alleged that the petitioner had not performed her obligations under the Agreement and had caused a loss of Rs.75 lakhs to the Company; and that the Company had suffered financial damages to the tune of Rs.5 crores. The petitioner’s advocate responded, denying these allegations.

7.A search taken in June 2011 by the petitioner’s advocate in the office of the Registrar of Companies disclosed that the Company had substantial liabilities in the form of unsecured loans of about Rs.12.62 lakhs, but net fixed assets of ony Rs.1,04,566/-. There were sundry debtors of Rs.22,43,996/-, loans and advances of Rs.8,07,139/- and aggregate liabilities of Rs.89,42,334/-. All this is

8.The petition was accepted and duly served, twice: in March 2012 and again in June 2012. Two affidavits of service are on file. Despite service, none appeared at the time of admission, and, after the petition was advertised following the order of admission, none appeared at the time of final hearing. No affidavit in reply has been filed. There is nothing to show that the financial position of the Company has in any way improved since the time the petition was admitted.

9.As to the merits of the petitioner’s claim, it is apparent that the Company’s response to the winding up notice is an after- thought. No such dispute was raised at any time previously. The allegations in that response – that the petitioner was remiss in the performance of her contractual obligations and that she was otherwise lacking in competence – are entirely unsubstantiated. No proceedings have ever been taken by the Company against the petitioner for recovery of the so-called loss claimed by the Company to have been caused to it by the petitioner. Even after this petition was admitted and advertised, there has been no response from the Company.

10.There is no reason why the Company should not now be ordered to be wound up. It is clearly unable to pay its debts and there is no reason to doubt the petitioner’s case that the Company is commercially insolvent.

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

Case brief

What is this about?

What did the court decide?

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

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

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