M/S RITIKA PVT. LTD. v. M/S OMAXE CONSTRUCTION LTD.

1. Whether Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in the Digest ? SUDERSHAN KUMAR MISRA, J.

1. This is a petition under S.433 of the Companies Act, 1956 for winding up of M/s Omaxe Construction Ltd, along with CA.No.1551/09 for appointment of a Provisional Liquidator. The respondent company carries on the business of construction and is stated to have been incorporated under the Companies Act, 1956 in 1989 and has its registered office in New Delhi. 2009:DHC:5582

2. On 14th December, 2005, the petitioner company/Intending Lessee entered into an unregistered Agreement to Lease with the respondent company/Intending Lessor for opening a showroom in premises bearing No.FF-04, Omaxe Mall-Ludhiana, located on the First Floor at Firozpur Road, Opp. Mini Secretariat, Tehsil and District Ludhiana, Punjab having a super area of approximately 205.31 square metres. The said Agreement has been annexed to the petition as “Annexure B”. Clause 3 thereof states that the lease was initially for a period of 3 years, to be calculated from the date of the grant of a Completion Certificate by the concerned authorities, to be renewed for a further 2 terms of 3 years each at the option of the Intending Lessee, on terms and conditions to be mutually decided as per the Agreement. The respondent company was to undertake the construction of a Mall at the Demised Premises, which would thereafter enable the Intending Lessee to carry on the business of garments and apparel under the brand/trade name of „Ritu Kumar‟. Clause 2 of the Agreement states that the said Mall was to be constructed by the Intending Lessor by 31st December, 2007, which would be extended in the case of force majeure circumstances and/or reasons beyond the control of the Intending Lessor.

3. The petitioner company, as per its obligations under Clause 6 of the Agreement, paid the respondent a total sum of Rs. 4,64,100/vide Cheque Nos. 599743 and 412066, drawn on Citi Bank N.A., Delhi, towards an interest-free security deposit equivalent to three months‟ rent. Part of this payment was made prior to the signing of the Agreement, and the balance was paid at the time of signing of the Agreement. The petitioner states that the second cheque was encashed on 31st December, 2005, and that the said deposit was subject to compliance with the terms and conditions stipulated in the Agreement to Lease dated 14th December, 2005.

4. The respondent company did not complete the construction of the Demised Premises/Mall by the stipulated time. It is the case of the petitioner that more than 20 months have lapsed since the date on which the Mall was supposed to be constructed and that, till date, the petitioner has not been handed over possession of the Demised Premises. A personal inspection of the construction site by officers of the petitioner company, photographic evidence of which has been annexed as “Annexure D (Colly)” to this petition, reveals, according to the petitioner, the fact that the said Mall is nowhere near completion.

5. Consequently, the petitioner delivered a notice of winding up dated 13th May, 2009 at the registered office of the respondent company in Delhi, proof of which is annexed to the petition as “Annexure C”, calling upon the respondent to refund the amount of Rs.4,64,100/- and interest @ 1.5% from the date of the notice, as well as costs of sending the legal notices, which amounted to Rs.11,000/-. The respondent has not replied to the said notice of winding up.

6. At the outset, it is a well-known principle that the respondent‟s failure to reply to the notice of winding up does not mean that winding up orders must invariably be passed. This Court has held in Resham Singh & Co Pvt Ltd v Daewoo Motors India Ltd, [2003] 116 CompCas 529 (Delhi), that “where no response had been made to the statutory notice the Respondent Company runs the risk of a winding-up petition being admitted for hearing at the threshold stage itself.” It has further been held, in the same case, that “Normally, the Company Judge considers it prudent in the first instance to issue notice to the Respondent so that its defense to the possible far-reaching and fatal winding-up orders can be considered. The admission of the Petition at its first hearing is possible because, by virtue of Section 434 of the Companies Act, a presumption of the indebtness can be legitimately drawn by the Court where no Reply to the statutory notice is forthcoming. The risk of the admission of the Petition, as well as the appointment of a Provisional Liquidator is thus broodingly and ominously present in all those cases where the Respondent Company neglects to send any Reply to the winding-up notice. But this is as far as the danger extends.”

7. Under the circumstances, let notice issue to the respondents to show cause why the company be not wound up, returnable for 4th May, 2010.

SUDERSHAN KUMAR MISRA, J. DECEMBER 22, 2009 sl