FORTUNE FINANCIAL SERVICES (I) LIMITED REP. BY ITS DIRECTOR SHRI NIMISH C. SHAH Vs. GOLDEN GATE PROPERTIES LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956

JUDGEMENT

(1.) PETITIONER is a Class -I Merchant Bankers engaged in the business of providing financial advise and cooperation. Respondent is a registered company under the Companies Act, 1956 having its registered office at Bangalore. The main objects of the Respondent company is to carry on business of Real Estate and property development in India and abroad. In the year 2004, the Respondent Company appointed the petitioner as its financial consultants. On 27.10.2006 there came to be an agreement between the petitioner and the respondent company as per Annexure -B specifying the terms and conditions. In terms of the agreement, the Respondent Company paid a sum of Rs. 10,00,000/ - on 13.2.2007 to the petitioner. On account of service and assistance rendered by the petitioner two investors by name Morgan Stanley and Deutsche Bank's REEF Fund evidenced prima -facie interest in December 2006 and January 2007 to invest money in Respondent Company. Finally the Deutsche Bank agreed to invest a sum of Rs. 273.50 crores with the respondent. On 14.6.2007 there came to be a Term Sheet executed between the Respondent Company and the Deutsche Bank as per Annexure -C. This agreement between the Respondent Company and the Deutsche Bank was on account of the efforts made by the petitioner under the Agreement at Annexure -B In terms of the agreement the petitioner submitted a bill on 12.12.2007 for a sum of Rs. 10,75,56,610/ - for the services rendered by them as per Annexure -D. Thereafter the respondent company paid a sum of Rs. 5 Crores. According to the petitioner after giving deduction to all the payments made by the Respondent Company, they were found due a sum of Rs. 5,65,56,610/ - as on 12.12.2007. Despite the petitioner's request by their letter dated 26.8.2008 as per Annexure -H and 4.11.2008 as per Annexure -J, Respondent Company has not paid the balance amount due to the petitioner. Between 5.1.2008 and 5.11.2008 continuously there was correspondence between the parties and exchange of E -mail. From this correspondence between the parties the Respondent Company asked the petitioner to reduce the fee rate from 3.5% to 2%. But the petitioner refused to accept the request of the Respondent Company for reduction of fee rate. further the correspondence between the parties reveals that Respondent Company was in financial problems. Finally the petitioner got issued a lawyer's notice on 5.12.2008 and 5.1.2009 as per Annexure -L and M calling upon the Respondent Company to pay the amounts due failing which they will initiate winding up proceedings. Respondent Company got issued a reply on 12.1.2009 interalia denying the liability to pay any due to the petitioner. Again the petitioner got issued another lawyer's notice on 13.2.2009 as per Annexure -N calling upon the Respondent Company to pay the amounts due to them. Since the respondent company failed to pay the amount due to the petitioner, they are before this Court for winding up of Respondent Company.

(2.) AFTER service of notice, Respondent Company entered appearance and filed statement of objections interalia contending that the petitioner failed to perform their obligation within the stipulated time specified in the agreement and also within the extended period. Respondent further contends that on their own efforts they entered into agreement with the Deutsche Bank and there is no worth assistance and service rendered by the petitioner. Respondent Company further contends that petitioner is entitled for its fee only upon successful completion of the transaction within the agreed time limit. Though Respondent Company is not liable to pay any amount they paid a sum of Rs. 5 Crores under tremendous pressure from the petitioner and the same do not amount to acknowledging the liability. On these grounds, the Respondent Company opposed the petition.

(3.) RESPONDENT company admit that they have entered into an agreement on 27.10.2006 as per Annexure -B with the petitioner specifying the terms and conditions. In terms of the agreement the transaction between the parties was to be completed on or before 31.3.2007. The parties by consent have agreed to extend the term of agreement by another 90 days as per Annexure -R1. Accordingly on 14.6.2007 the term sheet came be entered between the respondent company and Deutsche Bank as per Annexure -C. Further the respondent company in their statement of objections at para -9 admit that they have received investment of Rs. 200 Crores by December 2007 as against approved disbursement of Rs. 273.5 Crores. It is not in dispute that subsequently the respondent company made payment of Rs. 5 Crores to the petitioner company. It is also not in dispute that as per the terms of agreement the respondent company has agreed to pay 3.5% fee on the investments received. On the face of it on the amounts received by the respondent bank they are liable to pay fee of Rs. 8 Crores to the petitioner.