SEMINDIA SYSTEMS PRIVATE LIMITED Vs. TATA ELXSI LIMITED

JUDGEMENT

(1.) This original side appeal is directed against the order dated 21-10-2010 passed in Company Petition No.138/2009 by the learned Single Judge admitting the petition filed by the respondent.

(2.) The respondent filed a petition under Sec. 433(e) of the Companies Act, 1956 seeking for winding up of the appellant-company. In the company petition it was contended that the appellant had placed a letter of intent for procurement of offshore service for "Open TV Core 2.0 Indeto CAS Integrations and Certification" project with the respondent. Accordingly, the respondent had to duly provide the service required by the appellant. As per the Memorandum of Understanding (for short 'MOU') dated 26-09-2008 entered into between the appellant and respondent, the respondent raised an invoice dated 30th Sept. 2008 for an aggregate sum of INR 2,03,61,879.00. However, the appellant-company did not make any payment as per the MOU and requested time to make payment. In spite of repeated requests, the appellant has neglected to pay the amount. On persistent requests and the reminders made by the respondent, the respondent issued a cheque for INR l,01,80,940.00 on 30-04-2009 drawn on ICICI Bank, BTM Layout Branch, Bangalore. However, the appellant requested not to present the cheque since there was no sufficient fund in the account. On the request of the appellant-company, the cheque was presented on 17-07-2009, however, the same was dishonored with an endorsement 'insufficient fund'. Even after dishonor of the cheque, on persistent requests made by the respondent, the appellant failed to pay the dues. Accordingly, a notice was issued under Sec. 434 of the Companies Act, on 27-07-2009 calling upon the appellant to pay the over-dues. In spite of the same, the appellant failed to pay the amount. On filing of the proceedings under Sec. 138 of the Negotiable Instruments Act, the appellant paid a sum of INR 20,00,000.00 on 11-09-2009. However no balance payment was made. The appellant-company is not in a position to pay the over-dues. In view of that, a petition was filed invoking section 433(e) of the Companies Act, 1956 and the Company Court issued notice to the appellant.

(3.) The appellant entered appearance and filed statement of objections contending that company petition itself is not maintainable. The respondent has failed to fulfill their part of obligations in supplying deliverables. Further, as per the agreement, if there is any dispute between the parties, the same has to be referred to the Arbitrator under the Arbitration and Conciliation Act as per the agreement entered into between the parties. The appellant-company is a profit making company, it has the assets of INR 74,57,13,897.00 and had earned the profit of INR 4,64,44,171.00 after taxation for the year 2008-09. Since there is a dispute regarding payment, the company petition for recovery of money is not maintainable. It was further contended that as per the letter of intent, the respondent agreed for porting Open TV Core 2.0 Middleware and Indeto CAS into Celestial Chipset Based DTH Set Top Box developed by the appellant-company. As per the Non-Disclosure Agreement entered into between the parties on 29-10-2007, a commercial document containing the scope of work, technical proposal, project plan, commercial terms like warranty term, duration, payment schedule, validity quota etc., was exchanged between the parties. The payment schedule was also specified in the said document. As per the said agreement, a sum of 75,000 USD was paid on 8-2-2008 for the purpose of Open TV & CA Certification and a further sum of 75,000 USD was paid on 1-8-2008. The appellant-company was required to pay the balance due in 10 monthly instalments. It was agreed that beyond successful production of one million units of Set Top box by the company, a mutual agreement regarding royalty was to be entered into between the parties. For that purpose, the appellant-company was required to furnish Library License from Open TV and Indeto and other Software documents to the respondent to execute their work. Since there was delay in obtaining the license, the project was delayed. Taking advantage of the delay in obtaining the license, the respondent company forced the officials of the appellant-company to enter into a Memorandum of Understanding for revised payment. The respondent suppressing the material fact 7 regarding payment of the amount, filed a petition seeking for winding up. The payment made is not disclosed in the petition. In spite of repeated requests to the respondent not to present the cheque unless they supply all the deliverables, the respondent presented the cheque, though they have not supplied the deliverables. Immediately after dishonor of the cheque, the appellant paid a sum of INR 20,00,000.00 as full and final settlement and not to press the proceedings initiated under Sec. 138 of the Negotiable Instruments Act. In spite of the payment of all the dues, the respondent has filed the petition under Sec. 433(e) for winding up of the appellant-company and sought for dismissal of the company-petition.