IBA HEALTH (INDIA) P. LTD. (FORMERLY KNOWN AS MEDICOM SOLUTION P. LTD.) Vs. INFO-DRIVE SYSTEMS SDN. BHD. (FORMERLY KNOWN AS BHARI INFORMATION TECHNOLOGY SYSTEMS SDN. BHD.)

JUDGEMENT

(1.) THE appeal by a company which is aggrieved of an order passed by the learned company judge by admitting a petition filed under Sections 433(e) and (f) read with Section 434 of the Companies Act, 1956, by another company by name M/s. Info -Drive Systems Sdn. Bhd. earlier known as Bhari Information Technology Systems Sdn. Bhd. and who incidentally happened to be an agent of the present appellant -company, rendering some service on commission basis.

(2.) THE company petition was presented on the premise that in respect of certain commission due to the petitioner -company, the respondent -company who is now the appellant before us, has entered into a compromise though the suit itself was not one for recovery of any money and in terms of the compromise on a future contingent receipt of service on payment of a price by the appellant -company, the company was to make certain payments to the petitioner -company, as stipulated in the compromise and the respondent -company was adopting devious methods to deprive the petitioner -company of such legal entitlements which amounts to evading payment of indisputable amounts and therefore came up before the company court with the following plea: 14. The petitioner submits that the respondent is very well aware that despite the name change and shareholding pattern, the respondent is liable to the petitioner to the extent of USD 1,065,714 as per the invoice bearing No. 400006 dated February 2, 2007, raised by the petitioner on the respondent. The petitioner considers the respondent -company's attempts to avoid the aforesaid lawful payment under frivolous grounds establishes that the respondent -company is incapable of discharging its debt. The method adopted by the respondent in respect of supply and payment clearly indicates that their intention is to deprive the right of the petitioner and avoid contractual obligation. It further establishes that their intention is not to honour their commitments and to overcome the financial obligations. Therefore, it is also just and necessary to order for winding up of the respondent -company.

(3.) NOTICE had been issued in the company petition and on receipt of the notice the present appellant -company entered appearance through counsel. The learned company judge finding a prima facie material to admit the company petition passed an order on September 17, 2009. While admitting the company petition the learned company judge has observed as under in the order dated September 17, 2009. 4. On the allegation that the respondent -company committed breach in making payment of the commission to the petitioner, a civil suit in O.S. No. 9655 of 2005 was filed by the petitioner before the City Civil Court, Bangalore, seeking permanent injunction restraining the respondent herein from entering into any contract for transfer of undertaking of the company either in favour of M/s. IBA Health Ltd., Australia or any other persons/companies during the subsistence of the deed of settlement dated December 19, 2003. A mandatory injunction was also sought to direct the respondent herein to furnish the details of payment received by it from M/s. Solutions Protocol Sdn. Bhd. in respect of HICT package one contract. Both parties entered into a compromise by filing a compromise petition dated March 18, 2006, in the said suit as per annexure H. The suit was decreed in terms of the compromise petition. 8. It is not in dispute that both the parties filed compromise petition dated March 18, 2006, before the City Civil Judge, Bangalore, in O.S. No. 9655 of 2005. Paragraphs 2, 3 and 5 of the said compromise petition make it clear that the defendant (the respondent herein) agreed to provide, report once in two months to the plaintiff of the invoices raised by the defendant on M/s. Solutions Protocol P. Ltd., Malaysia, pertaining to the transactions under HICT package -1 contract. 9. The defendant also agreed to make future payments to the plaintiff as per the plaintiffs entitlement and as per the defendant's obligations under the deed of settlement (Clause 3 of the compromise petition)(underlining supplied). Clause 5 of the compromise petition also referred to the fact that the defendant has already disclosed the right of the plaintiff in respect of deed of settlement to M/s, IBA Health P. Ltd., Australia regarding the understanding, entered between them. Clause 6 of the compromise petition states that the compromise shall be binding on the parties and shall not be construed as creating an executable decree. 10. It is also not in dispute that pursuant to this compromise certain sums were paid by the respondent -company to the plaintiff. It is thus prima facie clear by looking at the undisputed understanding reached between the petitioner and the respondent, right from the co -operation agreement till the filing of the compromise petition that the respondent has undertaken to pay to the petitioner as per the entitlement of the petitioner and as per the obligation undertaken by the defendant under the deed of settlement. As already stated, under the deed of settlement, the payment to be made in favour of the petitioner is stated in clear terms. The defence of the respondent is that after the respondent -company was taken over by M/s. IBA Health India P. Ltd., its business with M/s. Solutions Protocol Sdn. Bhd. came to an end. To a question as to when the merger took place, counsel for the respondent has stated that the merger took place somewhere in the month of March, 2006 which means since then no business was transacted with M/s. Solutions Protocol Sdn. Bhd. This assertion made by the respondent is quite contrary to the averments made in the compromise petition which is produced at annexure H. Two things are clear from annexure H - -compromise petition filed in O.S. No. 9655 of 2005. Firstly, the respondent -company herein undertook to make 'future' payments to the petitioner herein in terms of the entitlement of the petitioner as per the settlement deed and in terms of the obligation of the respondent under the said deed. Secondly, the respondent herein, in fact admitted that an understanding has been reached between the Australian company and the respondent herein. This compromise petition is dated March 18, 2006. The reference made in Clause 5 of the compromise petition clearly discloses that the process of merger had already taken place. If that was so, there was no need on the part of the respondent -company to undertake to make future payments to the plaintiff in terms of the deed of settlement vide Clause 3 of the compromise petition. Therefore, it is clear that the assertion made by the respondent that its business with M/s. Solutions Protocol Sdn. Bhd. came to an end after the merger is against the very admitted case made out before the civil court in O.S. No. 9655 of 2005. Moreover, the petitioner has placed strong reliance on annexures J1 to J9 to establish that M/s. Solutions Protocol Sdn. Bhd. was directed by the holding company of the respondent to raise the purchase order on it and to pay the amount to another subsidiary company, namely, M/s. IBA Health (Malaysia) Sdn. Bhd. and this was done by the holding company to deprive the legitimate amount payable to the petitioner. The documents produced at annexures J1 to J9 prima facie probablise this assertion of the petitioner. The contention urged by the petitioner that the respondent -company is bound to pay the commission till the cut -off date that is to say December 31, 2006, as per the settlement deed dated December 19, 2003 and that the respondent in active understanding with IBA Health Ltd. (Australian) has entered into an understanding with the respondent -company has instructed the purchaser to pay the amount to another associated company in Malaysia, namely, IBA Health (Malaysia) Sdn. Bhd. so as to avoid service charges is prima facie borne out from the events that have taken place as disclosed by the documentary evidence adverted to above. 11. Though several decisions including the judgment in Amalgamated Commercial Traders (P.) Ltd. Vs. A.C.K. Krishnaswami and Another, (1965) 35 CompCas 456 (SC) are cited by the respective counsel on the maintainability of the company petition, it is clear that the position in law is that where the debt is disputed bona fide and the defence taken is a substantial one, the court will not order winding up. The respondent -company has not produced any prima facie proof of the fact on which the defence is raised. On the other hand, the petitioner -company has placed strong materials in support of its plea that a winding up petition is a legitimate recourse in the case on hand. Hence, I find that there is ample prima facie material in favour of the petitioner. 12. In the circumstances, the petition deserves to be admitted. Accordingly, the petition is admitted.