MICHAEL HART Vs. NINESTARS INFORMATION TECHNOLOGIES LTD

JUDGEMENT

(1.) This application is filed under section 433(e) and (f) of the Companies Act, 1956, to wind up the respondent-company on the ground that the respondent-company is unable to pay its debt. The case of the petitioner is that the respondent-company engaged the petitioner as a consultant by entering into a consulting agreement, dated May 21, 2004 and as per the said agreement, the respondent-company agreed to pay a sum of US$ 10,460 per month as compensation for the services to be rendered by the petitioner and the respondent-company also agreed to pay to the petitioner other incidental expenses, such as work travel expenses, expenses related to the use of his cell phone, office phone, office supplies and health insurance cost of US$ 400 per month. The said agreement was for a period of six months and latter renewed for a period of six months through another consulting agreement, dated November 19, 2004 and the said- agreement was in force till May, 2005; As per the second agreement also, the remuneration agreed to be paid to the petitioner was US$ 10,460 (US dollars) per month and other expenses as stated above.

(2.) It is stated by the petitioner that he sent invoices every month for his consultation fee of US$ 10,460 and the respondent-company was making incomplete and irregular payments of the fees and as on March 2005, the respondent-company was liable to pay a sum of US$ 164,500 (US dollars) to the petitioner towards his consultation fees and despite efforts taken by the petitioner requesting the respondent to release the payment, the respondent-company did not make the payment and therefore, the petitioner tendered his resignation on March 29, 2005 and thereafter, the respondent-company negotiated with the petitioner and finally the petitioner agreed to receive US$ 140,000 (US dollars) as full and final settlement towards his compensation and the respondent-company also executed a promissory note in favour of the petitioner on March 31, 2005, for the said amount of US$ 140,000 and sent the same through fax to the petitioner and thereafter, the respondent-company did not make any payment, as per the said promissory note and the respondent-company agreed to pay the said sum without interest on or before October 31, 2005 and as the respondent-company did not make the payment as promised as per the promissory note, the petitioner sent a notice, dated February 22, 2008, to the respondent-company demanding the payment due under the promissory note with interest at the rate of 1.5 per cent, per month and after receiving the notice, the respondent-company sent an e-mail, dated April 1, 2008 and requested the petitioner to settle for a sum of US$ 100,000 payable in three or four instalments and that the promissory note was issued in good faith and the respondent-company was not able to make the payment due to financial crisis and requested the petitioner to accept the sum of US$ 100,000 in full quit. Even after that, no payment was made by the respondent-company. Therefore, the petitioner issued a statutory notice under section 434 of the Companies Act, 1956, dated September 15, 2008, addressed to the respondent-company at its registered office in Chennai and its office in Bangalore requesting the respondent- company to make the payment and there was no reply and as the respondent-company is not able to make the payment due and payable to the petitioner, despite notice sent by the petitioner, the respondent-company deemed to be unable to pay off its debts of US$ 2,17,700 and hence, the respondent-company is liable to be wound up and therefore, the petition is filed.

(3.) The respondent-company filed a counter affidavit stating that the respondent-company is financially sound and there was no necessity for the respondent to deny the payment of any legitimate sum, if at all payable to the petitioner as claimed in the company petition and denied the promissory note executed by the respondent-company. Further, in the counter affidavit, the respondent-company elaborated the financial worthiness of the respondent-company, its business and its number of employees to make it appear that the respondent-company is a financially sound one and it cannot be wound up.