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2009 Supreme(Bom) 1750
High Court of Judicature at Bombay
THE HONOURABLE DR. JUSTICE D.Y. CHANDRACHUD
Cavendish Shipping Limited
Versus
Polaris Marine Management Pvt.Ltd. & Others
COMPANY PETITION NO.723 OF 2008 WITH COMPANY PETITION NO.724 OF 2008
Decided on: 17-12-2009
For the Petitioner:Janak Dwarkadas, Sr. Advocate with Sharan Jagtiani, Girish Dave and Ankit Rajput i/b. Dave & Girish & Co. for the, Advocates.
For the Respondents:Snehal Shah with Divya Gurbuxani i/b. Dutt Menon Dunmorrsett, Advocates.
Headnote:Companies Act, 1956 - Sections 433(c)(e)(f) and 439(1)(4) (b) - Winding up of a company - Petition for - Petitioner, a company invested money for purchase of vessels - Joint venture agreement between petitioner and respondent - Shareholder’s agreement entered - Sale of vessels - Dispute regarding distribution of amount as per agreements - Held - Petitioner - Company not registered as owner of shares of respondent-company - Not original allottee of shares from company - Not satisfy conditions of Section 439(4)(b) of Act - Clauses of Joint Venture Agreement and share holder’s agreement support submission of petitioner - Acknowledgment on part of respondents of debt due and payable to petitioner - Petition admitted - Petitioners advertise petitions in two local newspapers. - In the present case, the record before the Court indicates that the petitioner has not acted unreasonable and has furnished more than abundant opportunities to the respondent to comply with their obligations. The relationship between the parties was governed by the obligation to be just and faithful in all transactions relating to the Company. Parties were liable to render full information and truthful explanations to the other. The obligation to act in good faith is emphasized in Clause 8.3(d) of the Shareholders Agreement and Clause 7 of the Joint Venture Agreement. The petitioner brought in capital to finance the acquisition of vessels and the understanding in good faith was that the operation of the vessels would be utilized to repay the outstanding debt to DAICO and the petitioner. This obligation towards the petitioner and the agreement arrived at between the parties was not fulfilled. Disbursement was not made to the petitioner upon the monies realised by the sale of the vessels. The substratum of the Companies has also disappeared. The vessels have been sold. What is left of the companies is the shell. The principle which has been laid down in V.B. Rangaraj v. V.B. Gopalalakrishnan, 1991 DGLS (sort) 632 : AIR 1992 SC 453, can have no application to a situation like the present where the just and equitable ground is pressed in aid of an application for winding up. That is because the just and equitable ground seeks to impose upon the formal structure of a Company, the real obligations of trust and confidence which are assumed by individuals either when they come to form a company or to make investments in a company. The formal structure is in such cases not regarded by the law as being decisive of the decision as to whether it is just and equitable to order to winding up of a Company.
For all these reasons, a case has been made out for the admission of the petitions for winding up under Clauses (c), (e) and (f) of Section 433 of the Companies Act, 1956. For the reasons indicated in the judgment, therefore, the company petitions are admitted. The petitioner shall advertise the petitions in two local newspapers.
1. The Petitioner is a Company incorporated in the U.K. and is stated to be a group company of Dallah Albaraka Investment Company Limited (DAICO). The First Respondents (“POLARIS and FALCON”) in both the Company Petitions are Joint Venture Companies.
2. Captain Mehernoosh Khajotia owned a Shipping Company by the name of Constellation Shipping (Bahamas) Ltd. Some time prior to 2000, the Company was financed by DAICO for acquiring five marine shipping vessels. According to the Petitioner, the loans of three vessels were repaid. The outstanding debt of Constellation was US $ 2.5 million. In 2000, Mehernoosh Khajotia is stated to have approached DAICO to invest in his Company for the acquisition of two vessels in order that the return of investment could be applied towards the repayment of the debt due from Constellation Shipping.
3. On 14th November 2000, a Shareholders' Agreement (SHA) was entered into, in respect of Falcon Marine Management Pvt.Ltd (Falcon), the First Respondent to Company Petition 724 of 2008, between the Petitioner and Polaris which was then owned completely by the Khajotia family. The Shareholders' Agreement provided that the Petitioner and Polaris would hold fifty percent in the equity of Falcon. The initial venture for the Company was to be the purchase of a Multipurpose Indian Vessel which was to be owned by Falcon. By clause 2 of the agreement, the share in the profits of the shareholders, was to be proportionate to their shareholding. The Petitioner was to contribute thirty percent towards the purchase of the vessel. Under Clause 4, the Board of Directors was to consist of four Directors. Each party was to nominate two Directors. Clause 5.1 provided that the vessel was to be under the complete control of Falcon and under the direct supervision of Mehernoosh Khajotia. Clause 8 provided that upon the sale of the vessel, the sale proceeds would be disbursed and all outstanding payments would be made in the following order of priority, namely (i) In repayment of outstanding loans of Banks/Financial Institutions; (ii) In payment to the Petitioner of an amount upto US $ 1 million; and (iii) The residual balance from the sale proceeds was to be divided between the parties according to their shareholding. Clause 8.3(d) provided that parties would be just and faithful in all transactions relating to the Company and would render full information and truthful explanations to the other parties on all matters relating to the affairs of the Company. Clause 8.6 provided that upon the determination of Falcon, the assets would be sold and the proceeds that were realized would be utilized to pay debts and the balance distributed between the shareholders. The Shareholders’ Agreement was executed on behalf of Polaris and by Mehernoosh Khajotia.
4. In May 2001, Falcon acquired a vessel, Ristakez, utilizing the investment of US $ 1 million made by the Petitioner. On 6th August 2001, there was an Addendum to the Shareholders' Agreement. Clause 2 of the Addendum provided that parties were desirous of acquiring a further vessel to be included in the fleet of Falcon and that the Petitioner would provide a second tranche of US $ 1 million of equity to Falcon for the acquisition of the second vessel. Parties agreed in Clause 4 of the Addendum that the 50 : 50 shareholding pattern would continue. On 18th October 2001, in pursuance of the Addendum, the Petitioner invested an amount of pound sterling 691,563 equivalent to US $ 1 million. This amount was reflected in the accounts of Polaris. According to the Petitioner, as subsequently agreed, the second vessel was to be purchased by Polaris and the equity investment was to be treated as an equity investment in Polaris entitling the Petitioner to fifty percent of the share capital of Polaris.
5. On 11th December 2003, a meeting took place of the Board of Directors of Polaris. The Minutes of the Meeting record the presence of Mehernoosh Khajotia and the Second Respondent. T
