The judgment emphasizes the importance of ascertaining the authority of representatives, privity of contract, and the need for a reasonable cause or a bona fide dispute to be adjudicated by a trial in a civil court.

MANMOHAN, J.

1. Present winding up petition has been filed under Section 433(e) read with Sections 434 and 439 of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) stating that the respondent is unable to pay its debts allegedly amounting to US$ 300,000 equivalent to Rs. 1,47,72,000/-.

2. The facts as stated in the present petition are that the petitioner is a sole proprietorship firm, based in the United States of America, owned by Mr. Deepak Mehta.

3. It is stated in the petition that respondent company's duly authorised representative Mr. Farhath Hussain was approached by the petitioner to arrange stage shows in United States in which Mr. Vivek Oberoi, the film star was willing to participate between 24th August, 2003 and 30th September, 2003. In support of its case the petitioner has annexed the respondent's letter dated 29th January, 2003 allegedly authorising Mr. Farhath Hussain to not only enter into contracts on behalf of the respondent company but also to accept monies in its account. In the petition, the petitioner has also relied upon another letter dated 29th January, 2003 issued by Mr. Vivek Oberoi authorising the respondent company to deal on his behalf for anything and everything including receipt of payment.

4. It is further stated in the petition that in pursuance to the above authority, on 1st February, 2003, Mr. Farhath Hussain for and on behalf of the respondent company had entered into a contract with the petitioner for stage shows in San Francisco in 2003.

5. It is stated in the petition that in pursuance to the request of Mr. Farhath Hussain, Mr. Manu Mehta, the brother of Mr. Deepak Mehta immediately transferred through Wire Transfer service US$ 300,000 in the account of the respondent being the consideration for the proposed stage shows in which Mr. Vivek Oberoi was to participate.

6. In the petition, it is contended that as Mr. Vivek Oberoi did not participate in the said stage shows, the respondent was duty bound to refund the advance received by it along with compensation on account of huge losses suffered by the petitioner. It is further stated that as despite exchange of number of e-mails respondent did not repay the advance received by it, petitioner sent a legal notice dated 18th January, 2006 and as there was no response to the same, petitioner filed the present winding up petition.

7. Mr. V.P. Singh, learned senior counsel for petitioner submitted that the respondent was an admitted creditor of the petitioner. In this connection, Mr. Singh drew attention of this Court to the emails exchanged between Mr. Mahesh Oberoi on behalf Mr. Suresh Oberoi, Director, of the respondent company and Mr. Kevin H. Lewis at pages 19 to 24 of the paper book. He contended that in the aforesaid e-mails, respondent company had admitted receipt of US$300,000 from the petitioner, but instead of offering full refund in cash, had offered to repay the petitioner partially in cash and the balance through services performed i.e. future shows to be performed by Mr. Vivek Oberoi. In particular, Mr. V.P. Singh relied upon the following e-mails to show the admission of debt to the tune of US$ 300,000 by the respondent-company:

“From : klewis@howardrice.com

To : uberois@aol.com; deepak@mehtaentertainment.com

Sent : Mon, 16 Apr 2007 3:34 PM

Subject: Representation From Farhath Hussain

Mr. Uberoi,

Attached is the signed representation from Farhath Hussain that you have requested.

Please make arrangements to wire the $340,000 U.S. to my client Deepak Mehta. Let me know who should receive the wire instructions. Thanks

Kevin Lewis”

“From : uberois@aol.com uberois@aol.com

To : Kevin H. Lewis

Sent : Mon Apr 16 15:25:34 2007

Subject: Re: Representation From Farhath Hussain

I thought the amount was $300K and alternate arrangements were made by Mr. Mehta. While we accept this scanned letter from Mr. Hussain, can you please request him to send the original notarized to Yashi Multi Media? Thank you. Best