B. P. Colabawalla, J. - (1.) This Company Petition seeks winding up of the Respondent Company- Prime Broking Company (India) Ltd on the ground that it is unable to pay its debts. It is the case of the Petitioner that the Respondent Company is indebted to the Petitioner in the sum of Rs. 103.73 Crores as on 8th April, 2014 along with interest @12% per annum till payment and/or realization. Out of this, according to the Petitioner, an amount of Rs.90.90 crores is admitted as due and payable by the Respondent Company to the Petitioner. The obligation of the Respondent Company arises out of various trades executed by the Respondent Company on the platform of National Stock Exchange of India Limited. Since the Respondent Company failed to make payment to the counter parties, the Petitioner had to pay the said counter parties out of its income-cum-profit and earnings, for and on behalf of the Respondent Company, and therefore, the Petitioner is entitled to recover the same from the Respondent Company.
(2.) The brief facts in the present controversy are as follows:- (a) The Petitioner is a wholly owned subsidiary of the National Stock Exchange of India Limited ("NSE"). The Petitioner offers clearing and settlement services to any person/organization including any trading member of the NSE or any other recognized stock exchange, subject to the provisions of the Petitioner's Bye-laws, Rules and Regulations. The Respondent Company was enrolled as a trading member of the NSE in the Futures and Options ("F & O") segment (in addition to other segments). As a condition precedent to being a trading member on the NSE in the F & O segment, the Respondent Company executed a Trading Membership Undertaking dated 17th January, 2003. Similarly, being a Trading Member in the F & O segment of the NSE, the Respondent Company was required to clear and settle the deals executed by the Respondent Company either by itself or as a clearing member of the Petitioner and for this purpose also executed a Clearing Membership Undertaking for the F & O segment dated 16th January, 2003. In the normal course of trading on the platform of the NSE in the F & O segment, the Respondent Company sold long dated nifty option contracts since June 2012 with their maturity set for September 2012 and December 2012. These contracts were subsequently partly rolled over to March 2013 and June 2013 respectively. (b) As a result of the expiry of the contracts rolled over for March 2013, as on 2nd April, 2013, an amount of Rs.158.04 Crores became due and payable by the Respondent Company to the Petitioner. The Respondent Company vide its letter dated 2nd April, 2013, has in clear and express terms admitted the outstanding amount of Rs.158.04 Crores as due and payable by the Respondent Company to the Petitioner and requested the Petitioner to adjust the outstanding amount against the Respondent Company's Fixed Deposits and cash collateral etc lying with the Petitioner. Accordingly, the Petitioner, as per the instructions of the Respondent Company, adjusted the deposits/collaterals, the details of which are set out in paragraph 7(h) of the Petition. After the aforesaid adjustment, an amount of Rs.3.77 Crores was still outstanding as due and payable by the Respondent Company to the Petitioner. This amount has also been expressly admitted by the Respondent Company vide its letter dated 3rd April, 2013. Despite the express admission, the Respondent Company failed and neglected to make the payment of the aforesaid amount of Rs.3.77 Crores. (c) In addition to the aforesaid sum (Rs. 3.77 Crores), that was due and payable by the Respondent Company to the Petitioner, on the expiry of the contracts rolled over to June, 2013 an additional amount of Rs.91.01 Cores became due and payable by the Respondent Company to the Petitioner. Therefore, as on 28th June, 2013 the outstanding amount due and payable by the Respondent Company was Rs.94.78 Crores. Accordingly, the Petitioner by its letter dated 28th June, 2013 called upon the Respondent Company to make the aforesaid payment failing which suitable action would be initiated. (d) In reply thereto, the Respondent Company sought to deny its liabilty on the grounds set out in its Advocates' letter dated 1st July, 2013 (Exhibit-I). The contentions raised in the said letter were basically two. They were:- (a) that the Petitioner had issued a Circular dated 20th December, 2012 which unilaterally and suddenly removed/reduced certain securities from the permissible list of collaterals to maintain the requsite margins for the F & O segment with effect from 1st January, 2013 which had far reaching consequences; and (b) that a meeting was held on 14th March, 2013 between the representatives of the Petitioner and the Respondent Company wherein the Petitioner conveyed to the Respondent Company that since the Respondent Company had not brought in additional margins in the form of cash, the Petitioner would immediately, offload all pledged securities lying with them to meet the pay-in obligations pertaining to March and June contracts expiry. This would have entailed sale of several securities including Twenty Lakh (20,00,000) shares of a company called "Gitanjali Gems Limited" (hereinafter referred to as "Gitanjali"). Despite this, the Petitioner sold only 2,97,731 shares of Gitanjali between 19th March, 2013 and 22nd March, 2013. The Petitioner ought to have sold all the 20,00,000 shares of Gitanjali, especially in view of the fact that during 19th March, 2013 and 22nd March, 2013 the share price of Gitanjali was approximately Rs.600/- per share and if all the shares were sold, then nothing would have been due and payable to the Petitioner. In the light of these facts, the Respondent Company called upon the Petitioner to grant them a personal hearing on 2nd July, 2013 to demonstrate that nothing was payable by the Respondent Company to the Petitioner. (e) Thereafter, the Respondent Company by its Advocates' letter dated 31st July, 2013 for the first time raised a counter claim against the Petitioner in the sum of Rs. 213.02 Crores What is pertinent to note in this letter is that the Respondent Company has expressly admitted that an amount of Rs.90.90 Crores was due and payable by the Respondent Company to the Petitioner. (f) As mentioned earlier, the outstanding of the Petitioner were to the tune of Rs.94.78 Crores as on 28th June, 2013. Thereafter, certain securities and deposits of the Respondent Company were appropriated towards the dues of the Petitioner bringing the balance outstanding of Rs.89.65 Crores. The Petitioner also charged interest and penalty as per Bye-law 16 of Chapter VI of the Petitioner's Bye-laws (F & O) segment amounting to Rs.14.07 Crores, and therefore, the amount claimed in the Petition is Rs.103.73 Cores. The details of the securities and deposits appropriated by the Petitioner have been set out in paragraph 7(s) of the Petition. (g) I must mention here that in the interregnum on 18th March, 2013, the Petitioner received two complaints, one from Sarvin Mercantile Pvt. Ltd. ("SARVIN") and another from Trusha Infrastructure Pvt. Ltd. ("TRUSHA") against the Respondent Company alleging non-delivery of 7 Lac and 13 lac shares of Gitanjali respectively. It was the case of SARVIN and TRUSHA that they had bought these shares through the Respondent Company and the said shares had been pledged by the Respondent Company with the NSE without their consent. A copy of these complaints were marked (amongst others), to the Additional Commissioner of Police, Economic Offences Wing, Mumbai ("EOW"). Be that as it may, as there was a shortfall in the margins maintained by the Respondent Company with the Petitioner [and for which the shares of Gitanjali (amongst others) were pledged], the Petitioner during the period 19th March, 2013 to 22nd March, 2013 sold 2,97,731 shares of Gitanjali. As 23rd March, 2013 and 24th March, 2013 were Saturday and Sunday respectively, no further sale of Gitanjali shares took place. Thereafter on 25th March, 2013 the Petitioner received a letter dated 23rd March, 2013 from the EOW. By this letter, the EOW requested the Petitioner to withhold the shares of Gitanjali till further orders in view of the fact that the said shares were the subject matter of an investigation pursuant to the criminal complaints filed by SARVIN and TRUSHA. Subsequently, on 27th April, 2013 the Petitioners received an order passed by the EOW under Section 102 of the Code of Criminal Procedure, 1973 ("CrPC"). By the said order, the Petitioner was directed to freeze all the shares of Gitanjali pledged with the Petitioner by the Respondent Company. It would be important to note that this order of the EOW was challenged by the Petitioner before this Court by filing Criminal Application No.483 of 2013 under Section 482 of the CrPC. This challenge was ultimately negated by this Court by its order and judgment dated 22nd August, 2013. Being aggrieved thereby, the Petitioner preferred an appeal to the Supreme Court which is pending. I must also mention here that the Supreme Court by its interim order allowed the Petitioner to sell the balance 17.03 Lac shares of Gitanjali and deposit the sale proceeds thereof in the Supreme Court. (h) Be that as it may, since the Respondent Company failed to make payment of its outstandings in accordance with the Rules, Regulations and Bye-Laws of the Petitioner, the Respondent was declared as a defaulter on 15th October, 2013. Subsequently, the Respondent Company was also declared a defaulter by the Bombay Stock Exchange vide its Notification dated 17th October, 2013. Subsequent to this, on 7th March, 2014 the Respondent Company has also been expelled from the trading membership of the NSE in all segments. I must mention here that the Respondent Company challenged the action of the Petitioner in declaring them as a defaulter before the SAT without any success. The Respondent Company thereafter challenged this order of the SAT dated 30th June, 2015 before the Supreme Court, which is pending. (i) Since no payment was forthcoming, the Petitioner served a statutory notice dated 17th April, 2014 under Sections 433 and 434 of the Companies Act, 1956 on the Respondent Company and called upon the Respondent Company to make payment of a sum of Rs.103.73 Crores. It is not in dispute that this statutory notice has been served on the registered address of the Respondent Company and the same has been duly received by it. (j) The Respondent Company through its Advocates letter dated 7th May, 2014 replied to the said statutory notice wherein they sought to refute the contentions of the Petitioner. The Petitioner by their letter dated 13th June, 2014 refuted the allegations contained in the letter dated 7th May, 2014. It is in these circumstances that the present Petition has been filed. (k) For the sake of completeness, it would be important to mention here that before the issuance of the statutory notice, the Respondent Company has also filed a Suit being Suit (L) No.939 of 2013 in this Court against the Petitioner and the National Stock Exchange of India Limited seeking a decree in the sum of Rs.152.57 Crores together with interest thereon @ Rs.18% per annum. The particulars of claim of this suit would reveal that the claim made in this suit is entirely on the basis of the alleged loss suffered by the Respondent Company on account of the actions of the Petitioner. Even so, on perusal of the particulars of the claim in the said Suit, it is clear that the Respondent Company has admitted its liability to the Petitioner in the sum of Rs.90.90 Crores and has sought set off of the said amount against their claim for damages.
(3.) In this factual backdrop, Mr. Tulzapurkar, the learned Senior Counsel appearing on behalf of the Petitioner, submitted that the dues of the Petitioner at least to the extent of Rs.90.90 Crores have been duly admitted by the Respondent Company. He submitted that it is not in dispute that since the Respondent Company did not honour the trades that matured / expired in June 2013 with the counter parties, the Petitioner was required to make payment to them. He submitted that it is not in dispute that therefore this payment has to be made by the Respondent company to the Petitioner. It is in this light that the dues of the Petitioner have been duly admitted by the Respondent Company to the Petitioner. Mr. Tulzapurkar, brought to my attention the particulars of claim in the suit filed by the Respondent Company [Suit (L) No.939 of 2013] wherein an amount of Rs.90.90 Crores has been admitted as due and payable by the Respondent Company to the Petitioner because the Respondent Company itself has given credit for the same in the particulars of claim, to the Petitioner. Apart from the admission in the aforesaid suit, the learned counsel also brought to my attention a letter dated 31st July, 2013 (Exhibit J, page 55 of the paper book) addressed by the Advocates of the Respondent Company to the Advocates of the Petitioner wherein, after giving a break up of the alleged loss suffered by the Respondent company of Rs.213.02 Crores, the Petitioner is called upon to pay a sum of Rs.122.12 Crores as a compensation failing which the Respondent Company would adopt such legal proceedings as may be advised. Mr. Tulzapurkar, submitted that therefore reading this letter as a whole, it is clear that the dues of the Petitioner, atleast to the extent of Rs. 90.90 Crores have been expressly admitted by the Respondent Company.;