2018 (4) TMI 1806 - Tri - Insolvency and Bankruptcy

Maintainability of application - Jurisdiction to English Courts - default of the respondent as recognized by decree of the English courts - respondent who is the guarantor of loan for principal borrower, herein did not repay the amount - HELD THAT - It is a well-settled law that the courts need not go beyond a decree made in favour of a party and in this case the decree made by the hon'ble High Court of Justice, Queen's Bench Division, Commercial Court, London. Since the respondent failed to defend its case before hon'ble High Court of Justice, Queen's Bench Division, Commercial Court, London, now it cannot contend that the said order is not on merits. The case laws relied by learned counsel for the petitioner is in support of the clarification to the queries raised by the respondent. In view of all the submissions made by the parties and the observations made, the Tribunal concludes that the petitioner/financial creditor has made out a prima facie case under the IB Code, 2016. The petition is admitted as the petitioner has made out a prima facie case and also proved that there is a debt due payable by the principal borrower and there is a decree made against the respondent/guarantor. This Tribunal has no jurisdiction to enforce the foreign decree ; however there is no bar in it taking cognizance of the foreign decree - petition disposed off.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal despite the exclusive jurisdiction clause in the loan agreements.
2. Validity of the petition under the Insolvency and Bankruptcy Code, 2016, by a foreign financial creditor.
3. Enforceability of the foreign court decree in India.
4. Compliance with the Foreign Exchange Management (Guarantee) Regulations, 2000.
5. The role and authority of the power of attorney holder in filing the petition.

Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal addressed the issue of jurisdiction despite the exclusive jurisdiction clause in the loan agreements, which conferred jurisdiction to the courts of England and Wales. The Tribunal noted clause 19.2 of the guarantee and indemnity deed, which allowed the lender to take proceedings in any other court of competent jurisdiction. Thus, the Tribunal held that it has competent jurisdiction to entertain the petition.

2. Validity of the Petition under the Insolvency and Bankruptcy Code, 2016:
The respondent argued that the petition under the IB Code, 2016, is not maintainable as the petitioner is not an Indian company and that the application was signed by an agent in Ghana. The Tribunal rejected these arguments, citing that the IB Code does not prohibit filing a petition by a foreign creditor and that an authorized representative can present an application before the Tribunal. It was established that the board of directors authorized the power of attorney to file the petition under the IB Code, 2016.

3. Enforceability of the Foreign Court Decree:
The respondent contended that the order by the English court was not conclusive and not on merits. However, the Tribunal observed that the English court had duly served notice to the respondent and provided opportunities to defend, which the respondent failed to utilize. The Tribunal concluded that the decree was indeed on merits and enforceable. The Tribunal also noted that while it cannot enforce the foreign decree, it can take cognizance of it under sections 13 and 44A of the Code of Civil Procedure, 1908.

4. Compliance with the Foreign Exchange Management (Guarantee) Regulations, 2000:
The respondent argued that no permission was obtained from the Reserve Bank of India (RBI) prior to signing the guarantee, making it invalid. The Tribunal dismissed this argument, stating that the FEMA (Guarantee) Regulations, 2000, apply only if the principal debtor is an Indian entity, which was not the case here.

5. The Role and Authority of the Power of Attorney Holder:
The respondent challenged the authority of the power of attorney holder to file the petition. The Tribunal referred to case laws and provisions under the IB Code, 2016, which allow an authorized representative to file the petition. It was established that the power of attorney was duly authorized by the board of directors of the petitioner/financial creditor.

Conclusion:
The Tribunal admitted the petition, finding that the petitioner/financial creditor made out a prima facie case under the IB Code, 2016. The Tribunal ordered the commencement of the corporate insolvency resolution process and appointed an interim resolution professional (IRP). The Tribunal declared a moratorium, prohibiting various actions against the corporate debtor, and directed compliance with relevant sections of the IB Code, 2016. The petition was disposed of with these directions.