9911796707
TMI Blog2001 (5) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... tor despite notice given by the petitioner. The respondent is a company incorporated in India and is in the business of developing various types of software. 3. Petitioners entered into an agreement with the respondent on January, 1999 at New Delhi and as per this agreement the petitioners were the Buyers who engaged the services of the respondents who were the Sellers to develop the Tumlare Information System Prototype Software based upon on the specifications set forth in Exhibit A . Mr. Kuldip Nar the Constituted Attorney of petitioner No. 2 signed the agreement for its behalf as well as its subsidiary proposed to be incorporated in India. As per agreement the respondent company was to complete the development/construction of the software system not later than 31-1-1999 (completion date) and if there was any delay on the part of the Buyer in giving the approvals, the completion date would be extended with mutual consultation and if the system was not complete within a week from the completion date the Seller shall pay the buyer Rs. 50,000 a day for each subsequent day up to 7 working days beginning a week after the completion date or until the system was complete, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough there is no such embargo to sue it. Section 599 provides as under : " Companies failure to comply with Part II not to affect its liability under contracts etc. : Any failure by a foreign company to comply with any of the foregoing provisions of this Part shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof; but the company shall not be entitled to bring any suit, claim any set-off, make any counter-claim or institute any legal proceedings in respect of any such contract, dealing or transaction until it has complied with the provisions of this part." 10. However, apart from these legal objections the respondent has in turn accused the petitioner for having committed breach of the terms of the agreement and on account of the defaults of the petitioner No. 2, the respondent has preferred a counter claim in para 7 of the reply. 11. Mr. Arvind Nigam, the learned counsel for the Respondent has contended with vehemence that the only course available under the said agreement, on the non-completion of the work by the dates as stipulated in the agreement was to have extended the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umlare Corporation its constituted attorney Mr. Kuldip Nar had signed. Similarly, in the confidentiality agreement which was also executed on the same day the disclosing party was mentioned as Tumlare Corporation through its duly constituted attorney for its behalf as well as for its subsidiary proposed to be incorporated in India and the respondent was referred as a Receiving Party. It is pertinent to mention that right from the inception of agreement the respondent had been having the communication with Mr. Kuldip Nar, a constituted attorney of the petitioner No. 2 and director of the petitioner No. 1. 16. Vide letter dated 24-2-1999, Mr. Kuldip Nar asked for appointment of the arbitrator and proposed the name of Mr. K.K. Nigam for resolving the dispute. In its reply dated 10-3-1999, the respondent did not challenge the authority of petitioner No. 1 and for that purpose Mr. Kuldip Nar, the constituted attorney of the petitioner No. 2 to make such a request. Rather it came out with the plea that as per terms and conditions of the contract, work could not be accomplished as on 31-1-1999 solely on account of the fact that the petitioner did not co-operate in observing the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munication with the petitioner No. 1 and the constituted attorney of the petitioner No. 2 with regard to the contracted job. Thus, to say that there was no privity of contract between the petitioner No. 1 and the respondent is not only denial of the agreement but is self-contradictory. Agreement itself referred the petitioner No. 1 as Buyer in the following term : "Tumlare Corporation having its registered office at Vesterbrogade 6D, DK1620, Copenhagen, Denmark, through its constituted Attorney Mr. Kuldip Nar of 57-B, LIG Flates, Rajouri Garden for its behalf as well as for its subsidiary proposed to be incorporated in India, hereinafter referred as "BUYER". 20. On the one hand, the respondent had been throughout dealing with the petitioner No. 1 and had been exchanging communication with it as to the progress of the contracted job and also accused it of delaying the project and even received the payment for the work done through its Chartered Accountant while on the other hand calls it a stranger to the contract or agreement. 21. So for as the petitioner No. 1 is concerned there is no dispute that it has complied with all the provisions of the Act. What is being disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following two classes, namely : ( a )companies incorporated outside India which, after the commencement of this Act, establish a place of business within India; and ( b )companies incorporated outside India which have, before the commencement of this Act, established a place of business within India and continue to have an established place of business within India at the commencement of this Act. 2. Notwithstanding anything contained in sub-section ( 1 ), where not less than fifty per cent, of the paid-up share capital (whether equity or preference or partly equity and partly preference) of a company incorporated outside India and having an established place of business in India, is held by one or more citizens of India or by one or more bodies corporate incorporated in India, or by one or more citizens of India and one or more bodies corporate incorporated in India, whether singly or in the aggregate, such company shall comply with such of the provisions of this Act as may be prescribed with regard to the business carried on by it in India, as if it were a company incorporated in India. 592. Documents, etc., to be delivered to Registrar by foreign companies carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , storehouse, godown or any other kind of such activity that has direct relation with the business and the place. Mere appointment of a constituted attorney by such a company for the purpose of signing the contract does not mean that the said company has an established place of business in that country. Sole requirement for complying with the provisions of Part II of the Companies Act by a foreign company is that such a company must have an established place of business at the time of signing the contract. Thus, unless a foreign company has an established place of business at the time of signing of the contract the said company cannot be governed by the restriction imposed under section 599. 26. The expression that the company has an established place of business in a particular country necessarily means that at the time of signing of the contract it has a permanent and specific location in that country from where it habitually and regularly carries on the business. 27. In Malaysian Airlines Systems BHD(II) v. Stic Travels (P.) Ltd. JT [2000] (suppl. 3) SC 313 the foreign company had its principal place of business at Kaulalumpur, Malaysia. It had an office at New D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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