9911796707
TMI Blog2012 (5) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant till the disposal of this appeal. 2. The respondent, in the company petition aforesaid, averred the appellant to be unable to pay its debts of 215,375,000 - CZK (Two hundred and fifteen million three hundred and seventy five thousand Czech crowns) equivalent to about Rs. 70 crores due by it to the respondent under a Guarantee Declaration dated 15th March, 2007 and Promissory Notes for the said amount. It was the case of the respondent, incorporated under the laws of Czech Republic that it had entered into an agreement dated 15th March, 2007 with M/s Newco Prague s.r.o., also a Czech Republic company for sale of the 100% equity interest owned by it in SP of W, a.s. also a Czech Republic company for a total sale consideration of CZK 230,000,000 and the appellant herein had guaranteed payment of the full price by M/s Newco Prague s.r.o. to the respondent. It was further the case of the respondent in the winding up petition that M/s Newco Prague s.r.o. failed and defaulted in payment to the extent of CZK 215,375,000 demand wherefor was made on the appellant vide notice dated 1st May, 2009 under Section 433(e) r/w Section 434 (supra). 3. The Stock Purchase and Sale Agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dovatelu 2830, Most, postal code 43401 Czech Republic represented by the executive Mr. Ing. Miloslav Soldat hereinafter the Seller that 1. It has been acquainted with the obligation of the company Newco Prague s.r.o. with registered office at Litynov - Janovg Pratelstyi 81, postal code: 435 42 Czech Republic, which ensues from the Stock Purchase and Sale agreement concluded on 15.3.2007 between N & S & N Consultants s.r.o. as the Seller, and NEWCO PRAGUE s.r.o., as the Seller, and NEWCO PRAGUE, s.r.o., as the Purchaser under the terms of which NEWCO PRAGUE s.r.o. is obliged to pay the Seller a purchase price for the shares transferred of CZK 230,000,000 (to wit: two hundred and thirty million Czech crowns) by 30.04.2009 at the latest. 2. It here by assumes the duty to pay the Seller specified above for the claim ensuring from the Stock Purchase and Sale agreement of 15.03.2007 a maximum amount of CZK 230,000,000 (to wit: two hundred and thirty million Czech crowns), on condition that the claim or part thereof specified hereinabove is not satisfied by the Purchaser within the deadline agreed on nor within a reasonable additional deadline specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torney in favour of the signatory of the Guarantee Declaration namely Mr. Ravi Chilukuri had been produced. It was thus pleaded that the Guarantee Declaration though purported to be on behalf of the appellant, was without any authority from the appellant in favour of the signatory thereof. With respect to the Resolution of Board of Directors it was stated that it was a general resolution intended for day to day business activities and not intended for incurring any financial liability which was in the exclusive domain of the Board of Directors; B. that the financial liability under the Guarantee Declaration was 600 times the total paid up share capital of the appellant company at the relevant time; that such a liability could not have been undertaken without a Special Resolution of the Board of Directors; C. that Mr. Ravi Chilukuri who had executed the Guarantee Declaration was at the relevant time neither the Director nor a shareholder of the appellant company; D. that under the Stock Purchase and Sale Agreement the purchaser M/s Newco Prague s.r.o. was obliged to pay the purchase price latest by 30th April, 2009; though the Guarantee Declaration was valid til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ravi Chilukuri not having the power of attorney; (v) that after the purchaser M/s Newco Prague s.r.o. had defaulted in making payment in installments agreed, the respondent had periodically sent letters/notices to the appellant keeping the appellant posted of the default and reminding it of its obligations under the Guarantee Declaration; (vi) if the Guarantee Declaration had been executed by the appellant in breach of the provisions of Foreign Exchange Management Act (FEMA) or Foreign Exchange Regulations Act (FERA), the appellant can be prosecuted for the same but it cannot be said that the Guarantee is null, void or unenforceable on this ground; (vii) Guarantee Declaration was enforceable under the law; (viii) that the Board Resolution aforesaid was in the widest language; (ix) reliance was placed on Ram Bahadur Thakur & Co. v. Sabu Jain Ltd. [1981] 51 Comp. Cases 301 (Delhi) and on IBA Health (India) Private Ltd. v. INFO-DRIVE Systems SDN. BHD. [2010] 104 SCL 367 (SC) 8. During the pendency of this appeal the appellant was on 29th April, 2011 directed to file an affidavit disclosing the position held by Mr. Ravi Chilukuri in the appellant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act to contend that implied authority is sufficient. Reliance is placed on Oriol Indistries Ltd. v. Bombay Mercantile Bank Ltd. AIR 1961 SC 993 and Industrial Investment Bank of India Ltd. v. Biswanath Jhunjhunwala [2009] 9 SCC 478; it is also contended that as per the terms of the Guarantee Declaration the respondent was not required to go to the principal debtor before invoking the claim under the Guarantee. 11. The senior counsel for the appellant in rejoinder has further contended that the imposition of penalty under the FEMA implies the act requiring permission being prohibited without such permission. Qua FEMA, the senior counsel for the appellant Company has relied on para 8 B 1 of the Foreign Exchange Manual titled "Guarantees for non-residents". The same also provides for approval of the RBI. 12. We have perused the provisions of FEMA, 1999 Section 3 thereof prohibits dealing in or transferring of any foreign exchange save as otherwise provided therein or under the Rules & Regulations framed thereunder without general or special permission of RBI. We are unable to find any provision therein voiding the transactions in contravention thereof. We may mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, certainly the appellant Company which had stood guarantee for the purchaser i.e. M/s Newco Prague s.r.o. would be in the know as to whether the purchaser has paid the price or not. If the purchaser was not in default, that would have been the first plea of the appellant Company against the petition for winding up. No such plea has been taken. On the contrary advantage is sought to be taken of technicalities and which cannot be permitted. We are also of the view that the appellant Company by allowing Mr. Ravi Chilukuri to be shown in all its material available on the internet as a promoter of the appellant Company, cannot now be heard to deny his authority. The Resolution of the Board of Directors executed in his favour is of the widest possible amplitude. If the Board of Directors of the appellant Company were intending to confer restricted authority on Mr. Ravi Chilukuri it was for them to in the Resolution so clearly restrict his authority. On the contrary by passing the Resolution in such a manner it was conveyed to all concerned that the appellant Company would be bound by the actions of Mr. Ravi Chilukuri. Similarly the plea that Mr. Ravi Chilukuri was authorized to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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