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TMI Blog2012 (5) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... rantee for the same. The world is a shrinking place today and commercial transactions spanning across borders abound. We have wondered whether we should be dissuaded for the reason of the transaction for which the appellant Company had stood surety/guarantee being between foreign companies. We are of the opinion that if we do so, we would be sending a wrong signal and dissuading foreign commercial entities from relying on the assurances/guarantees given by Indian companies and which would ultimately restrict the role of India in such international commercial transactions. As far as the argument of appellant Company of the purchasers under the aforesaid Stock Purchase and Sale Agreement being not before this Court and of denial of the knowledge of default, is concerned, 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Agreement dated 15th March, 2007 between the respondent and M/s Newco Prague s.r.o. inter alia provided as under:- "3.2. Guarantees 3.2.1 Corporate Guarantee. The Purchaser shall procure the irrevocable Corporate Guarantee issued by the company SRM Exploration Private Limited headquartered at D-146, Saket, New Delhi - 110 017 India in favour of the Seller for the aggregate amount of the Purchase Price i.e. the amount of 230,000,000 - CZK (two hundred thirty million Czech Crowns) (hereinafter the "Corporate Guarantee"). The Corporate Guarantee in the wording as enclosed as Schedule 3 of this Agreement will be issued before the Signing date and handed over to the Seller against the hand over of the Shares of the Company as described in section 3.4. of this Article. 3.2.2 Promissory Notes. The Purchaser shall issue the Promissory Notes in the amounts of the particular instalments of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 written request sent by the Seller for payment of an particular installment. 3. The Guarantee undertakes to satisfy the claim of the Seller to the extent of the appropriate unpaid installment in accordance with the Stock Purchase and Sale agreement of 15.3.2007 referred to above within a deadline of 30 days of being delivered an announcement from the Seller that its claim has not been satisfied by the Purchaser within the deadline specified or to the specified extent and that the Seller requests settlement in accordance with this Guarantee Declaration. 4. This Guarantee is valid until 15.5.2009 and its validity will expire automatically if it is not enforced within this deadline. The Seller is entitled to apply the rights ensuing from the Guarantee Declaration within a deadline no shorter than 15 days prior to its expiry. 5. This Guarantee Declaration is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 till 15th May, 2009 but the liability to pay thereunder was to be within 30 days of being put to notice of default by the purchaser M/s Newco Prague s.r.o.; however the demand in the notice dated 1st May, 2009 was for payment within three weeks and not within 30 days; that by the time the period of 30 days would have expired the Guarantee Declaration would have ceased to be valid; E. No such contingent liability had been shown by the appellant in its books of accounts; F. that the Guarantee Declaration was for payment in foreign currency which could not be made without the requisite permission of the Reserve Bank of India (RBI) and hence the very execution of the Guarantee Declaration was bad; G. that disputed questions of law and fact arose and the remedy of winding up petition was not appropriate; H. that the appellant did not owe any liability to the respondent and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BA 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 Company as well as in group companies, namely M/s Cals Refineries Ltd. and M/s Spice Energy Pvt., Ltd. In response thereto it has been disclosed that Mr. Ravi Chilukuri has never held the position of a Director in the appellant Company; however he had applied and was allotted 7,80,000 shares of the appellant Company on 5th December, 2007 and which he continues to hold. It was further disclosed that Mr. Ravi Chilukuri was appointed as Director of M/s Cals Refineries Ltd. on 23rd July, 2007 and so remained as Director till 24th January, 2011. It was yet further disclosed that Mr. Ravi Chilukuri was appointed as a Director in M/s Spice Energy Pvt. Ltd. on 5th May, 2008 and continues to be so. On enquiry it was further disclosed that the shareholding of Mr. Ravi Chilukuri in the appellant Company is of 30% . 9. The senior counsel for the appellant Company has contended that the Guarantee Declaration describes Mr. Ravi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its 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 mention that the predecessor legislation to FEMA namely FERA 1973 vide Section 47 prohibited entering into any contract or agreement directly or indirectly evading or avoiding any operation of the said Act or any provision thereof. However Sub Section (3) thereof also provided that such prohibition shall not prevent legal proceedings being brought in India for recovery of a sum which apart from the provision of FERA would be due. However the legislature while re-enacting the law on the subject has chosen to do away with such a provision. We are of the view that the same shows a legislative intent to not void the transaction even if in violation of the said Act. Thus we are of the opinion that the plea of the appellant Company in this regard is without any force. 13. The pleadings of the appellant Company are conspicuously silent as to why Mr. Ravi Chilukuri who has a substantial stake in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 act jointly with Mr. Mohinder Verma is devoid of any merit. The language of the Resolution, if that had been the intention, would have been different. Also, though a lip service is sought to be paid by filing a copy of the complaint lodged with the Police against Mr. Ravi Chilukuri but no serious action for the folly if any committed by him has been taken. There is nothing to show that the Board of Directors of the appellant Company has dealt with the matter. Mr. Ravi Chilukuri who continues to be associated with the appellant Company has not come forward to explain the transaction. The Supreme Court in N. Rangachari v. BSNL [2007] 5 SCC 108 has held that a person normally having business or commercial dealing with a company will satisfy himself about its credit worthiness and reliability by looking at its promoters and Board of Directors and nature and extent of its business; oth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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