9911796707
TMI Blog2011 (12) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... ss to develop, import, export and deal in computer software and hardware, establishing and running data processing and computer centres and offering consultancy, data processing etc. (b) The respondent-company approached the petitioner for sanction of multi-purpose trade/cash facilities and agreed to enter into/undertake foreign exchange and derivative transactions ("FX and DT") in accordance with the applicable regulations and guidelines of the Reserve Bank of India. The petitioner granted credit facilities to the respondent-company up to Rs.25,00,00,000. The respondent-company executed the required documents for the facilities sanctioned to it. The respondent-company placed on record the resolution dated December 5, 2007, passed by the board of directors authorising the company to avail the credit facilities. Pursuant to the sanction of credit facilities, the respondent-company availed packing credit facility of Rs. 50,000,000 on January 14, 2008, Rs. 155,000,000 on January 25, 2008 and USD 1,075,000 on April 2, 2008. The representatives of the respondent-company approached the petitioner on various occasions representing that the respondent-company is not in a position to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 7, 2009, denied of entering into contract with the respondent-company. T-Mobile USA orally informed the Deutsche Bank AG, New York office that it has not executed any notice of assignment as projected by the representatives of the respondent-company. The petitioner, vide its letter dated April 29, 2009, called upon the respondent-company as to why the account of the settlement dues of Rs. 100,969,700 and export credit facility of USD 195,123.20 and INR 30,57,94,962.84 cannot be classified under wilful default category. (d) The petitioner filed a complaint against the respondent-company and its representatives. The petitioner also filed original application being O. A. No. 403 of 2009 before the Debts Recovery Tribunal, Bangalore, against the respondent-company and the guarantors for recovery of the amount due under various credit facilities and obtained an ex parte interim order dated August 6, 2009. The respondent-company filed a civil suit being O. S. No. 4013 of 2009 on the file of the City Civil Judge, Bangalore and obtained ex parte temporary injunction on June 27, 2009, restraining the petitioner from publishing any defamatory statement against it. However, the City ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has wrongfully, purposely, intentionally and with a mala fide intention to defraud the petitioner and without any just or sufficient cause and despite having no defence whatsoever failed and neglected to pay to the petitioner its legitimate outstanding dues and have by its letter dated September 16, 2009, raised all false and frivolous contentions which are hereby denied. Copy of the letter dated September 16, 2009, is annexed and marked as annexure 44. The liability of the company to repay its dues is absolute and unconditional, particularly in view of the express acknowledgment. In view of the aforesaid, the petitioner submits that it should be deemed that the company is unable to pay its debts owned to the petitioner. The petitioner submits that the company is, therefore, liable to be and should be wound up, by and under the orders of the Companies Act, 1956. The petitioner also submits that it is just and equitable to wind up the company on account of the reasons stated hereinabove." 3. Notice before admission came to be ordered on October 27, 2009. The respondent entered appearance and filed counter. M. Durga Prasad, vice-president (finance) and company secretary of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly in India and overseas contributing substantial foreign exchange to the nation. The respondent is a commercially solvent company and has 28,125 shareholders. The respondent-company declared dividends up to 30 per cent. continuously during the last three financial years. It enjoys excellent credit limits from its bankers, namely (1) UCO Bank, (2) IDBI Bank, and (3) ING Vysya Bank up to Rs. 80 crores. The secured creditors namely, ING Vysya Bank, UCO Bank and IDBI Bank issued letters dated December 9, 2009 and December 10, 2009, respectively confirming the prompt payment of the dues to them. The Standard Chartered Bank which is a major unsecured creditor has issued a letter dated December 14, 2009, stating that the respondent-company has repaid the fund based (pre and post-shipment) facility of Rs. 25 crores. (c) The petitioner filed a criminal complaint against the respondent-company and others before Halasur Police Station. Thereupon, the SHO, Halasur Police Station, registered a case in Crime No. 213 of 2009 and after due investigation filed a final report stating that the disputes between the parties are purely civil in nature. The petitioner knowing fully well of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co., as a prerequisite condition for advancing the IWARP Facility by the petitioner-bank. The petitioner-bank having purchased the receivables/invoices, it is the sole responsibility of the petitioner-bank to inter act and recover the amounts from the respondent's customers, i.e., M/s. OVS Starpoint Solutions LLC, M/s. John's Hopkins Medicine International, LLC and M/s. T-Mobile USA and the respondent-company is not responsible for the repayments thereof. (e) The respondent-company has been doing business with T-Mobile USA, John's Hopkins Hospital and Ovs-Starpoint Solutions LLC for the last six years, ten years and one year respectively. There were inflow of funds to the account of the respondent-company pertaining to the invoices/receivables for the period from 2007 till April, 2009. The petitioner instead of adjusting the said funds into the pre-shipment facility, adjusted the said funds towards FX and hedging account without the instructions of this respondent and against the terms and conditions of the agreement. The respondent-company through its letter dated May 14, 2009, issued a reply to the petitioner denying its liability. The petitioner never disclosed to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued and governed by the English Laws, as such this hon'ble court may be pleased to dismiss the company petition." 4. The petitioner filed reply affidavit, which, in brief, is as follows : (a) The petitioner-bank is a scheduled bank and is included in the Second Schedule of the Reserve Bank of India Act, 1934. Once the petitioner is a scheduled bank, it is authorised to carry on banking operations in India. The petitioner is also a Category I Authorised Dealer in Foreign Exchange under the Regulations of Reserve Bank of India. The respondent-company never questioned the legal status of the petitioner bank when it obtained loans and facilities from the petitioner. Mr. Sudarsan Sreedharan and Mr. Damodaran Sreenivasan are authorised signatories and have a valid and subsisting authority to act and appear on behalf of the petitioner-bank. The petitioner is a non-resident banking company, operating through its branch offices. The petitioner after obtaining the requisite statutory permissions is carrying on business of banking in India. The head office of the petitioner-bank is located in Germany. The petitioner and the Deutsche Bank AG are one legal entity. They are not two separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling the order dated September 17, 2009, passed by the District Judge, Ranga Reddy in O. S. S. R. No. 14886 of 2009. A Division Bench of this court by order dated October 8, 2009, dismissed the CMA as withdrawn. (c) The petitioner after following the procedure as per the guidelines/ instructions of the RBI, declared the respondent as a wilful defaulter. This declaration has become final and its name has been published as a defaulter in the website of CIBIL. With regard to criminal case against the directors of the respondent-company, the petitioner filed a protest petition and also Additional Protest Petition in Crime No. 213 of 2009 against the report of the police referring to the case as civil in nature. The said protest petition is pending for orders. The petitioner did not mention about the criminal proceedings in the company petition since the criminal proceedings are basically against the persons responsible for committing the offence of cheating, fraud, etc., and whereas the present winding up petition is only against the company and not against its directors or officers. The petitioner obtained an order of attachment of accounts of the respondent-company in I. A. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rally by the petitioner bank contra to the terms and conditions of the counter guarantee and indemnity agreement is denied. USD 1,075,000.00 under Packing Credit No. 797PFF0800019 were credited to the respondent's account with PNC bank, 5th Avenue, Oakland, Pittsburg, USA as per the respondent's request. The post-shipment facility was given to the respondent only after due execution of all necessary documents and various representations by the respondent and its officials. The letter dated May 14, 2009, purportedly written by John Hopkins Medicine-School of Medicine and letter dated May 15, 2009, purportedly written by T. Mobile USA to the respondent-company are fabricated. When the receivables are fraudulent, the question of initiating recovery proceedings against the so-called customers does not arise. The petitioner received Rs. 1.95 crores in the month of April, 2009 and adjusted the same towards FX dues. The respondent-company addressed two letters to the petitioner on May 14, 2009. One letter was in response to the statutory notice issued under sections 433 and 434 of the Act and the other was in response to the notice declaring the respondent as a wilful defaulter. In both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereupon, the petitioner issued notice to the respondent-company calling upon payment of the dues under various credit facilities for which the respondent-company, issued reply admitting the liability and requesting three months' time to clear the dues. A further submission has been made that the respondent-company having admitted its liability neglected to pay the same and it amounts to prima facie commercial insolvency of the respondent-company warranting admission of this company petition for winding up. Learned senior counsel took me to the reply notice dated May 14, 2009, issued by the respondent-company to the notice dated April 29, 2009, under sections 433 and 434 of the Companies Act. Much stress has been laid on the admissions made by the respondent-company with regard to outstanding dues. I deem it appropriate to extract the reply notice dated May 14, 2009, issued by the respondent-company, which reads as hereunder : "We acknowledge receipt of your letter referred to above. In this connection, we wish to inform you that the export bills referred to in your letter have been factored/discounted as per the facilities sanctioned by you. The customers on whom we have drawn t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is neither a bona fide nor a substantial one. In support of his submissions, reliance has been placed on the decisions of the Supreme Court in Madhusudan Gordhandas & Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 and Vijay Industries v. NATL Technologies Ltd. [2009] 147 Comp Cas 490/89 SCL 205. In Madhusudan Gordhandas & Co.'s case (supra) the Supreme Court held that where the debt is undisputed, the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. 8. In Vijay Industries (supra) the Supreme Court held that for invoking the relevant provisions, i.e., section 433(e) read with section 434(1)(a) of the Companies Act, 1956, in relation to winding up of a company on the ground of its inability to pay its debt, what is necessary is that despite service of notice by the creditor, the company which was indebted in a sum exceeding one lakh rupees then due, failed and/or neglected to pay the same within three weeks thereafter or to secure or compound for it to the reasonable satisfaction of the creditor. Failure of the company to pay the agreed interest or the statutory int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly, no document, showing that there was any board resolution of the petitioner-company authorising the company secretary to file the company petition was filed. Except stating that he was having the authorisation, the company secretary has stated nothing about the maintainability of the company petition. Even when it was suggested also when he was in the witness box, he did not produce any document showing that he had the authority to institute the company petition as well as to depose. In the absence of such evidence, there is no other option, except to take a view against the petitioner-company that the company petition was instituted by a person, who is incompetent to institute the same. This issue is accordingly decided against the petitioner and in favour of the respondent-company." 10. In reply, Sri S. Ravi, learned senior counsel submits that section 291 of the Act is not applicable to the petitioner-bank since the petitioner-bank is not a company coming within the purview of section 3 of the Act. Learned senior counsel took me to the definition of "company" as defined in section 3 ; "company" means a company formed and registered under the Companies Act, 1956, or an exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on facts and legal advice. (3) The material filed in support of the company petition are the originals/true copies of the originals. 14. "On July 20, 2009, Deutsche Bank has given the power of attorney in favour of Roger Lee Hoong Kwong and Soon-Heng Low and 14 others to supervise, manage, carry on and do all and every business etcetera. Copy of the power of attorney has been placed on record at page No. 238 of the material papers filed along with the additional affidavit dated September 3, 2011. The power of attorney includes initiation of winding up proceedings. Clause (17) of the power of attorney reads as hereunder : "17. To commence, prosecute, enforce, defend, answer or oppose all demands, actions and other legal proceedings (whether civil or criminal and including proceedings to procure or establish the bankruptcy or insolvency of any person or firm, or the liquidation or winding up of any company) relating to any matter in which any of the specialised offices is or may hereafter be interested or concerned and also if thought fit to compromise, refer to arbitration, discontinue, abandon, submit to judgment or become non-suited in any such action or proceeding as afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instruments. (2) To demand, enforce and sue for payment, securities, money and claims of all kinds, to receive and take goods, products and property of all kinds, whether belonging to the said branch office or held by the said branch offices, as security or in trust, or held by any person or company in trust for the said branch offices. (3) To sign seal and execute all such deeds/agreements/instruments/writings as shall be requisite for or in relation to the affairs of the said branch office. (4) To approve the opening and operation of accounts by the said branch office with any bank, including the Reserve Bank of India, the overdrawing of such accounts, the taking of loans and advances and similar facilities, the investment of funds in Government and other securities and the receipt of interest on, the holding, sale disposition of, transfer, negotiation, hypothecation or otherwise dealing with such securities in India or elsewhere. (5) To negotiate, sign, renew, discount by the said branch office of bills of exchange, promissory notes, with or without securities, the acceptance of deposits, the opening and keeping of deposit accounts, the drawing, acceptance, making and endo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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