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TMI Blog2011 (12) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... B. SESHASAYANA REDDY, J. S. Ravi for the Petitioner. C. Kodandaram for the Respondent. JUDGMENT 1. This company petition has been taken out by Deutsche Bank AG under sections 433, 434 and 439 of the Companies Act, 1956 read with rule 95 of the Companies (Court) Rules, 1959, seeking an order of winding up of Prithvi Information Solutions Ltd. (in short, "the respondent-company"). 2. The petition averments, in brief, are : ( a ) The petitioner carries on business as a banking company and is an authorised dealer and a scheduled commercial bank in India. The respondent-company is a public limited company incorporated and registered under the provisions of the Companies Act, 1956 (in short, "the Act") having its registered office at 10 Q3-A1, 10th Floor, Cyber Tower, HITEC city, Madhapur, Hyderabad-500 081. The respondent-company is a listed public company. It is engaged in the business 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/cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assignment addressed to the foreign purchasers assigning the receivables in supply of contracts absolutely in favour of the petitioner and instructing the foreign purchasers to make payment to the petitioner. The petitioner allowed post-shipment credit facility against the invoices raised by the company on the above-referred foreign purchasers. As the petitioner did not receive any payments on the respective due dates from the foreign purchasers, it addressed letters to T-Mobile USA, John's Hopkins Hospital, Starpoint Solutions LLC, calling upon them to make payments in respect of the invoices raised by the company. The petitioner received letter dated April 24, 2009, from Starpoint Solutions LLC, wherein it is stated that the documentation produced by the company is fraudulent and that it never entered into the business relationship with the respondent-company. M/s. John's Hopkins under letter dated May 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .68 to be compounded daily, from August 11, 2009, till date of actual payment and/ or realisation, with regard to the FX and Derivative transactions within 21 days from the date of receipt of the notice by the company, failing which the respondent-company was cautioned that the petitioner shall be constrained to file proceedings for winding up of the company. ( g ) The respondent-company failed to liquidate its liability despite receipt of statutory notice. The respondent-company is deemed to have become commercially insolvent and is unable to discharge its debts warranting an order of winding up. Hence this petition seeking the prayer stated supra. Paragraph 32 of the petition needs to be noted and it is thus : "32. The petitioner states and submits that more than 21 days have passed since the service of the aforesaid statutory notice dated August 20, 2009, on the company and the company 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 Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, which are governed by two different laws amounts to misjoinder of transactions and therefore, the petition for winding up of the respondent-company is liable to be dismissed. ( b ) The company petition is not maintainable in view of the arbitration clause in the contract between the parties. The parties conferred jurisdiction on courts at Mumbai for settlement of disputes between them. The petitioner has already initiated recovery proceedings before the Debts Recovery Tribunal, Bangalore. As the respondent-company disputed its liability to the petitioner and exposed various irregularities committed by the petitioner by filing written statement before the Debts Recovery Tribunal, the issues between the petitioner and respondent are triable issues and they cannot be decided in a summary proceedings. The respondent-company has nearly 2,702 employees, who are working directly and indirectly 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 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee indemnity agreement. The petitioner-bank on its own volition came out with a scheme and advanced post-shipment facilities of Rs. 30 crores to the respondent-company. The post-shipment facility provided by the petitioner-company is an Insurance Wrapped Accounts Receivables Purchase Facility ("IWARP Facility"). The assured receivables for the projects executed by the respondent-company which carry a payment period of 90 days to 120 days are sold to the petitioner bank at a discount of 10 per cent. The petitioner-bank is thus the owner of the receivables having purchased at discounted price. The IWARP Facility has insurance coverage. In the event of the amounts being not paid by the customers of the respondent-company, the petitioner-bank has to initiate steps to recover the amounts from the insurance company. The respondent-company had paid Rs. 34 lakhs as premium to New India Insurance 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 Starpoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph 57 of the counter affidavit needs to be noted and it is thus : "57. In view of the facts and circumstances abovementioned respondent-company respectfully submits that there is no amount outstanding as claimed by the petitioner-bank much less the amounts claimed by it as submitted above all the transactions relating to IWARP are governed by RBI circulars and amount outstanding is a result of the petitioner-bank failure to recover the amounts under the IWARP facilities and the amounts claimed under the FX and derivative transactions and hedging activities are as a result of extreme fluctuation in foreign exchange rates and the prevailing economic meltdown globally which the petitioner-bank is trying to accuse and recover from the respondent-company for no fault of it and the said amounts are disputed by the respondent-company. More so FX and derivative transactions are construed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pending. Sojitz Corporation filed an application Index No. 602511-2009 against the respondent-company for an order of attachment without notice in aid of arbitration before the Supreme Court of the State of New York county of New York. The respondent-company filed a suit in O. S. SR. No. 14886 of 2009 on the file of the District Judge, R. R. District at L. B. Nagar, Hyderabad against Sojitz Corporation and two others for a declaration that the acts of Sojitz Corporation, Japan in filing cases against the plaintiff in the Supreme Court of the State of New York, i.e., Suit/Index No. 602511- 2009 and the Superior Court of California County Los Angeles, i.e., Case No. SS018525 are in violation of procurement agreement. The District Judge, by order dated September 17, 2009, returned the plaint for presentation before the proper court. The respondent filed C. M. A. No. 998 of 2009 assailing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Mobile 2,778,521.40 15-12-2008 797PFD0800005 797PFD0800008 3. 797XCPO800185/GFE0900007 Johns Hopkins Hospital 503,532.00 22-12-2008 797PFF0800019 4. 797XCP0800184/GFE0900006 T. Mobile 1,430,000.00 22-12-2008 797PFD080008 797PFF080019 5. 797XCP0800186/GFE090002 Johns Hopkins Hospital 513,090.00 22-12-2008 797PFF0800019 6. 797XCP0800190/GFE0900008 Starpoint Solutions LLC 379,876.80 29-12-2008 Current account 7. 797XCP0800189/GFE0900010 Johns Hopkins Hospital 195,123.20 29-12-2008 Current account ( e ) The respondent is liable to pay the entire amount with interest consequent on failure of the foreign purchasers/drawee to pay the amount to the petitioner. The allegation that receivables of the company under preshipment facility dated November 20, 2007, of Rs. 25 crores were adjusted unilaterally by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail any export bill credit facility/bill discounting facility. The respondent-company sought ex parte ad interim injunction against the petitioner restraining it from declaring the respondent as wilful defaulter. The petitioner failed to secure any interim orders in the said suit. The petitioner-bank by letter dated July 8, 2009, declared the respondent-company as wilful defaulter. On July 17, 2009, the respondent issued reply letter to the petitioner-bank raising untenable and frivolous grounds questioning the declaration of the respondent as wilful defaulter. The plea taken by the respondent that there are two transactions and they are with two different banks is totally misconceived. Both the transactions are with the petitioner and there are no two separate legal entities. There is no bona fide dispute as to payment of interest or the principal amount. 5. Heard Sri S. Ravi, learned senior counsel appearing for the petitioner and Sri C. Kodandaram, learned senior counsel appearing for the respondent-company. 6. Sri S. Ravi, learned senior counsel submits that the respondent-company availed various credit facilities and subsequently, became a defaulter and thereupon, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt that is crystallised shall always have first preference in clearing the same. As the circumstances and changes that the entire world is undergoing on the economic front are beyond the control of the company, you will appreciate that we are not an exception. We once again reiterate that our intentions are clear and we would like to ensure that the outstandings to the bank is cleared at the earliest. However, seeing the ground reality situation, we once again request you to give time of 3 months and shall be grateful for not proceeding under sections 433 and 434 of the Companies Act, 1956." 7. Learned senior counsel would submit that the petitioner has issued a notice under section 433 read with section 434 of the Act on August 20, 2009, calling upon the respondent-company to pay the dues payable under post-shipment credit facility and foreign exchange derivative transactions within 21 days from the date of receipt of the notice. The respondent-company having admitted the liability in the earlier notice dated May 14, 2009, issued reply dated September 16, 2009, taking all sorts of untenable pleas. In a way, his submission is that the defence pleaded by the respondent-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h v. Standard Chartered Bank ; [2003] 115 Comp Cas 161, Ahmedabad Electricity Co. Ltd. v. Sanghi Spinners (India) Ltd. [2007] 140 Comp. Cas. 161/74 SCL 95 (AP) and the decision of Patna High Court in BOC India Ltd. v. Zinc Products Co. (P.) Ltd. [1996] 86 Comp Cas 358, a decision of the Delhi High Court in Nibro Ltd. v. National Insurance Co. Ltd. [1991] 70 Comp Cas 388 ; and the decision of the Supreme Court in State Bank of Travancore v. Kingston Computers (I) (P.) Ltd. [2011] 163 Comp Cas 37/107 SCL 377/11 taxmann.com 172. In Ahmedabad Electricity Co. Ltd. ( supra ), a learned single judge of this court held that an individual director has no power to act on behalf of the company. He is only one of a body of directors called the board, and alone has no power except such power as may be delegated to him by the board or given to him by the articles. Paragraph 33 of the cited judgment needs to be noted and it is thus (page 179 of 140 Comp Cas) : "In view of the above legal position, it has to be considered whether the company secretary of the petitioner-company was authorised to file the company petition as well as to give evidence by filing the verified af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sudarshan Sridharan and Mr. Damodaran Sreenivasan are competent to initiate winding up proceedings on behalf of the petitioner-bank against the respondent-company on behalf of the petitioner ?" 13. Point : It is trite to refer verification affidavit filed along with the company petition, which reads as hereunder : "We, Mr. Sudarsan Sridharan S/o. S. Sridharan, aged about 30 yrs, resident of Flat No. 102, East Wing, V. S. Enclave, Kaggadasapura, 6th Cross, 6th Main Road, Bangalore and Mr. Damodaran Sreenivasan S/o. Damodaran aged about 35 years, resident of Site No. 1095, 4th main 4th Cross D Block AECS layout Kundanhalli Bangalore-560 037 the authorised signatories of the petitioner having office at Raheta Topwner, Mezannine, Floor 26-27 MG Road, P. O. Box No. 5002, Bangalore-560 001, do hereby solemnly affirm and sincerely state as follows : (1) We are the authorised signatories of the petitioner herein and as such aware of the facts of the case and competent to file the present application. A certified true copy of the board resolution authorising me to sign on behalf of the petitioner-company is being as annexure P. (2) The contents stated in the accompanying company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uptcy or insolvency of any person or firm, or the liquidation or winding up of any company) relating to any matter in which the said branch offices are or may hereinafter 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 aforesaid." 16. Along with the company petition, copy of the power of attorney executed by Kaushik Chandrakant Shaparia and Atulya Sharma in favour of Sudarsan Sridharan and Damodaran Sreenivasan and 63 others have been filed. It is not stated in the power of attorney that Mr. Sudarsan Sridharan and Mr. Damodaran Sreenivasan are competent to initiate winding up proceedings against the respondent-company on behalf of the petitioner. The attorneys are authorised to verify the following acts on behalf of the petitioner : "(1) To approve the discounting, negotiation and renewal by the said branch offices 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 endorsement of bills of exchange, promissory notes, c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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