9911796707
TMI Blog2013 (10) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... ly enhanced to Rupees Thirty crores on 20 May 2006. Cheques issued by the Respondent were dishonoured. Complaints were filed under Section 138 of the Negotiable Instruments Act, 1881 and the petition for winding up was instituted before the Company Court on 20 August 2009. On 17 September 2009, a letter was addressed by the Appellant to the Respondent in which it was stated that the amount payable by the Respondent as on 30 September 2009 was Rupees Thirty One crores. The Appellant stated that it was willing to reverse an overdue discount of Rupees One crore subject to full compliance with the terms of the arrangement as reflected in the letter upon which the residual amount payable was Rupees Thirty crores. The terms and conditions subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstance satisfactory to GTF and all the terms and conditions of this letter have been complied with by KSS, GTF reserves all its rights in relation to the defaults under the Facility. Any failure of GTF to exercise, or any delay by GTF in exercising any right or remedy, or anything else which GTF has or may have agreed to do or done or may in the future agree to do (including receipt and/or acceptance of any sum payable under the facility) does not, shall not and is not intended to operate as a waiver of any rights of GTF arising from the previous defaults of KSS or of any of KSS's obligations." (Emphasis supplied) Subsequently on 19 October 2009, the spouse of the ex-director addressed a communication to the Appellant irrevocably agreeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rupees Five crores was made. It is urged that this is a patently incorrect reading of the handwritten endorsement which stipulated that the pending proceedings would be withdrawn only if, inter alia, the bonds were issued and a mortgage was created in accordance with the letter of sanction and subject to strict adherence to the terms of sanction dated 17 September 2009 and 19 October 2009. Hence, it is urged that there is a debt due and payable and the learned Single Judge was manifestly in error in holding that there was substantial compliance with the terms of the sanction. 8. On the other hand, it has been urged on behalf of the Respondents that: (i) The debt due and payable to the Appellant stands replace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion of the bonds into equity shares and the Respondent was obliged within twenty-four hours of a notice of conversion to complete the formalities for the conversion of the bonds into equity shares. There is no dispute about the fact that though on 8 March 2011 the Appellant exercised the option for conversion, the Respondent did not allot equity shares in compliance with its obligation to complete the conversion. Hence the Respondent was in breach of its obligations under the restructuring: firstly, it did not convert the bonds into equity shares and secondly, no mortgage was executed in favour of the Appellant. 10. The defence of the Respondent in the affidavit-in-reply was to the following effect. "9. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009 along with interest as per the terms and condition of the sanction letter dated 14th October, 2009 realization of this draft along with the issuance of bonds and creation of mortgage as per the terms and condition of the above stated letter and strict adherence of the said terms of sanction letter dated 17th September, 2009 and 14th October, 2009." Exfacie, the endorsement stipulated that the Appellant would withdraw legal proceedings subject to various conditions being fulfilled including the creation of a mortgage in terms of the letter of sanction and strict adherence of the terms of the letters of sanction dated 17 September 2009 and 19 October 2009. The Respondent suggests that it was not obliged to convert the bonds into equity s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no discharge of the debt. What the letter of sanction dated 17 September 2009 did was to restructure the debt subject to compliance by the Respondent of the terms and conditions stipulated therein. The debt was never extinguished. On a breach by the Respondent of the terms and conditions governing the sanction for restructuring, the Appellant was entitled to institute a proceeding for winding up on the basis of the inability of the Respondent to pay the debt. 14. Similarly, it is not possible to accept the finding of the learned Single Judge that there was substantial compliance of the letter of restructuring. The learned Single Judge has proceeded on the basis that there was an admitted breach on the part of the Appellant of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
