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TMI Blog2017 (6) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The respondent expressed its desire to associate with the petitioner for selling or exporting gold and diamonds to the prospective overseas buyers. The petitioner agreed to provide its co-operation to the respondent in order to promote the export of gold jewellery. The parties accordingly entered into an agreement dated 15th December 2006 for export of gold jewellery by the respondent through the petitioner to certain prospective foreign buyers as identified by the respondent on the terms and conditions recorded in the said agreement. Clause 10 (b)(v) of the said agreement provided that in the event of non-payment of export bills by the foreign buyers, the petitioner will have full recourse of the post shipment credit with interest etc. from the respondent. The respondent-company shall immediately refund the amount of post shipment credit with interest as and when asked for by the petitioner. Clause 16(a)(c) of the said agreement provided that the respondent shall indemnify and keep indemnify the exporter against all such claims, actions, proceedings, losses, costs, taxes, levels, duties, expenses arising out of the said agreement. It was further agreed that in the event of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner from time to time reminded the respondent to pay to the petitioner various amounts payable under the said post shipment finance facility availed of by the respondent but the respondent did not pay any amount. 7. The petitioner vide its letters dated 7th May 2010 and 18th May 2010 called upon the respondent to pay US$ 7759680 which was equivalent to Indian Rs. 41,22,10,222/- as on the date of said notice. On 20th May 2010, the petitioners invoked the corporate guarantee and called upon the respondent to pay an amount of US$ 7559680 equivalent to Indian Rs. 36,27,65,040/- as on 20th May 2010 along with interest of Rs. 1,99,56,606.79. By a letter dated 28th May 2010, the petitioner also called upon the respondent to pay the said outstanding liabilities of the respondent in view of personal guarantee dated 7th January 2010 submitted by the respondent. The respondent, however, did not make any payment to the petitioner. It is the case of the petitioner that the respondent vide its advocate's reply dated 30th May 2010 took a frivolous stand for referring the subject matter to arbitration and raised an alleged claim of Rs. 110 crores against petitioner. 8. It is the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 passed by the division bench of the this Court. 12. On 24th June 2011, the arbitration application filed by the respondent came to be rejected by this Court by observing that such an application will have to be made with the Indian Council of Arbitration. On 6th July 2011, the respondent filed an arbitration application (1797 of 2011) with the Indian Council of Arbitration along with statement of claim. On 2nd August 2011, the petitioner nominated Shri Justice D.P.Wadhwa, a former Judge of the Supreme Court as their nominee arbitrator. The respondent nominated of Shri Justice R.C. Lahoti, former Chief Justice of India as their nominee arbitrator. The learned arbitrators have appointed a Presiding Arbitrator. Some of the relevant facts in Company Petition No.128 of 2011 are as under:- 13. It is the case of the petitioner that under Agreement dated 15th December 2006 for export of gold jewellery by the respondent through the petitioner, the respondent had committed default in making payment to the petitioner. The foreign buyers also failed to make payment to the petitioner. It is the case of the petitioner that the respondent vide its letter dated 30th June 2009 submitted the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner alleged that the respondent was unable to receive the requisite letter from the petitioner as well as from the Exim Bank whereas the respondent had been consistently pursuing with the buyers to make the payments against the export bills. The respondent made a suggestion to the petitioner to permit the respondent to allow the buyers to make the payment against the export bills directly to the account of the respondent and suggested that in turn, the respondent shall be submitting to the petitioner the requisite Foreign Inward Remittance Certificate (FIRC) in order to get the GR cleared. The respondent requested the petitioner to give their consent against those 20 bills mentioned therein. 17. On 17th February 2010, the respondent addressed a letter to the petitioner alleging that they had discussed the arrangement with the Axis Bank and had requested for 'No objection Certificate' from the petitioner and the Exim Bank as well as for release of the FIRC to the respondent for receipt of the payment in their account. The petitioner addressed a letter on 19th February 2010 to the Exim Bank giving its no objection to the proposal made by the respondent with reference to thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent by the petitioner. It is the case of the petitioner that this company petition is filed by the petitioner against the respondent in respect of the said 8 invoices of diamond document and other invoices referred to at page 106 of the petition which were adjusted against the gold jewellery but sale proceeds was not received from the foreign buyers and 5 gold jewellery documents which were other than gold jewellery documents. 21. The Managing Director and other Directors of the respondent submitted their personal guarantees dated 7th January 2010 in favour of the petitioner. 22. The petitioner vide its letters dated 7th May 2010 and 18th May 2010 called upon the respondent to pay US$ 18966601 equivalent to Indian Rs. 87,24,63,640/- as the amount due from the foreign buyers as on the date of the said notice. The respondent responded to the said demand notice dated 18th May 2010 and referred the subject matter to the arbitration. By a letter dated 30th May 2010 sent by the respondent through its advocate, the respondent raised a claim of Rs. 110 crores against the petitioner. The respondent thereafter vide its letters dated 25th August 2010 and 4th September 2010 requested the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts executed by and between the parties and the correspondence forming part of the record. He submits that under the said agreement dated 15th December 2006, the realization of export proceeds from the foreign buyers was the responsibilities of the respondent besides the successful execution of the export order. The said contract provided for 'Mode/Terms of Payment'. The petitioner was to retain 1.5% on C.I.F. value of the export as Trading Margin plus 5% towards interest and bank charges etc. and was to pay the balance amount to the respondent against the post dated cheques of equivalent amount. The said cheques were to be retained by the petitioner till realization of the export proceeds from the foreign buyers and final settlement of the account. 26. It is submitted that on receipt of the payment of the export bills from the foreign buyers after making final adjustment of its Trading Margin, bank charges, interest and any other dues and funds released to the respondent on discounting, net available export proceeds would be released to the respondent. He submits that accordingly, the petitioner had discounted those bills. The foreign buyers, however, did not release any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except serial no.10, 11 and 12 of the said statement. 29. It is submitted that since the respondent has received post shipment finance as against the serial nos.1 to 9, 13 to 18 upto 83.5% through the bankers of the petitioner, the respondent has reimbursed the amount of the said post shipment finance by issuing post dated cheques for the value of invoice value. The petitioner has accordingly utilized the payment of the said post dated cheques towards corresponding invoices issued by the petitioner to the said foreign buyers at serial nos.1 to 9 and 13 to 18 of the statement no.2. The said post dated cheques are dishonoured and the petitioner has filed separate proceedings against the respondent on the said dishonoured cheuqes. It is submitted by the learned senior counsel that the respondent had requested the petitioner to adjust overdue payment of the Exim bank against the export document of cut and polished diamond. The petitioner had accordingly adjusted the said export documents against the outstanding of export gold jewellery. The petitioner did not receive any payment from the foreign buyers towards the said export cut and polished diamonds as against the corresponding invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator be appointed as a provisional liquidator of the respondent-company with all powers under the provisions of the Companies Act, 1956. 34. It is submitted by the learned senior counsel that the petitioner did not make any claim in respect of 8 invoices in these company petitions. The petitioner has been paying the dues of the banks though the amounts were not released by the respondent. He submits that transactions between the parties are not in dispute. The invoices are also not in dispute. 35. Learned senior counsel invited my attention to various allegations made in the affidavits filed in the aforesaid two petitions and submits that the respondent has raised various false and dishonest defences which are ex facie moonshine and cannot be accepted by this Court. He submits that Company Petition No.128 of 2011 relates to the discounting of the bills through the Exim bank whereas the Company Petition No.277 of 2011 relates to the bills discounting by the petitioner through the Standard Chartered Bank. Statement of Outstanding Export Bills finance by the Exim Bank of gold jewellery is relating to 5 invoices whereas 8 invoices are relating to cut and polished diamonds which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tripartite agreement in respect of the said transaction, there is no obligation of the respondent to make any payment to the petitioner. He invited my attention to the said alleged tripartite agreement dated 16th June 2009. 38. In so far as the dispute arising out of the cut and polished diamond transactions is concerned, the learned counsel for the respondent submits that the petitioner did not invoke arbitration agreement against the foreign buyers. He submits that no amount is received by the respondent from the foreign buyers in respect of the cut and polished diamond transaction. He submits that the respondent is not aware whether the petitioner has received any amount from the Exim Bank or not. Learned counsel for the respondent placed reliance on the judgment of the Delhi High Court in the case of German Homoepathic Distributors Pvt. Ltd. Vs. Deutsche Homeopathic-Union Dhu- Arzneimittel Gmbh & Co., reported in (2009) 150 Comp Cas 887 (Delhi) and submits that since the respondent has to recover substantial amount from the petitioner, this company petition cannot be entertained by this Court. 39. Learned counsel for the respondent also placed reliance on the judgment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entered into between the parties, it was the responsibility of the respondent to pay to the petitioner in respect of such dues not paid by the foreign buyers. He submits that foreign customers of the respondent could have informed the respondent about the payment, if any, alleged to have been made to the petitioner. 42. Mr. Sancheti, learned senior counsel for the petitioner in both the aforesaid petitions invited my attention to the order and judgment dated 5th September 2014 delivered by the Division Bench of this Court in the case of State Trading Corporation of India Ltd. Vs. M/s. Ushma Jewellery & Packing Exports Pvt. Ltd. in Appeal (L) No.191 of 2014 in Company Petition No.311 of 2011 and would submit that in the similar facts considered by the Division Bench of this Court, this Court has held that there was no bonafide defence of the company and has admitted the company petition. 43. Division Bench of this Court in the judgment delivered in case of State Trading Corporation of India Ltd. Vs. M/s. Ushma Jewellery & Packing Exports Pvt. Ltd. (supra) has considered the identical facts and has held that the respondent in that matter was responsible if the foreign buyers did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -120 days Usance from the date of BL/AWB. The realization of the export proceeds from the foreign buyers was the responsibility of the respondent besides successful execution of the export orders. The shipping documents were to be prepared and signed by the respondent and were to be submitted to the petitioner who was required to present such documents for negotiations with their bank. 47. The petitioner was required to release the said amount after deducting certain charges from the said amount to the respondent. It is not in dispute that the petitioner had released 83.5% of the bills discounted by the petitioner to the respondent. The respondent had also issued 7 post dated cheques to the petitioner to the tune of 83.5% of the amount. Admittedly, the said cheques upon deposit were dishonoured with remark "stop payment.' The corporate guarantees and personal guarantees executed by the respondent were not hourned when invoked by the petitioner. 48. A perusal of the correspondence exchanged between the parties clearly indicates that the foreign buyers did not release the payment to the petitioner on due date or otherwise in respect of some of the invoices. The correspondence furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings filed by the petitioner on the ground that the respondent is unable to pay its debts. It is the case of the petitioner that the liability of the petitioner is an admitted liability. The respondent is however has dishonestly refused to pay the legitimate dues of the petitioner. The respondent is heavily indebted to the petitioner as well as several other creditors. 52. A perusal of the record indicates that the respondent has admitted the fact that the foreign buyers with whom the gold export transaction had taken place did not pay any amount in respect of some of the bills to the petitioner. The respondent was fully aware of non-payment of such amount by those foreign buyers and has expressed difficulty by those foreign buyers to make payment. The respondent had repeatedly requested the petitioner to grant extension of time to the foreign buyers to make payment. At the same time, the respondent also requested the petitioner to allow adjustment of the outstanding dues in respect of the gold export transaction against the said cut and polished diamond transaction. The respondent also agreed to release the payment to the petitioner if the payments were directly made by those f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner during the pendency of the petition. 56. In so far as the judgment of the Delhi High Court in the case of German Homoepathic Distributors Pvt. Ltd. Vs. Deutsche Homeopathic- Union Dhu-Arzneimittel Gmbh & Co. (supra) relied upon by the learned counsel for the respondent is concerned, it is not in dispute that the application under Section 8 of the Arbitration and Conciliation Act, 1996 filed by the respondent in the summary suit filed by the petitioner is rejected by this Court. The appeal as well as the Special Leave Petition filed by the respondent are also dismissed. The respondent did not file any counter claim in the said summary suit filed by the petitioner. This proceeding is not for recovery of money which money claim is the subject mater of the said summary suit filed by the petitioner. 57. The Civil Court cannot pass any order for winding up of the respondent on the ground that the respondent is unable to pay its debts or on any other grounds. The Delhi High Court in the said judgment in the case of German Homoepathic Distributors Pvt. Ltd. Vs. Deutsche Homeopathic-Union Dhu- Arzneimittel Gmbh & Co. (supra) has held that as regards the prima facie proof of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate guarantees submitted by the respondent clearly indicates that in the event of foreign customers of the respondent would have refused to make payment to the petitioner, the respondent was liable to pay to the petitioner for such transaction. The respondent had agreed to pay to the petitioner upon those foreign parties paying directly to the respondent subsequently and has also issued cheques which were dishonoured with remark "stop payment." In my view, there was a clear debt which was agreed to be paid by the respondent to the petitioner which the respondent failed and neglected to pay and was unable to pay to the petitioner. There is no dispute about the principles laid down by the Supreme Court in the said judgment. The said judgment, however, is clearly distinguishable in the facts of this case on the ground that defence in this case raised by the respondent is not substantial but is moonshine and is not bonafide. 60. In so far as the judgment of the Supreme Court in the case of Everest Holding Limited Vs.Shyam Kumar Shrivastava & Ors.(supra) relied upon by the respondent is concerned, Supreme Court has held that though the arbitrator would have no power to order for wi ..... 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