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TMI Blog2015 (9) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... and 18th September of each year. A Trust Deed was executed, whereby the appellant was appointed as the trustee for the bonds, which were all issued in favour of persons outside India. The first installment of interest due on 18th September, 2006, was duly paid by the Company to the appellant - Trustee. Similarly, the interest due on March 18th 2007, September 18th 2007, March 18th 2008 and September 18th 2008 was also paid within time. The first default which occurred was regarding payment of interest for March 2009, which was not paid on March 18th 2009, but with a delay of 13 days. Uptil now, there was no dispute raised with regard to payment of interest, or fulfilling the commitment by the respondent-Company. ( 3. ) The interest due to be paid thereafter on September 18th, 2009 could not be paid and the respondent-Company defaulted. A notice was then issued by the appellant to the respondent-Company on 22.12.2009, mentioning that interest payable on September 18th 2009 had not been paid and thus called upon the respondent-Company to pay the same. A response to the same was given by the respondent-Company on the same day through E-mail, wherein request for recalling the notice w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge was refused by the Division Bench by another detailed reasoned order dated 10.04.2012. Pursuant to the same, the Company Petition was advertised in the newspapers. After two years, the Company Petition then came up for hearing before the learned Single Judge, who, vide the impugned order dated 04.03.2014, has dismissed the Company Petition on the ground of jurisdiction. While deciding the petition, the learned Single Judge had framed four points for consideration, which are as follows: i. What is the nature of the contract between the parties? ii. Whether the petitioner, having chosen to confer exclusive jurisdiction on the English courts and having intended the application of the English law to the contract, is justified in seeking to invoke the jurisdiction of this court? iii. Whether the petitioner has demonstrated that after the default, by the respondent under the contract, the conditions under the contract have been satisfied to enable the petitioner to prefer this petition? iv. Whether the respondent is to be ordered to be wound up? ( 7. ) While dismissing the Company Petition, the learned Single Judge had primarily considered the second point, which relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may think fit to enforce repayment of the Bonds and to enforce the provisions of this Trust Deed or the Conditions, but it will not be bound to take any such proceeding unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by the holders of at least one quarter in principal amount of the outstanding Bonds and (b) it shall have been indemnified and/or secured to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges and expenses which may be incurred by it in connection therewith and provided that the Trustee shall not be held liable for the consequence of taking any such action and may take such action without having regard to the effect of such action on individual Bondholders. Only the Trustee may enforce the provisions of the Bonds or this Trust Deed and no Bondholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing. 20 Governing Law and Jurisdiction 20.1 Governing Law This Trust Deed and the Notes and all matters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with, English Law. 21.2 Jurisdiction The Issuer has in the Trust Deed: (a) agreed for the benefit of the Trustee and the Bondholders that the Courts of England shall have exclusive jurisdiction to settle any dispute (a 'Dispute') arising from or connected with the Bonds; (b) agreed that those courts are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue that any other courts are more appropriate or convenient; (c) designated a person in England to accept service of any process on its behalf. The Trust Deed also states that nothing contained in the Trust Deed prevents the Trustee or any of the Bondholders from taking proceedings relating to a Dispute ('proceedings') in any other courts with jurisdiction and that, to the extent allowed by law, the Trustee or any of the Bondholders may take concurrent proceedings in any number of jurisdictions. ( 12. ) The relevant sections 2(11), 9, 10, 433 and 439 (2) of the Companies Act, 1956 are reproduced below. S.2(11) : 'the Court' means (a) with respect to any matter relating too a company (other than any offence against the Act), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up' (g) if the company has made a default in filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years; (h) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality; (i) If the Tribunal is of the opinion that the company should be wound up under the circumstances specified in section 424G; Provided that the Tribunal shall make an order for winding up of a company under clause (h) on application made by the Central Government or a State Government. S.439: Provisions as to application for winding up (1) . (2) A secured creditor, the holder of any debentures (including debenture stock), whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures, shall be deemed to be creditors within the meaning of clause (b) of sub-section (1). (3) (4) .. (5) .. (6) .. (7) .. (8) .. ( 13. ) SECTION 57(2) of the Indian Evidence Act, 1972 is also reproduced below: S.57: Fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition can always be filed in the Court in India having jurisdiction. It is thus contended that dismissal of the Company Petition for winding up, on the ground of jurisdiction, was not warranted in the facts of the present case. ( 16. ) On the other hand, Sri K G Raghavan, learned Senior counsel appearing for the respondent Company has submitted that, firstly, the appellant does have the locus to present the winding up petition; secondly, appellant does not have the right to present the winding up petition under the terms of the Bond; and thirdly, the Karnataka High Court does not have the jurisdiction to entertain the winding up petition and decide the disputes raised in the winding up petition. Learned counsel has, however, fairly stated that the first two questions have not been considered by the learned Company Judge and hence, the same may not be necessary for being decided by this Court as the only question on which the company petition has been dismissed, is because of lack of jurisdiction and thus, it is the third point which has to be decided by this Court in this appeal. ( 17. ) It is contended by learned Senior Counsel for the respondent that by agreeing to the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in any agreement which may be executed, meaning thereby that the Companies Act would override the provisions of the agreement or the Trust Deed. Section 10 of the Act provides that the Court having jurisdiction under the Act would be the High Court having territorial jurisdiction in relation to the place at which the registered office of the Company is situate. In the present case, it is not disputed that the registered office of the Company is at Bangalore, which is within the territorial jurisdiction of the Karnataka High Court at Bangalore. Sub-section (11) of Section 2 defines 'Court' to mean the Court having jurisdiction under the Act, 'with respect to that matter relating to that Company, as provided in Section 10'. Sub-section (2) of Section 439 provides that any Trustee/s having been appointed in respect of the debentures, and the Trustee for holders of debentures, shall have a right to file a petition for winding up of the Company. Clause (e) of section 433 provides that the Company can be wound up if it is unable to pay it debts. Section 434 gives the details as to when the Company would be deemed to be unable to pay its debts. ( 21. ) While passing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take judicial notice of all public Acts passed by Parliament of the United Kingdom, and all local and personal Acts directed by the Parliament of the United Kingdom are also to be judicially noticed by the Courts in India, meaning thereby that the English Statute Laws can be tried and considered by the Courts in India. ( 25. ) In light of the aforesaid, when clause 20.1 of the Trust Deed provides for all matters arising there or connected with it, to be governed or construed in accordance with the English laws, there can be no dispute of the fact that Indian Courts can also try the same by applying English Law. Clause 20.2 of the Trust Deed provides for Courts of England to have exclusive jurisdiction to settle any dispute arising out of the Trust Deed or the consequences of their nullity. This clause is with a caveat, provided in clause 20.4, which clarifies that nothing in the said clause 20.2 would prevent the Trustee or the Bond Holders to raise a dispute in any other Court with jurisdiction, or to take concurrent proceedings in any number of jurisdictions, meaning thereby that the restriction imposed by clause 20.1 would be only on the respondent Company and not on the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest, which was to be paid half yearly, and the Company had admittedly defaulted in payment of such interest. Though the clause in the Trust Deed provided for enforcing payment of the entire amount of Bond (if the interest was not paid), but the fact that the interest was due and liable to be paid, which had not been paid by the Company to the Bond Holders or the Trustee, is not a matter in dispute. ( 30. ) It may be true that the disputed questions of fact can normally not be gone into in a Company Petition filed for winding up of a company. What is meant by the same is questions which may require consideration by way of leading of evidence by the parties. As we notice, in the present case the respondent Company has not, at any stage, disputed the fact that the interest due and liable to be paid after March 2009, remained due to be paid. Thus, there is no dispute that there is an admitted amount or debt due to be paid by the Company to the Bond holders, which has not been paid. ( 31. ) The only question which remains is as to whether the appellant Trustee can represent the Bond holders or not. With regard to this, learned counsel for respondent has relied on clause 10.1 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be as to whether under the terms of the Trust Deed, appellant Trustee would actually be a Trustee or an agent of the Bond Holders. As such, it has been contended that the question as to whether appellant ought to be treated as a Trustee or an agent cannot be looked into by the Courts in India and more so, by the Company Court. As we have already observed above, questions of law can always be looked into by the Courts in India by applying, either Indian law or English law, as the case may be. For deciding this question, all that would be required is interpreting the provisions of the Trust Deed by applying Indian law or English law. In our view, the same can always be done by the Company Court, if such question is raised before it during the course of the proceedings. ( 34. ) Learned counsel for respondent has relied on the decision of the Apex Court in the case of Pradeshiya Industrial & Investment Corporation of Uttar Pradesh Vs North India Petrochemicals Ltd, 1994 3 SCC 348. In the said decision, reliance has been placed on another decision of the Apex Court in the case of Madhusudhan Gordhandas Vs Madhu Wollen Industries Pvt Ltd, 1971 3 SCC 632 wherein it has been held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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