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TMI Blog2013 (5) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/09/2007 between Huawei, Teracom and Teracom's wholly owned subsidiary, Nextera Telecom Private Limited ('Nextera' for short) and a bid- cooperation agreement dated 17/09/2007 between Huawei and Teracom. In November, 2007, the bid of Teracom and Huawei was accepted by BSNL and BSNL issued the advance purchase order dated 26/11/2007 on Teracom. The total purchase order amount payable by BSNL to Teracom for the goods was INR 179,03,78,825/-. As per their prior contractual understanding, Teracom and Huawei entered into three supply contracts, two of which were entered into on 04/01/2008 and the third one on 27/03/2008. The respondent also entered into two supply contracts on 04/01/2008 with Huawei, the terms of which are identical with minor variations. In terms of the said supply contracts, Huawei and Teracom agreed upon the technical specification for the goods as also issue pertaining to packing, marking, inspection, testing, quality, indemnities and warranties with respect to the goods. 4. Thereafter on 31/01/2008 and 16/05/2008, Huawei and Teracom mutually agreed to involve the petitioner i.e. M/s. Sojitz Corporation ('Sojitz' for short) for financing the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of the payments due to it from the respondent and, therefore, from 2009 till October, 2011, the representatives of the petitioner and the respondent held number of meetings to discuss the issue pertaining to outstanding payments due from the respondent to the petitioner. In such meetings, the representatives of Huawei were also involved. The respondent represented that delay in receipt of payment from BSNL was on account of faulty goods and once these defects were rectified, the same would aid in clearances of outstanding dues. It is further the case of the petitioner that the petitioner acted as bridge between the respondent and Huawei to facilitate the resolution of outstanding technical issues and the participation of the representatives of the petitioner was not on account of any contractual responsibility under the procurement agreement or any other document but was a bonafide voluntary gesture to resolve the dispute between the respondent and its supplier Huawei. Minutes of the meetings held between the representatives of the petitioner and the respondent on 04/11/2009, 24/01/2011 and 14/10/2011 and also memorandum of understanding dated 09/01/2010 have been relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had acknowledged indebtedness to the petitioner to the tune of Rs. 83.01 Crores, although much higher amount was due by the respondent to the petitioner. 9. On 21/11/2011, the petitioner, respondent and Nextera executed a memorandum of understanding (MOU) inter alia confirming that the sole role of the petitioner with respect to the purchase and delivery of goods from Huawei was that of financier and the same acknowledged the balance confirmation letter dated 19/10/2011 and as such, the respondent acknowledged its liability to the petitioner in terms of the balance confirmation letter dated 19/10/2011. 10. Thereafter, correspondence ensued between the petitioner and the respondent. Upto December, 2011, a sum of Rs. 5 Crores was paid by Teracom/Nextera to the petitioner under MOU and thereafter, no payment was made and as of July, 2012, an amount of INR 57 Crores remains outstanding. 11. In February, 2012, the respondent and Nextera filed a Civil Suit No.OS 219/2012 in the Court of Senior Civil Judge, Gautam Budh Nagar, Uttar Pradesh against the petitioner and Huawei inter alia contending that the goods allegedly supplied by the petitioner and Huawei were defective goods. The pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. It was submitted that the documents, more particularly two documents dated 13/10/2011 and 19/10/2011 clearly suggest that the respondent acknowledged its liability, but to the extent of lesser amount as claimed by the petitioner and the defence taken by the respondent that it does not owe any amount under the procurement agreements, is patently false. According to the petitioner, there is neither rescission nor novation of the procurement agreements in view of the memorandum of understanding dated 21/11/2011 entered into between the parties and the petitioner is though the financier, in order to protect its financial interest, intervened to bring about settlement between the respondent and BSNL, in view of the claim made by BSNL that the goods supplied were defective. It was further argued that the defence taken by the respondent that signature of C.M.D. has been forged, is nothing but an afterthought and taken with a view to avoid its liability under the four procurement agreements and to avoid any order of winding up of the Company. It was further argued that having regard to the agreements entered into between the petitioner and the respondent, the petitioner is not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 (P&H.) (xiv) Malhotra Steel Syndicate Vs. Punjab Chemi- Plants Limited; 1993 Supp(3) SCC 565. (xv) In Re: The India Electric Works Ltd.; AIR 1970 Cal 398. (xvi) Welding Rods (P.)Ltd. Vs. Indo Borax & Chemicals Ltd.;(2002) 108 Comp. Cases747 (Guj.) (xvii) Associated Journals Ltd. Vs. The Mysore Paper Mills Ltd.; AIR 2006 SC 2695. 17. The case of the respondent in brief is as under : The stand of the petitioner that it was only a trade financier with respect to the goods supplied to the respondent under four procurement agreements dated 31/01/2008, 01/04/2008, 29/04/2008 and 16/05/2008 is not correct. In fact, the petitioner is a seller of the goods and the petitioner is engaged in the business of international trading and purchased goods from Chinese company Huawei and sold the goods to the respondent in terms of the procurement agreements. According to the respondent, the same is evident from the invoices raised by it. It is the case of the respondent that the transaction between the petitioner and the respondent and Huawei was based on back to back contracts and entered into between the respondent and Huawei on one hand and circumscribed by procurement agreements enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. Similarly, the respondent is also ready and willing to submit bank guarantee in respect of the overdue interest of JPY 1,398,933/-. In support of the submissions, the respondent has relied upon the following judgments : (i) Tayal Potteries and another Vs. Macroplast (P) Ltd. (2001)103 Comp. Cases 404(All). (ii) Mool Chand Wahi Vs. National Paints (Private Ltd. And Anr.); MANU/PH/0241/1986. (iii) Mool Chand Wahi Vs. National Paints P. Ltd and Anr.; MANU/PH/0219/1983. (iv) Shantilal Khushaldas and Bros. Pvt. Ltd Vs. Smt. Chandanbala Sughir Shah and another; (1993)77 Comp. Cases 253 (Bom). 18. On behalf of the respondent, submissions were made in consonance with averments made in the affidavits filed on behalf of the respondent, opposing the winding up the petition. It was contended that the petitioner, though styled itself as trade financier in the procurement agreements, having regard to the terms and conditions of the said agreements, is a seller of the goods to the respondent and not financier and as such, in terms of the provisions of Sale of Goods Act and Contract Act, the petitioner is liable for defects in the goods supplied to the BSNL. It was further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 and the submission made on behalf of the petitioner that English Law will apply is without any merit inasmuch as all the procurement agreements were executed at New Delhi, India and the goods were supplied in India. It has been further urged that the memorandum of understanding dated 21/11/2011 entered into between the petitioner and the respondent is novated and rescinded and in the earlier procurement agreements and in the said Memorandum of Understanding, there is no mention that the petitioner is not liable for the quality and defects of the goods. It has been further urged that in winding up petition, the jurisdiction of this Court is very limited and the Court is not entitled to examine and/ or to adjudicate as to whether the petitioner is financier or seller or whether there is novation or rescission of the procurement agreements by virtue of memorandum of understanding dated 21/11/2011. Similarly, it has been urged that this Court, while exercising the jurisdiction under Section 434 of the Act, is not entitled to adjudicate on the rights and liability of the petitioner and the respondent under the procurement agreements and/ or memorandum of understanding and also as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute as to the liability of the respondent under four procurement agreements and also under consultancy agreements which are interconnected with the procurement agreements. Without prejudice to the contentions of the respondent, it was submitted that the respondent was ready and willing to furnish bank guarantees for liability amount of USD 252,000/- and in respect of overdue interest of JPY 1,398,933/-, if direction is given by the Court. 19. Since the objection regarding authorisation in favour of Mr. Ota was not valid and as such the petition filed was not maintainable, was taken at the fag end of the argument which was opposed by Mr. Kantak on the ground that such a ground was not taken in reply, while reserving the petition for order, this Court granted leave to the petitioner to file fresh power of attorney along with brief written submissions. Against the said order, respondent preferred Company Appeal No.13/2012 which was disposed of by the Division Bench allowing the respondent herein to file additional written arguments to oppose production of fresh power of attorney dated 12/10/2012 which was produced pursuant to liberty granted. Liberty was also given to the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly stamped power of attorney. The petitioner placed reliance upon the judgment of the Apex Court in the case of Hindustan Steel Ltd. (supra) in which it has been stated that the Stamp Act is a fiscal measure enacted to secure revenue for State on certain classes of instruments and it is not enacted to arm the litigant with a weapon of technicality to meet the case of the opponent. In the case of Mahesh Nathani (supra), learned Single Judge of Allahabad High Court permitted the petitioner to file fresh power of attorney in accordance with Indian law ratifying the earlier attorney. In the case of Western India Theatres Ltd. (supra), the Division Bench of this Court held that if the winding up petition was not properly signed by the petitioner, it was a mere irregularity which could be cured at any time. Learned Division Bench placed reliance upon the ratio of the judgment in the case of Dahybhai Girdhardas Vs. Babaji. In the said case, the Division Bench permitted the petitioner, who was present in the Court to sign the petition in the Court and posted the appeal for being taken up on merits. In the case of United Bank of India (supra), the Apex Court held that if a suit of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised on behalf of the respondent. Therefore, in my view, the objection taken by the respondent, has absolutely no merit. Reliance placed on behalf of the respondent on the judgment in the cases of P. Laxmidevi and Avinashkumar Chauhan (supra) is in relation to the provisions of Indian Stamp Act and as such, is of no avail to the respondent. 27. Reliance has been also placed by learned Counsel on behalf of the respondent on the judgments in cases of Tayal Potteries and another rendered by learned Single Judge of Allahabad High Court, Mool Chand Wahi of Division Bench of Punjab and Haryana High Court and learned Single Judge of this Court in the case of Shantilal Khushaldas and Brothers Pvt. Ltd. (supra). The ratio of the judgment would not advance the case of the respondent inasmuch as in all these cases, the affidavits in support of the petition were not filed by the person duly authorised to file the petition. In the present case, I have already permitted the petitioner to file fresh power of attorney which has been duly filed and the said power of attorney dated 12/10/2012 in favour of Mr. Ota clearly authorises him to file the present petition. Therefore, in my view, the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Vijay Industries (supra), the Apex Court held that if the principal amount is admitted and there is dispute as to existence of agreement for payment of interest or the rate of interest, the same would not result in dismissal of winding up petition. In the said case the Apex Court held that on the date of filing of winding up petition, dues in respect of the part of the debt which were more than the amount of Rs. 1 Lakh specified in Section 434(1)(a) of the Act were not denied and, therefore, the Division Bench of the High Court was not entitled to dismiss the winding up petition on the basis that entire debt, covering both principal and interest must be undisputed. The Apex Court held that for invoking the provisions of Section 433(b) read with Section 434 of the Act in relation to winding up of a Company on the ground of its inability to pay debt, what is necessary is that despite service of notice by the creditor, the Company was indebted in a sum exceeding Rs. 1 Lakh then due and failed or neglected to pay the same within three weeks thereafter or to secure or compound for it to the reasonable satisfaction of the creditor. The Apex Court further held that failure of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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