2006 (1) TMI 254 - HC - Companies Law

Court rules in favor of Petitioner, upholding agreement date and dismissing guarantor discharge claim.

Malaysian International Trading Corpn. Versus Mega Safe Deposit Vaults (P.) Ltd.

Malaysian International Trading Corpn. Versus Mega Safe Deposit Vaults (P.) Ltd. - [2006] 68 SCL 52 (BOM.) Issues Involved:1. Whether the Petitioner's claim is under the agreement dated 20-9-2002.2. Whether the company is discharged as a guarantor due to the extension of time for payment by the principal debtor.3. Whether the Petitioners' claim is sustainable without proving the relevant Malaysian Law.4. Whether an account of the Petitioner's dues under the agreement dated 20-9-2002 was rendered by the Petitioners.Issue-wise Detailed Analysis:I. The Petitioner's claim is not under the agreement dated 20-9-2002:7. Mr. Chagla argued that the company is liable only for transactions under the agreement dated 20-9-2002 and not for independent transactions between the Petitioners and Mega Visa Singapore. The court agreed with this interpretation.8. The court examined whether the dues were related to transactions under the agreement dated 20-9-2002 and found that they were.9. The letter dated 10/11-6-2004 explicitly acknowledged liability under the agreement, without suggesting that the dues were from independent transactions.10. Correspondence between the parties consistently referred to the agreement dated 20-9-2002, and there was no denial of liability from MV Ltd. or Mega Visa Singapore.11. The Petitioner's Advocate's notices and the statutory notice clearly stated that the dues were under the agreement, and there was no denial from the Respondents.12. The court concluded that the amount claimed by the Petitioner was indeed due under the agreement dated 20-9-2002 and rejected Mr. Chagla's first contention.II. The company is discharged as a guarantor in view of the Petitioners having agreed to extend the time for payment by the principal debtor, MV Ltd.:13. Mr. Chagla contended that under section 135 of the Indian Contract Act, the company was discharged as a guarantor due to the extension of time for payment.14. The court assumed that the extension of time would discharge the company as a guarantor in the absence of other factors.15. However, the court found that the company impliedly, if not expressly, assented to the extension of time granted by the Petitioners.16. MV Ltd. is a subsidiary of the Respondent Company, and the directors of both companies were involved in the correspondence.17. The company's affidavit denying knowledge of the letter dated 10/11-6-2004 was not advanced by Mr. Chagla.18. The court noted that the company did not express any surprise or objection to the extension of time.19. The court concluded that the company had consented to the extension of time for payment.20. Although the pleading on the point of consent was not entirely satisfactory, the court found that the issue was adequately addressed in the rejoinder and the documentary evidence.III. The Petitioners' claim is not sustainable as they have not proved the relevant Malaysian Law which governed the rights of the parties and the guarantee:22. Mr. Chagla argued that the Petitioners failed to establish the Malaysian law governing the guarantee.23. The court found this submission to be unfounded, noting that neither party had provided evidence of Malaysian law.24. The court referred to established legal principles that, in the absence of evidence, foreign law is presumed to be the same as Indian law.25. The court cited several judgments supporting this presumption, including decisions from the Privy Council and the House of Lords.27. Mr. Chagla relied on the Supreme Court judgment in Hari Shankar Jain v. Sonia Gandhi, but the court found it distinguishable and not applicable to the present case.28. The court concluded that the presumption of foreign law being the same as Indian law applied, and rejected Mr. Chagla's third contention.IV. An account of the Petitioner's dues under the agreement dated 20-9-2002 was not rendered by the Petitioners:30. Mr. Chagla argued that the petition was silent regarding 'costs and expenses' to be apportioned between the parties.31. The court found this submission to be an afterthought, noting that the statement of accounts in the letter dated 10/11-6-2004 was clear and there was no reservation regarding any liabilities of the Petitioner.32. The court directed the petitioners to deposit costs of Rs. 2,000 within four weeks.33. Mr. Chagla made a statement that the company would not dispose of any of its immovable properties without the court's leave, which was accepted.34. The order was stayed for eight weeks to allow the Respondents to challenge it.Conclusion:The petition was admitted and to be advertised in Free Press Journal, Nav Shakti, and Maharashtra Government Gazette. The court's order was stayed for eight weeks to enable the Respondents to challenge it.