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2013 (3) TMI 284
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....009, learned company judge admitted the winding up petition, and in the order issued the following operative direction : "As the defence of the respondent Company is found to be not bona fide, before this Court passes the further order for issuing advertisement in accordance with law, by way of an opportunity to be given to the respondent Company for showing its ability to pay the debt and also to show the complications which may arise on account of the advertisement upon its commercial solvency or insolvency as the case may be, the respondent is directed to deposit the amount of Rs. 89,19,840/- being equivalent Indian rupees at the rate of Rs.80/- per pound of GBP 48,343.13 is concerned, no order for directing to deposit is made at this stage. Such amount be deposited with this Court without (sic-within) two weeks on or before 15th September, 2009." 1.2 The present appeal questions the legality of above order dated 26.08.2009. The aggrieved appellant contends that it has got a substantive and bona fide dispute as to the debt claimed and therefore, the winding up petition itself is not maintainable. 2. The factual profile emerging from the record of the appeal is set out a....
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.... Justice, Queen's Bench, Manchester, United Kingdom (hereinafter referred to as 'the UK Court), for recovery of the amount with interest at the rate of 8%. According to the original petitioner, the summons of the UK Court was served on the appellant and certificate of service dated 28.10.2008 reflected such service. As the company did not appear, the judgment was passed directing the company to pay to original petitioner VTL GBP 1,10,558.21 and GBP 940/- towards cost totalling GBP 1,11,498.21 forthwith. It is pertinent to notice that learned Company Judge directed to deposit the amount as directed by the Foreign Court as aforesaid in the order while admitting the winding up petition. 2.4 The correspondence which was ensued between the parties in the subject matter is summarized as under. (i) The original petitioner-VTL sent an E-mail message dated 26.09.2008, communicating that the Rosebys Operation Ltd. (hereinafter mentioned as 'the Rosebys') has been placed under administration. The VTL expressed intention to enforce the guarantee. (ii) By letter dated 2.10.2008, the VTL raised a formal demand of the sum of GBP 220,354.7 based on the deed of guarantee.....
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.... 6, 7 and 8** ** ** 9. In the circumstances, we are instructed by our clients to call upon you, which we hereby do, to pay to our clients, the aforesaid sum of GBP 1,59,842.34 (Pounds One Lakh fifty Nine Thousand Eight Hundred forty two and Cents Thirty Four only) alongwith only interest due thereon at the rate of 12% per annum from November 22, 2008 till payment/realisation thereof, within twenty one (21) days of the receipt of this notice by you, failing which our clients will have no alternative but to adopt appropriate legal proceedings against you, as they may be advised, including but not limited to initiating winding up proceedings against you, which shall be entirely at your risk as to costs and consequences thereof. Kindly treat this as a notice as Sections 433 and 434 of the Companies Act,. 1956." 2.7 The appellant has resisted the winding up petition raising contentions in its affidavit-in-reply inter-alia that (i) the company is a going concern having turn-over of Rs. 11,568.90 million having ....
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....any Judge misdirected himself on one hand in believing the case of the original petitioner with reference to the deed of guarantee by accepting that the sum was payable thereunder and on the other hand ultimately directing to deposit the amount as per the decree of the UK court. He submitted that case of the original petitioner lacks in clarity and it is not certain whether the original petitioner has rested his case on the deed of guarantee or has based the claim for debt due under the judgment and decree of the UK Court. In order to buttress the contention, he highlighted the aspects that there was no proper service of summons by the UK Court. By referring to the dates and events it is submitted by him that the entire alleged transaction resulting into a default judgment by the UK court ex-parte delivered, entertains serious doubts. 4.2 On the basis of all aforesaid contentions, the learned senior counsel finally submitted that in the minimum the appellant company has a bonafide defence to successfully resist the winding up petition. According to his submission there is no neglect to pay for the purpose of section 433 and 434 of the Companies Act, 1956. 4.3 Learned counsel ....
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.....2 Immediate recourse The Guarantor waives any right it may have of first requiring the Supplier to proceed against or enforce any other rights or Security or claim payment from any person before claiming from the Guarantor under this Deed. This waiver applies irrespective of any law or any provision of any agreement or other instrument to the contrary. 2.4 Guarantee Limitations This guarantee shall apply to all goods delivered by the Supplier to the Obligor on or after 20 June 2008 together with applying to all goods ordered and delivered from the date of this guarantee. This guarantee shall not apply to goods ordered but not delivered to the Obligor, provided that the Guarantor serves notice on the Supplier prior to delivery of such goods to the Obligors premises. 4.6 It was next contended that the guarantee payment under the deed of guarantee also came to be decreed by the UK Court and that the said judgment is against the principal debtor and further that thereby the claim of payment essentially arises from the guarantee deed and is enforceable. It was submitted that the appellant being a guarantor, his liability is coextensive and in that way also the debt was undi....
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....he original petitioner VTL are UK Court judgment and the deed of guarantee. The petitioner has relied on the said Foreign Judgment delivered with reference to the deed of guarantee in question. It has relied on the deed of guarantee independently as well. It was argued in that context by learned senior counsel for the company that the original petitioner was not sure as to which was the real basis for instituting the winding up petition and that there was a convenient make-shift on its part to assert the claim somehow and anyhow. Be that as it may. 5.1 A perusal of copy of judgment and decree of UK Court dated 20.11.2008 which is on record of the petition, unmistakably shows that it was an ex parte decree. At the top, it is mentioned "Judgment for claimant (in default)". The claim No. is 8MA91372 and the claimant's name shown is Vanguard Textiles Ltd. whereas the defendant is indicated as Ghcl Ltd.. The Judgment states, "You have not replied to the claim form. It is therefore ordered that you must pay the claimant GBP 110558.21 for debt (and interest to date of judgment) and GBP 940.00 for costs. You must pay the claimant a total of GBP 111,498.21 forthwith." 5.2. It is....
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....and decree covered under any of the clauses, a suit in an Indian court shall not lie to enforce the dues or a claim flowing. 5.5 The Apex Court in Smt. Satya v. Teja Singh AIR 1975 SC 105 held, "the validity of a foreign judgment rendered in a civil proceeding must be determined in India on the terms of Section 13, Civil P.C. If the judgment falls under any of the clauses of Section 13 it will cease to be conclusive as to any matter thereby adjudicated upon and will be open to collateral attack on the grounds mentioned in Section 13. It is beside the point that the validity of the judgment is questioned in a criminal court and not in a civil court. Thus, a foreign decree of divorce obtained by the husband from the Nevada Court in USA in absentum of the wife without her submitting to its jurisdiction will not be valid and binding on a criminal court in proceedings for maintenance under Section 488, Criminal P.C." 5.6 Therefore, in light of observations made in Smt. Satya (supra) and the position of law emerging from other decisions referred to, whatever may be the kind of jurisdiction in which the Foreign Judgment is a subject matter, if any of the clauses of section 13 of ....
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....een regularly performed. To say that a decree has been passed regularly is completely different from saying that the decree has been passed on merits. An ex parte decree passed without consideration of merits may be decree passed regular if permitted by the rules of that Court. Such a decree would be valid in that country in which it is passed unless set aside by a Court of appeal. However, even though it may be a valid and enforceable decree in that country, it would not be enforceable in India if it has not been passed on merits. Therefore for a decision on the question whether a decree has been passed on merits or not, the presumption under Section 114 would be of no help at all. It must be mentioned that in support of submission that it must be presumed that all formalities were complied with and the decree passed regularly reliance was also placed on cases of Krishna Kumari v. State of Haryana reported in AIR 1999 SC 854 : (1998 AIR SCW 3958) and The Commr. of Income-tax, AP. v. M. Chandra Sekhar @page-SC2139 reported in AIR 1985 SC 114 : (1985 Tax LR 497). In our view these authorities are of no help in deciding the question under consideration. Even if we presume that all fo....
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....Indian Party as on the date of the last audited balance sheet; Explanation: - For the purpose of the limit of 100% of the net worth the following shall be reckoned, namely: (a) cash remittance by market purchase and /or equivalent rupee investments in case of Nepal and Bhutan (b) capitalisation of export proceeds and other dues and entitlements as mentioned in Regulation 11; (c) fifty per cent of the value of guarantees issued by the Indian party to or on behalf of the joint venture company or wholly owned subsidiary. (d) investment in agricultural operations through overseas offices or directly (e) External Commercial Borrowing in conformity with other parameters of the ECB guidelines Notwithstanding anything contained in these Regulations investment in Pakistan shall not be permitted." 5.10 Regulation 5 prohibits any person resident in India or any Indian party from making any direct investment outside India, whereas Regulation 6 permits such direct investment in certain cases subject to the conditions specified in sub regulation (2). Sub regulation (2) inter-alia provides that the total financial....
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....any, sister concern or associate company in India; provided that (i) All financial commitments including all forms of guarantees are within the overall ceiling prescribed for overseas investment by the Indian party i.e. currently within 400 per cent of the net worth of the Indian party, (ii) No guarantee is 'open ended' i.e. the amount of the guarantee should be specified upfront, and (iii) As in the case of corporate guarantees, all guarantees are required to be reported to Reserve Bank, in Form ODI-Part II. Guarantees issued by banks in India in favour of WOSs/JVs outside India, would be outside this ceiling and would be subject to prudential norms issued by Reserve Bank from time to time." 5.12 In view of above, the deed of guarantee relied on by VTL is not approved by the Reserve Bank of India. Not only that, in its nature, it is open ended guarantee in favour of a foreign company, which is prohibited in terms of the Regulation 6 above. It is in this context that clause (f) of section 13 of CPC gets attracted, when it provides that a foreign judgment cannot be a conclusive judgment where it sustained a claim founded on breach of any law in force in India....
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....28th October, 2008 and the same is shown to have been certified by Helen Cathenine Brown mentioning that said person was a partner. 6.2 It prima facie does appear that the record lacks a convincing proof about the actual service of summons. However, the issue of validity of service of summons, need not be gone into. Because, even without gone into it, from the manner of service of summons as canvassed by the learned senior counsel, the effect of clause (c) of section 13 of CPC is further emphasised in as much as the doubts entertainable about the validity of service of summons adds to the feature already obtained that the judgment of the UK Court is opposed to natural justice. On the basis of above aspects of the matter, one may view the whole transaction to be under cloud as to its genuineness itself. But these aspects are mentioned herein by this Court for the purpose only to indicate that they further weaken the case of the original petitioner, and make the defence of the appellant stronger. 6.3 It is well settled that the proceedings of winding up is not a recovery proceeding. Once it is demonstrated that the debt is subject to a bonafide dispute, the court will not order....