TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1006
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....igare Finvest Limited (in short 'Religare') entered into an Assignment Agreement dated 25th July, 2015 with the petitioner No.2/ Strategic Credit Capital Private Limited (in short 'the Strategic') through its Director Padma Vathy/petitioner No.1, for assignment of the loans and receivables along with all rights, title and interest therein for a total consideration of Rs. 530,02,40,678/- (Rupees five hundred and thirty crore two lakh forty thousand six hundred and seventy eight only). The Assignment Agreement obligated Strategic to issue a Standby Letter of Credit (in short 'the SBLC') for a sum of Rs. 540 crores in favour of Religare, to guarantee the balance purchase consideration. Religare received an initial purchase consideration of Rs. 10 crores from Strategic on June 24, 2015 and the balance purchase consideration was required to be given within a period of 90 days from the initial purchase consideration. However, Strategic failed to pay the balance purchase consideration under the Assignment Agreement. So around 22nd October, 2015 Religare informed Strategic that it would invoke the SBLC on account of default in payment of the balance purchase consideration. On the represen....
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.... Finvest Limited Authorized Signatory." 5. This letter dated 21st March, 2016 is the bone of contention between the parties and major portion of the arguments have revolved on this letter which does not form part of the complaint. 6. Besides the letter dated 21st March, 2016 the other major fact brought to the notice of this Court by Religare is that despite the fact that Strategic sought to terminate the Assignment Agreement and the Supplemental Agreement vide e-mail communication dated 9th June, 2016, Strategic further assigned the loans, receivables and interest to Eleos Finvestia Acquisition Trust (in short 'the Eleos') vide Assignment Agreement dated 25th July, 2015 pursuant whereto Eleos filed a petition being OMP(I)(COMM) No.294/2016 before this Court against Religare and its authorized representative. The pleadings in the said petition of Religare are being relied upon by learned counsel for Strategic whereas learned counsel for Religare submits that despite terminating the Agreement with Religare, Strategic entered into a further Assignment Agreement with Eleos for an aggregate consideration of Rs. 1260 crores in cash on 28th June, 2016. 7. Legal issues raised b....
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....ntainability of the complaint, relying upon the decision of the Supreme Court reported as (2015) 12 SCC 203 A.C. Narayan Vs. State of Maharashtra & Anr., learned counsel for the petitioners contends that a criminal complaint cannot be filed by an employee of a company unless he is duly authorized by a resolution of the company and the employee filing the complaint must affirm and depose that he has personal knowledge of the facts. Rebutting the plea learned counsel for Religare submits that no such plea has been taken in the present petition which could have been replied by Religare, even otherwise in the complaint in Para 1 itself it is stated that Ankur Gupta is the authorized signatory on behalf of the complainant and has been duly authorized to sign, verify and institute the proceedings by way of a Board Resolution/ Power of Attorney dated 7th July, 2016. Pursuant to the resolution passed at the meeting of the Board of Directors of Religare on 27th May, 2015 Ankur Gupta has been duly authorized and as per Clause 8 of the Power of Attorney he is competent to sign, verify and file complaint/cases under Section 138 of the NI Act on behalf of Religare against the borrowers before....
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....annot be decided in the present petition. The terms of the Assignment Agreement clearly stipulate that if Strategic fails to pay, the SBLC can be encashed. Thus the SBLC was only a guarantee and not in discharge of the liability. 13. Before adverting to this issue it would be appropriate to note the terms in the Agreement in respect to the SBLC. In the Assignment Agreement SBLC was defined as "SBLC means a standby letter of credit for an amount aggregating INR 520,00,00,000 (Rupees Five Hundred and Twenty Crores) issued by LA FINANCIERE (EUROPE), UNICREDITO BANCA S.A, in favour of the Assignor (in a form and manner acceptable to the Assignor) on behalf of the Assignee". Further Clause 2.3(c) of the Assignment Agreement noted that "If the Assignee fails to pay the Outstanding Balance Purchase Consideration on the Balance Purchase Consideration Payment Date, the Assignor shall be entitled to invoke the SBLC in accordance with the terms of the SBLC to the extent of the Outstanding Balance Purchase Consideration". It is thus apparent that SBLC was not issued as a consideration of the Assignment Agreement but was a guarantee to be invoked in case the assignee failed to pay the outstand....
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....the decision reported as (1992) 2 SCC 330 Syndicate Bank Vs. Vijay Kumar describing the liability of a guarantee held: "10. It is in common parlance that the issuance of guarantee is what that a guarantor creates to discharge liability when the principal debtor fails in his duty and guarantee is in the nature of collateral agreement to answer for the debt. It is well-settled that the Bank guarantee is an autonomous contract and imposes an absolute obligation on the Bank to fulfill the terms and the payment in the Bank guarantee becomes due on the happening of a contingency on the occurrence of which the guarantee becomes enforceable. 11.Guarantee has been defined in Halsbury's Laws of England, 4th Edn., Vol. 20, page 49, para 101 as: "A guarantee is an accessory contract whereby the promisor undertakes to be answerable to the promisee for the debt, default or miscarriage of another person whose primary liability to the promise must exist or be contemplated." 12. In the banking system it is understood that Bank guarantee has a dual aspect. In the case of a Bank guarantee the banker is the promisor. It is a contract between the Bank and the beneficiary of the guaran....
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....reported as (2001) 6 SCC 16 Hiten P. Dalal Vs. Bratindranath Banerjee in view of the presumption raised under Section 139 NI Act the issue whether the cheque was in discharge of a liability wholly or partly or not is an issue to be decided at the stage of trial. It was held: "21. The appellant's submission that the cheques were not drawn for the "discharge in whole or in part of any debt or other liability" is answered by the third presumption available to the Bank under Section 139 of the Negotiable Instruments Act. This section provides that: "139. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability." The effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability. 22. Because both Sections 138 and 139 require that the court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidyanatha Iyer [AIR 1958....
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....tion 15 of the NI Act. Reliance is placed on the decisions reported as 2005 SCC OnLine AP 1081 M. Ethirajulu vs. Rangam Adinarayana and Others and (1938) 2 KB 384 Hibernian Bank Limited vs. Gysin & Hanson. 19. In the Kings Bench decision the instrument itself was marked as not negotiable, which is not the case in the present case. Even in M. Ethirajulu (supra) relied upon by learned counsel for Strategic it was held that the endorsement should either be on the instrument or on a separate paper annexed thereto. It was held: "11. A combined reading of the above provisions clearly shows that a promissory note, bill of exchange or a cheque can be negotiated or transferred by making an endorsement either on the instrument or on a separate paper annexed thereto. The transferee of such instrument becomes the holder if that person is entitled in his own name to the possession thereof when it is transferred in his favour by making the necessary endorsement. The holder of a cheque becomes holder in due course only when he has become the possessor thereof for consideration without knowing any defect existed in the title of the person from whom he derived the title." 20. In the present cas....
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....ted 21st March, 2016 however, still it would be appropriate to note that Ankur Gupta, the authorised representative of Religare, who also filed an affidavit in response to the reply to Eleos stated that signatures of Ankur Gupta on the letter in question were only acknowledgment of receipt of the cheque and not acceptance of the contents or the terms of the letter in question. 24. The Supreme Court in the decision reported as 2004 (2) SCC 235 Goa Plast Pvt. Ltd. vs. Chico Ursula D'Souza while dealing with the similar issue on a contention of the accused therein that the complaint should be rejected, because the accused had suppressed the fact about the letter dated 12th February, 1993 held that there was no obligation on the part of the appellant to reply to such letter as per the scheme of Section 138 of NI Act. It was held: 16. Another reason given by the courts below to reject the complaint was that the appellant has suppressed the fact about the letter dated 12-2-1993. In our view, there is no obligation on the part of the appellant to reply to such letter as per the scheme of Section 138 of the Act. 19. We shall now advert to the rulings cited at the time of hearing. The ....
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....ppose after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same for encashment and yet the payee or holder in due course presents the cheque to the bank for payment and when it is returned on instructions, Section 138 does not get attracted' is accepted as good law, the very object of introducing Section 138 in the Act would be defeated. 16. We see great force in the above submission because once the cheque is issued by the drawer a presumption under Section 139 must follow and merely because the drawer issues a notice to the drawee or to the bank for stoppage of the payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of a cheque in due course. The object of Chapter XVII, which is intituled as 'OF PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNTS' and contains Sections 138 to 142, is to promote the efficacy of banking operations and to ensure credibility in transacting business through cheques. It is for this reason we are of the considered view that the observations of this Court in Electron....
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....uctions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section 138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi [(1998) 3 SCC 249]. On same facts is the decision of this Court in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar [(2001) 3 SCC 726]. The decision in Modi case [(1998) 3 SCC 249] overruled an earlier decision of this Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. [Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd., (1996) 2 SCC 739: 1996 SCC (Cri) 454] which had taken a contrary view. We are in respectful agreement with the view taken in Modi case [(1998) 3 SCC 249]. The said view is in consonance with the obj....