AI Drafter 
TaxTMI 
TaxTMI 
2015 (9) TMI 1572
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....six monthly basis, falling due on 18th March 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-m....
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.... stay of the order dated 19.03.2012 passed by the learned Single Judge 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 Compan....
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.... become due and payable, the Trustee may, at its discretion and without further notice, take such proceedings against the Issuer as 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 s....
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.... 21 Governing Law and Jurisdiction. 21.1 Governing Law The Trust Deed and the Bonds and all matters arising from or connected with the Trust Deed and the Bonds are governed by, and shall be construed in 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....
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....ce its business within a year from its incorporation, or suspends its business for a whole year; (d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two; (e) if the company is unable to pay its debts; (f) if the Tribunal is of the opinion that it is just and equitable that the company should be wound 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 credi....
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....ded that in the balance sheet of the company, it has duly accepted such debts due to be paid to the appellant, as its liabilities. It is, thus, contended that under the relevant clause of the Trust Deed, even if clause 20.4 is ignored, then too, the dispute arising from or connected with the Trust Deed may have to be taken to the English Courts alone, but if the liability to pay the admitted debts is accepted, and there is no such dispute with regard to the liability or terms of the Trust Deed, then the winding up 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 rais....
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....ts having jurisdiction. Sri Raghavan has raised certain other questions which have not been considered by the learned Company Judge, and on his request the same have been considered by us in appeal. ( 19. ) We have heard learned counsel for the parties at length, who have also relied on certain case laws, which shall be dealt with at the time of considering their submissions. ( 20. ) Section 9 of the Companies Act provides that the provisions of the Act shall have effect, notwithstanding anything to the contrary contained 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....
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....visions of the Trust Deed or the conditions. ( 23. ) In the case of Swastik Gases part of the contract was performed both at Kolkatta and Jaipur and parties had agreed to the jurisdiction of Kolkatta Court to entertain all cases arising out of any dispute. Such is not the position in the present case. As such, in our view, the ratio of the said case will not apply to the facts of the present case. ( 24. ) At this juncture, we may also place on record that by virtue of Section 57 of the Indian Evidence Act, Courts in India are 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 provide....
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....earned counsel for respondent with regard to the correct interpretation of the Trust Deed that appellant/Trustee would not be entitled to maintain a company petition, as disputed questions of fact would be involved, which cannot be gone into by the Courts in India. ( 29. ) A bare perusal of clause 13.3 would show that the same relates to legal proceedings which may be initiated at any time after the bonds have become due and payable. The due date for maturity of the bonds was in 2011 and the claim of the appellant is with regard to payment of 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 le....
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....ompany Petition has been filed on the ground that there are admitted debts to be paid by the Company to the appellant, which it is unable to pay, it would be for the Company Court to take a final decision in the matter and then decide whether, in the facts of the case, the Company is to wound up or not. However, saying that because of clause 13.3 of the Trust Deed, the option of filing of Company Petition by the appellant Trustee is taken away, would not be correct. ( 33. ) It was also argued by learned counsel for respondent that the question to be considered 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 ....