TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 544
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....the Registrar of Companies, Maharashtra, Mumbai. Its registered office is at No. 621, Tulsiani Chambers, Nariman Point, Mumbai - 400021, within the State of Maharashtra. Therefore, this Bench has jurisdiction to deal with the present petition. 3. The present petition was filed on 22.02.2019 before this Adjudicating Authority on the ground that the Corporate Debtor failed to make payment of a sum of $930,000.00 (US Dollars nine lakh thirty thousand only) as principal amount and $38,971.84 (US Dollars thirty-eight thousand nine hundred seventy-one and cent eighty-four only) as interest at the rate of 4% p.a. compounded quarterly along with $9,536.00 (US Dollars nine thousand five hundred and thirty-six only) being cost awarded to the Operational Creditor by Arbitral Award (at p.3 of the Petition) arising out of a sale contract dated 11.10.2017, a copy of which is placed as Exhibit E at pp. 42-52. The date of default is 19.04.2018, date on which Award of Arbitration was announced. A copy of the Arbitral Award is placed as Exhibit D at pp. 17-41. 4. Mr. Shyam Kapadia, Learned Counsel appearing on behalf of the Operational Creditor submitted that the case of the Operational Creditor i....
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....l Andhyarujina a/w Mr. Shrey Sancheti, Mr. Devesh Juvekar and Mr. Dikshat Mehra i/b Rajani Associates, Advocates, appeared on behalf of the Corporate Debtor. 6. In its reply dated 14.06.2019, the Corporate Debtor has set up the following defence: (a) The present petition is defective for want of Board Resolution of the Operational Creditor as required under the Code, authorising the initiation of corporate insolvency resolution process as per para I on p.3 of the reply. (b) The Demand Notice is defective. The Demand Notice issued by the Operational Creditor relies on the Foreign Arbitral Award passed by a Sole Arbitrator under the Grain and Feed Trade Association Rules (GAFTA) and fails to provide particulars of transaction on account of which debt had fallen due as per para II on pp. 3-4 of the reply. (c) The Sole Arbitrator, while passing the award had observed that "under the 'GAFTA' Arbitration Rules 125, the juridical seat of this arbitration, as defined in the Arbitration Act 1996, is England." and a Foreign Arbitral Award was subject to English procedural and substantive law, as opposed to an Arbitral Award passed under the provisions of The Arbitration and Co....
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....y any of those persons by way of defense, set off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award. 11. Accordingly, the reliance on the foreign award in the present petition by the Operational Creditor, without it being declared enforceable under applicable Indian law, is incorrect. 12. The provisions of section 46 read with section 48 and 49 of the Arbitration and Conciliation Act, 1996 entitles a party to have a foreign award declared un-enforceable and not binding in India and that the binding nature of a foreign award is subject to the court being "satisfied that the foreign award is enforceable under this chapter". The scheme of the Arbitration and Conciliation Act, 1996 further requires the party applying for enforcement of the foreign award to adduce evidence under section 47 in proof of the said foreign award. 13. The Corporate Debtor has also relied on the judgment of the Hon'ble Bombay High Court in the matter of Noy Vallesina Engineering Spa v. Jindal drugs Ltd. 2006 5 Bom CR 155 which reads as follows: "21. Reading of Section 46 of th....
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....t the foreign award, enforcement of which is sought, is not enforceable. In other words, if the Respondent in a petition either does not appear or fails to discharge the burden, the court would be justified in enforcing the award. So far as Sub-section 2 of Section 48 is concerned, it confers powers on the court to refuse to enforce an award, if the court is satisfied that the subject matter of the difference is not capable of settlement by the arbitration under the law of India or the enforcement of the award would be contrary to the public policy of India. In other words, Sub-section 2 casts the burden of proof on the Petitioner to satisfy the court that the subject matter of the award of which he is seeking enforcement is capable of being settled by arbitration under the law of India and that the award is not contrary to the public policy of India." 14. This principle of law was reinforced by the Hon'ble Supreme Court in the case of Sea Stream Navigation Ltd. V. LMJ International Ltd. as under: "68. Since that decision of the Supreme Court the Arbitration and Conciliation Act, 1996 has been enacted Part II deals with enforcement of a foreign award. If we examine Sections ....
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....ancorp Advisors Pvt. Ltd. C.P. No. (IB)- 196(PB)/2017 which observed the following: "4. Learned counsel appearing on behalf of the Appellants submitted that the Adjudicating Authority has no jurisdiction to decide the legality and viability of foreign decree and no right finding can be given by it. 5. *** - 13. *** 14. In the circumstances, we answer the first question in favour of the Appellant and hold that the Adjudicating Authority has no jurisdiction to decide the question of legality and propriety of a foreign judgment and decree in an application under Sections 7 or 9 or 10 of the 'I&B Code'." 20. The Operational Creditor also relied on a judgment of the Hon'ble NCLAT in Peter Johnson John (Employee) vs. M/s. KEC International Limited Company Appeal (AT) (Insolvency) No. 188 of 2019 which clearly states as follows: "7. It is well settled that foreign decree either of reciprocating or non-reciprocating territory not passed on merits or not satisfying the requirements of Section 13 of CPC cannot be the basis of winding up petition. An ex-parte decree based on default summary judgment for nonappearance before a foreign court cannot be relied upon for seekin....
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.... arbitral award qualifies as 'pre-existing dispute' for the purposes of initiating corporate insolvency resolution process by the operational creditor. 26. The Operational Creditor referred to section 3(6) of the IBC, 2016 which defines claim as under: "claim" means-- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured; 27. A claim is defined to include a right to a remedy for breach of contract, if such breach gives rise to a right of payment, whether or not such a right has been reduced to a judgment. Thus, a claim includes a judgment, being an award passed by a court of competent jurisdiction. 28. The Arbitral Award passed as per the Arbitration Rule No. 126 of the 'GAFTA' was initiated for the breach of sales contract, after considering the disputes and submissions made by the Corporate Debtor in the Arbitral proc....
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....jaykumar Gopalan Iyengar, Director is annexed which states that the Operational Creditor appoints Mr. Nirav Dilip Gandhi as a constituted attorney to represent the Operational Creditor in various courts including the National Company Law Tribunal under the provisions of the IBC, 2016 of India along with Mr. Vijaykumar Gopalan Iyengar. 34. Hence it is clear from the above that Mr. Nirav Dilip Gandhi is rightly the authorised representative for the Operational Creditor to initiate the corporate insolvency resolution process against the Corporate Debtor. On foreign award 'not binding' upon parties in India 35. Section 44A of the Code of Civil Procedure reads as under: 44A. Execution of decrees passed by Courts in reciprocating territory.-- (1) Where a certified copy of a decree of any of the superior Courts of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court. (2) Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for ....
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.... competent Arbitral Tribunal after the consideration of the positions of both the sides, and there is no challenge to the Arbitral Award dated 16.04.2018 in a manner known to law. Hence the same cannot be considered as a pre-existing dispute, and the objection of the Learned Counsel for the Corporate Debtor on this count is rejected. On defective petition 38. The Corporate Debtor submitted that the Board Resolution submitted by Operational Creditor (Exhibit A to the petition) authorises Mr. Vijaykumar Gopalan Iyengar to file the present petition. However, the petition is signed by Mr. Nirav Gandhi as per the Power of Attorney submitted. The Corporate Debtor submits that in absence of specific authority in favour of Mr. Nirav Gandhi, the present petition is defective. 39. In the present case the Board of Directors of the Operational Creditor has, at its meeting held on 05.07.2018, resolved as follows: "Mr. Iyengar Vijaykumar Gopalan be and is hereby appointed as the Company's Constituted Attorney to do various acts, deeds and things on behalf of the Company, including: 1. to appoint and authorise substitute as attorneys 2. to represent the Operational Creditor in variou....
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....rs initiation of CIRP against the Corporate Debtor. 43. The Operational Creditor has proposed Mr. Rajeev Mannadiar as Interim Resolution Professional (IRP) in the matter. 44. It is, accordingly, hereby ordered as follows:- (a) The petition bearing CP (IB) No. 798/MB/C-IV/2019 filed by Agrocorp International Private (PTE) Limited [UEN: 199005306N], the Operational Creditor, under section 9 of the IBC read with rule 6(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against National Steel and Agro Industries Limited [CIN: L27100MH1985PLC140379], the Corporate Debtor, is admitted. (b) There shall be a moratorium under section 14 of the IBC, regarding the following: (i) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (ii) Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; (iii) Any action to foreclose, recover or e....