TaxTMI 
TaxTMI 
2020 (10) TMI 544
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...., as a public company limited by shares with 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 subm....
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....vit as required under section 9(3)(b) of the IBC, 2016 is placed at pp. 74-75 of the petition. 5. Mr. Zal 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 subjec....
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....oreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by 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 ju....
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....those proceedings satisfies the court that the award is not enforceable for the reasons enumerated in Sub-section 1 of Section 48. In other words, Sub-section 1 of Section 48 casts the burden of proof on the Respondent to show that 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 Na....
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....ia, in terms of section 46 of the Arbitration and Conciliation Act, 1996. 19. The Operational Creditor has relied on a judgment of the Hon'ble National Company Law Appellate Tribunal (NCLAT) in the matter of Usha Holdings L.L.C. & Anr. Vs. Francorp 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....
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....ot been enforced in India under the Arbitration Act, it cannot be said to be a judgment under Indian law and therefore there can be no right to payment. 25. The Hon'ble Supreme Court in K. Kishan vs. M/s. Vijay Nirman Company Pvt. Ltd (Civil Appeal No. 21824 of 2017) held that pendency of challenge to an 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 ju....
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...., Director as constituted attorney giving him the authority to appoint and authorise substitute as attorneys and to represent the Operational Creditor in various courts including the National Company Law Tribunal under the provisions of the IBC, 2016 of India. Further at pp. 12-13 of the petition a Power of Attorney dated 08.11.2018 signed by Mr. Vijaykumar 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 Court....
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....y resolution process by the operational creditor. In the present case, there is no pending challenge to the Arbitral Award. This Bench is of the considered view that it is not possible to wait indefinitely for the Corporate Debtor to challenge the Arbitral Award, and that it has to decide the present petition on the basis of the admitted positions, that is to say, there is an Arbitral Award passed by a 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 t....
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....the Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is more than minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders 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 secti....