Bombay High Court
Deutsche Bank Ag vs Pearl Engineering Polymers ... on 19 November, 2012
Bench: Anoop V.Mohta
Dixit 1 CP-221-12
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY PETITION NO.221 OF 2012
ALONG WITH
COMPANY APPLICATION NO. 304 OF 2012
IN
COMPANY PETITION NO. 221 OF 2012
ig In the matter of the Companies
Act, 1956;
And
In the matter of Sections 433(e)
and 434 of the Companies Act,
1956;
And
In the matter of Pearl Engineering
Polymers Limited, a company
incorporated under the provisions
of Companies Act, 1956 and
having its Registered Office at
Plot No.D-17, MIDC Industrial
Area, Kurkumbh, Taluka Daund,
Dist. Pune 413 802.
CIN - L25209PN1992PLC012701
Deutsche Bank AG, London,
having its office at Winchester House,
1, Great Winchester Street,
EC2N 2DB, London ... Petitioner
Versus
::: Downloaded on - 09/06/2013 19:23:56 :::
Dixit 2 CP-221-12
Pearl Engineering Polymers Limited,
a company incorporated under the
provisions of Companies Act, 1956
and having its Registered Office at
Plot No.D-17, MIDC Industrial Area,
Kurkumbh, Taluka Daund,
Dist. Pune 413 802 ... Respondent
Mr. Virag Tulzapurkar, Sr. Counsel, a/w. Dr. Birendra Saraf, Mr.
Sachin Chandarana, Mr. Shiraz Fatakia, i/by M/s. Manilal Kher
Ambalal & Co., for the Petitioner.
Mr. Arun Khosla, Sr. Counsel, a/w. Mr. Prakash Punjabi i/by M/s.
Prakash Punjabi & Co., for the Respondent.
CORAM : ANOOP V. MOHTA, J.
RESERVED ON : 17
TH OCTOBER, 2012
.
PRONOUNCED ON : 19
TH NOVEMBER, 2012.
JUDGMENT :
. The Petitioner, a Foreign Company, constituted under the laws
of Germany, has invoked Section 433(e) and 434 of the Companies
Act, 1956, (for short "the Act").
2 The Petitioner has been authorized to carry on banking
business in India. The basic facts about the Petitioner-Bank and the
reasons for filing of the present Company Petition for winding-up
against M/s. Pearl Engineering Polymers Limited, i.e. the
Respondent-Company, are as under :
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. "The present Petitioner is a body corporate and is also
authorized to carry on banking business in India and
constituted under the Laws of Germany. One Asian Finance &
Investment Corporation Ltd. ("AFIC") being an institution as
per the laws of Republic of Singapore engaged in investment
for industrial activities in the Asian Region. Under the terms
of an agreement relating to sale of assets and subscription for
shares dated 28th February, 2005 ("Purchase Agreement"),
ACTIS AFIC Holdings Ltd. agreed to purchase certain
financial and investments (including the debts owed by the
Respondent Company to AFIC) from AFIC and to subscribe to
the shares of AFIC. The said Purchase Agreement was valid
and conditional upon approval of the shareholders of AFIC
and grant of order by the High Court of Republic of
Singapore to sanction the scheme of arrangement between
AFIC, its shareholders and ACTIS AFIC Holdings Ltd. The
scheme became effective pursuant to the order dated 10 th
May, 2005 passed by the High Court of Singapore. Thus
ACTIS AFIC Holdings Ltd., became entitled to all rights in
respect of the Company's said loan. Thereafter, as a result of
the internal arrangement between the ACTIS' group of
companies under a Trust Deed dated 7 th June, 2005 ("Trust
Deed"), AFIC was appointed as a Trustee of ACTIS AFIC
Equity Management Ltd., ACTIS AFIC Credit Management
Ltd. and ACTIS AFIC Labuan Ltd. to hold in trust the assets
for the aforesaid companies. Thus, AFIC as trustee of ACTIS
AFIC Credit Management Ltd. came to hold the legal title to
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the said loan and rights thereto. It is pertinent to note that
under the terms of the Trust Deed, AFIC, ACTIS AFIC
Holdings Ltd. and ACTIS AFIC Credit Management Limited
agreed that debts owed by the Respondent Company to AFIC
shall be held by AFIC on trust for ACTIS AFIC Credit
Management Limited. Thus, the transfer from ACTIS AFIC
Holding Ltd. to ACTIS AFIC Credit Management Ltd. of the
beneficial interest in the loan took place, with AFIC as trustee
continuing to hold the legal title thereto, now as trustee for
ACTIS AFIC Credit Management Ltd. Thereafter, vide Trade
Confirmation dated 26th March, 2007 executed by AFIC (the
Trustee appointed under the Agreement dated 7 th June,
2005) and ACTIS AFIC Credit Management Ltd. as also the
Petitioner, ACTIS AFIC Credit Management Ltd. with AFIC
signed and recorded the terms of the sale of the loan of the
Respondent Company to the Petitioner. Pursuant thereto AFIC
acting on behalf as investment manager for ACTIS AFIC
Credit management Ltd. assigned all its rights, title, interest,
obligations, benefits arising under a Loan Agreement dated
30th July, 1993 and the Amendment Agreement dated 24 th
November, 2003 executed between AFIC and the Respondent
Company to the present Petitioners vide Sale and Purchase
Agreement dated 30th March, 2007. Thus the Petitioner
became the legal and beneficial holder of all rights inclusive
of the rights of recovery of the said loan in its own right."
3. The Respondent Company availed of a financial assistance
Dixit 5 CP-221-12
including term loan from AFIC in order to establish a plant to
produce 17250 TPA of specialty bottle grade polyester chips at
Kurkumbh, Plot No.D-17, MIDC Industrial Area, Taluka Daund,
District Pune, Maharashtra.
4. As there were constant defaults and the liability was quite
huge, the Petitioner had filed a winding-up Petition (291/2010)
which was withdrawn with liberty and, therefore, the present
Company Petition.
5.
The matter listed for admission. The Respondent Company by
its affidavit-in-reply dated 10th July, 2012 resisted the same on all
counts and even raised issue of locus standi of the Petitioner to
maintain the present Petition. An affidavit-in-rejoinder also filed by
the Petitioner.
6. The case of the Respondent is that they have paid the dues on
installments till 31st December, 2005 and thereby discharged the
liability of the erstwhile AFIC. There is serious dispute raised with
regard to the Sale and Purchase Agreement dated 30 th March, 2007,
whereby AFIC and the Petitioner entered into the transaction and
that resulted into filing of the Petition in May 2012, on the basis of
alleged due and payable claim of US Pound 31,28,855 along with US
Pound 96,950, due on 30th September, 2006. The aspect of
limitation is also important.
7. There is nothing on record to show and justify that at any
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point of time, the Respondent Company admitted the Petitioner's
ownership, entitlement and/or agreed to make the payment so
claimed. These disputed facts go to the root of the matter. The
earlier background, the litigation and the reasons for withdrawal, as
reflected in the affidavit, are also additional factors, which unless
adjudicated finally, just cannot be overlooked.
8. I have already dealt with in Company Petition No.86 of 2012
(17-10-2012) by referring to the Supreme Court Judgment, IBA
Health (India) Private Limited Vs. Info-Drive Systems SDN. BHD.,
[(2010) 10 SCC 553], about the effect of disputed questions and
facts and the defence so raised in such matter. If it is a bona fide
dispute, the Court needs to consider these aspects before passing any
order or even admission of the Company Petition. The Apex Court in
IBA Health (India) Private Limited (supra), while dealing with
Section 433(e) and 434 of the Act, has recorded as under :
"20. The question that arises for consideration is that
when there is a substantial dispute as to liability, can a
creditor prefer an application for winding-up for
discharge of that liability? In such a situation, is there
not a duty on the Company Court to examine whether
the company has a genuine dispute to the claimed
debt? A dispute would be substantial and genuine if it
is bona fide and not spurious, speculative, illusory or
misconceived. The Company Court, at that stage, is not
expected to hold a full trial of the matter. It must
decide whether the grounds appear to be substantial.
The grounds of dispute, of course, must not consist of
some ingenious mask invented to deprive a creditor of
a just and honest entitlement and must not be a mere
wrangle. It is settled law that if the creditor's debt is
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bona fide disputed on substantial grounds, the court
should dismiss the petition and leave the creditor first
to establish his claim in an action, lest there is danger
of abuse of winding-up procedure. The Company
Court always retains the discretion, but a party to a
dispute should not be allowed to use the threat of
winding-up petition as a means of forcing the company
to pay a bona fide disputed debt.
34. A creditor's winding-up petition, in certain
situations, implies insolvency or financial position
with other creditors, banking institutions, customers
and so on. Publication in the newspaper of the filing
of winding-up petition may damage the
creditworthiness or financial standing of the company
and which may also have other economic and social
remifications. Competitors will be all the more happy
and the sale of its products may go down in the
market and it may also trigger a series of cross-
defaults, and may further push the company into a
state of acute insolvency much more than what it was
when the petition was filed. The Company Court, at
times, has not only to look into the interest of the
creditors, but also the interests of the public at large."
9. The issues are also with regard to the details of valid/binding
assignment of debts/the Sale & Purchase Agreement in question.
The aspect of Master Circular for External Commercial Borrowing
dated 2nd July, 2012 issued by the Reserve Bank of India and the
related Regulations and detailed reasoning to justify the entitlement
of the Petitioner to file present Petition is also a matter of debate.
Certain issues are even pending before the concerned Authorities in
this regard between the parties referring to the details of the
assignment. Therefore, it is not the question of invalidation and/or
illegality of the assignment of loans, but the question is the final
Dixit 8 CP-221-12
authority and entitlement of the Petitioner to claim the same. The
Petitioner specifically averred and contended that the due and
payable amount to the erstwhile AFIC was paid in the year 2005
itself. The aspect of violation of the Foreign Exchange Management
Act, 1999 and FEMA Regulations, 2000, as averred and as denied is
also an additional factor.
10. Let Competent Authority decide and declare finally that the
Petitioner fulfills all qualifications to be the lender including the
retrospectivity of the SEBI circulars, if any. We are concerned with
the invocation of these provisions under the Company Act and not
the action and/or proceedings under the other Acts. There is a
substance in the contentions so raised by the learned Senior Counsel
appearing for the Respondent that the debt has been secured by
mortgaging the immovable property of the Company. There is
nothing brought on record to show that they have complied with all
these formalities and there is a conclusive decision with regard to the
validity of the assignment, transfer and their entitlement to claim the
alleged amount, as the lender from the Respondent-Company. There
is even a dispute raised with regard to the intimation and/or about
valid transfer of Deed of Assignment and the Sale and Purchase
Agreement dated 30th March, 2007. The Respondent's RBI approval
of 10th June, 2012 to the amendment in original terms and
conditions following BIFR sanctioning Rehabilitation Scheme, that
itself cannot be to disentitle the Respondent to challenge the
ownership/title/entitlement of the Petitioner to claim such alleged
due and payable amount, based upon the unregistered Deed of
Dixit 9 CP-221-12
Assignment and the Sale and Purchase Agreement in question.
11. The Petitioner needs to stand on his own leg for claiming the
benefits of the provisions in question. We cannot compare such
liquidation action with the ordinary money recovery suits. The
Company Judge is not competent to decide the validity and/or
dispute so raised with regard to the Sale and Purchase Agreement
and so also the Deed of Assignment in question, as it requires various
decisions prior and even post of the transactions.
12.
The Respondent Company as mentioned unable to pay after
31st December, 2005 due to liquidity constraints in view of losses,
that itself cannot be the reason to accept the case of the Petitioner in
the facts and circumstances of the case. In all these prior
proceedings, till the Deed of Assignment and/or sale and purchase
transactions, the Petitioner Company was no where in picture. The
Mortgage deed and the hypothecation of movables and the default
clauses therein, are still there to recover the amount due, if any.
13. The documents relied and referred by both the Counsel itself
shows that there are various questions, which need to be adjudicated
first before accepting the averments of the Petitioner. Unless the
transactions based upon which the present Petition is filed by the
Petitioner has binding force and unless it is declared accordingly in
view of the challenge so raised, I am inclined to observe that the
present Company Petition, as filed, is not sufficient to pass the
winding-up order against the Respondent-Company. There is no
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foundation to accept and exercise the discretion that the
Respondent-Company "neglect to pay due and "payable/agreed
amount". The Petitioner is not remedyless to recover the amount.
14. In view of above, I am inclined to observe that there are
various disputed questions of facts are involved; and the amount so
claimed cannot be stated to be admittedly due and payable apart
from the entitlement of the Petitioner. Therefore, the Petition is
dismissed. However, all points are kept open. No order as to costs.
15.
In view of the dismissal of the Company Petition itself, nothing
survives in the Civil Application and the same is also disposed of.
( ANOOP V. MOHTA, J. )
