Company Petition No.277 of 2011 along with Company Petition No.128 of 2011. Case: State Trading Corporation of India Ltd. Vs M/s. Masumi Overseas Private Ltd.. Bombay High Court

Case Number:Company Petition No.277 of 2011 along with Company Petition No.128 of 2011
Party Name:State Trading Corporation of India Ltd. Vs M/s. Masumi Overseas Private Ltd.
Counsel:For Appellant: Mr. Pradeep Sancheti, Senior Advocate a/w Mr. Darshit Jain a/w Ms. S.I. Shah i/by M/s. S.I. Shah & Co. and For Respondents: Mr. Sameer Jain a/w Mr. Kantilal Kanojia a/w Mr. Angad Sandhu i/by Mr. P.N. Patwardhan, Advs.
Judges:R.D. Dhanuka, J.
Issue:Companies Act, 1956 - Sections 433, 434; Arbitration and Conciliation Act, 1996 - Sections 8, 11; Companies (Court) Rules, 1959 - Rule 28
Judgement Date:June 06, 2017
Court:Bombay High Court
 
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Judgment:

  1. By these two petitions filed under Sections 433 and 434 of the Companies Act, 1956, the petitioner seeks winding up of the respondent company on the ground that the respondent is unable to pay its debts.

  2. By consent of the parties, both the petitions were heard together for the purpose of deciding whether these petitions shall be admitted or not and are being considered by a common order.

    Some of the relevant facts in Company Petition No.277 of 2011 are as under:-

  3. The petitioner is one of the agencies nominated by the Government of India for import and export of gold and other precious metals under the Foreign Trade Policy. The respondent expressed its desire to associate with the petitioner for selling or exporting gold and diamonds to the prospective overseas buyers. The petitioner agreed to provide its co-operation to the respondent in order to promote the export of gold jewellery. The parties accordingly entered into an agreement dated 15th December 2006 for export of gold jewellery by the respondent through the petitioner to certain prospective foreign buyers as identified by the respondent on the terms and conditions recorded in the said agreement. Clause 10 (b)(v) of the said agreement provided that in the event of non-payment of export bills by the foreign buyers, the petitioner will have full recourse of the post shipment credit with interest etc. from the respondent. The respondent-company shall immediately refund the amount of post shipment credit with interest as and when asked for by the petitioner. Clause 16(a)(c) of the said agreement provided that the respondent shall indemnify and keep indemnify the exporter against all such claims, actions, proceedings, losses, costs, taxes, levels, duties, expenses arising out of the said agreement. It was further agreed that in the event of the buyers failing to honour their contractual obligations, the respondent alone shall bear all the risks and costs.

  4. It is the case of the petitioner that the respondent obtained various export orders from various foreign buyers. The respondent accordingly exported the gold jewellery to those foreign buyers through the petitioner. The bills/invoices for the sale of gold jewellery were raised on the foreign buyers by the petitioner from time to time during the period 2008-09 and the said bills/invoices were discounted by the bankers of the petitioner i.e. Standard Chartered Banks while giving post shipment finance facility which was extended through the petitioner to the respondent in the year 2008-09. It is the case of the petitioner that the petitioner during the said period 2008-09 exported the gold jewellery aggregating to US $7759680 was sold to the foreign buyers.

  5. The respondent had availed of post shipment finance facility from time to time from the bankers of the petitioner i.e. Standard Chartered Bank during the said period. It is the case of the petitioner that none of the bills/invoices raised on the foreign buyers for export of gold jewellery were, however, honoured by the foreign buyers on due date. The respondent had issued a corporate guarantee dated 17th June 2008 upto maximum of sum of Rs.1 crore in favour of petitioner in order to ensure due payment from the foreign buyers of the price of gold jewellery sold to them by the petitioner. Under clauses 3 and 4 of the said corporate guarantee, the respondent also guaranteed the due payment of the purchase price, in the event of failure of the foreign buyers not paying to the petitioner the purchase price payable by it for the purchases of gold jewellery.

  6. It was agreed that any demand made on the guarantor by the beneficiary shall be final, binding and conclusive evidence and that the respondent would be liable under the said guarantee as if it were the sole principal debtor and not merely a security. The managing director and one of the directors of the respondent had also submitted their personal guarantees dated 7th January 2010 in favour of the petitioner making themselves personally liable to pay the purchase price of the exported gold jewellery in the event of failure on the part of the respondent to pay the said amount to the petitioner. It is the case of the petitioner that the petitioner from time to time reminded the respondent to pay to the petitioner various amounts payable under the said post shipment finance facility availed of by the respondent but the respondent did not pay any amount.

  7. The petitioner vide its letters dated 7th May 2010 and 18th May 2010 called upon the respondent to pay US$ 7759680 which was equivalent to Indian Rs.41,22,10,222/- as on the date of said notice. On 20th May 2010, the petitioners invoked the corporate guarantee and called upon the respondent to pay an amount of US$ 7559680 equivalent to Indian Rs.36,27,65,040/- as on 20th May 2010 along with interest of Rs.1,99,56,606.79. By a letter dated 28th May 2010, the petitioner also called upon the respondent to pay the said outstanding liabilities of the respondent in view of personal guarantee dated 7th January 2010 submitted by the respondent. The respondent, however, did not make any payment to the petitioner. It is the case of the petitioner that the respondent vide its advocate''s reply dated 30th May 2010 took a frivolous stand for referring the subject matter to arbitration and raised an alleged claim of Rs.110 crores against petitioner.

  8. It is the case of the petitioner that the respondent company thereafter had held various meetings with the officers of the petitioner and had vide letter dated 14th June 2010 admitted the liability of the said payment and had requested the petitioner for further post shipment finance assistance with a view to resume normal business enabling the said foreign buyers to remit their dues.

  9. The respondent vide its letters dated 25th August 2010 and 4th September 2010 requested the petitioner for providing fresh additional financial facility in the form of preshipment and post shipment additional finance assistance. The petitioner through its advocate''s letter dated 30th November 2010 issued a statutory notice upon the respondent calling upon the respondent to pay to the petitioner sum of Rs.41,22,10,222/- inclusive of accrued interest on the outstanding liability of the payment of export bills of the said foreign buyers. The said notice was replied by the respondent vide its advocate''s common reply dated 20th December 2010 and denied its liability to pay the said debts of the petitioner.

  10. On 14th December 2010, the petitioner filed a summary suit (1885 of 2011) against the respondent in this Court for recovery of Rs.38,27,21,646.79 in respect of 9 invoices on the basis of dishonoured post dated cheques, corporate guarantees and personal guarantees given by the respondent in this Court. On 18th December 2010, the respondent filed an arbitration application (212 of 2011) under section 11 of the Arbitration and Conciliation Act, 1996 in this Court. The respondent filed notice of motion in the said summary suit under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the parties to the Arbitration. Some time in the year 2011, the petitioner filed this winding up petition against the respondent.

  11. By an order dated 13th January 2014, this Court dismissed the said notice of motion filed by the respondent under section 8 of the Arbitration and Conciliation Act, 1996 in said summary suit filed by the respondent. By an order dated 7th October 2015, the division bench of this Court dismissed the Appeal (L) No.52 of 2014 filed by the respondent against the said order dated 13th January 2014 as not maintainable. By an order dated 12th July 2016, the Supreme Court has dismissed the special leave petition filed by the respondent against the said order 7th October 2015 passed by the division bench of the this Court.

  12. On 24th June 2011, the arbitration application filed by the respondent came to be rejected by this Court by observing that such an application will have to be made with the Indian Council of Arbitration. On 6th July 2011, the respondent filed an arbitration application (1797 of 2011) with the Indian Council of Arbitration along with statement of claim. On 2nd August 2011, the petitioner nominated Shri Justice D.P.Wadhwa, a former Judge of the Supreme Court as their nominee arbitrator. The respondent nominated of Shri Justice R.C. Lahoti, former Chief Justice of India as their nominee arbitrator. The learned arbitrators have appointed a Presiding Arbitrator.

    Some of the relevant facts in Company Petition No.128 of 2011 are as under:-

  13. It is the case of the petitioner that under Agreement dated 15th December 2006 for export of gold jewellery by the respondent through the petitioner, the respondent had committed default in making payment to the petitioner. The foreign buyers also failed to make payment to the petitioner. It is the case of the petitioner that the respondent vide its letter dated 30th June 2009 submitted the Diamond Export Document worth US $ 15281061 to the petitioner for onwards submission to Exim Bank and requested for adjusting the old overdues of Gold Jewellery Account. The respondent also sought permission for export of cut and polished diamonds to roll over the old overdues instead of gold jewellery at the earliest. The petitioner accordingly forwarded those documents to Exim Bank for adjustment of the account of outstanding dues of the respondent of gold jewellery.

  14. It is the case of the petitioner that the Exim Bank adjusted those export documents for cut and polished diamonds with outstanding dues of 20 invoices of gold jewellery and created a new debt account based on invoices of those cut and polished diamonds. The respondent vide its letter dated 29th December 2009 to the petitioner, as regards the remittance of an outstanding export proceeds for the bills with Standard Chartered Bank is concerned, requested the petitioner to accede an extension...

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