TMI Blog2015 (12) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... . For The Petitoner : Mr Rohan Cama a/w Bhalchandra Palav i/b Cyril Amarchand Mangaldas For The Respondent : Mr Haresh Jagtiani Sr. Advocate a/w Mr Yashpal Jain, Ms Vanelana kumavat and Mr Rushabh Thacker i/b Mr Yashpal Jain P.C. : The Company Petition seeks winding up of the Respondent company on the ground of deemed inability to pay its debts within the meaning of Section 433 and 434 of the Companies Act, 1956 ( the Act ). 2 One Aarohi Diamonds Ltd. ( in which the Respondent holds 49 % shareholding) had obtained a credit facility (loan) up to the sum of USD 7 million from the Petitioner bank. This loan was inter alia secured by a corporate guarantee issued by the Respondent in favour of the Petitioner. The credit facility was subsequently restricted to the sum of USD 5 millions. The principal borrower defaulted in repayment of the loan availed of under the credit facility. The Petitioner, thereupon, by its letter dated 3 January 2012, cancelled the credit facility with immediate effect calling upon the borrower to make payment of USD 5.15 millions towards the dues outstanding as on 3 January 2012. On 6 February 2012, the Petitioner invoked the corporate gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sind Bank 2008 Indlaw CAL 766. 5 Agencia Commercial International Ltd emphasizes the distinct and separate identity of a branch of a bank based on the observations of the Supreme Court in Delhi Cloth and General Mills Co. Ltd Vs. Harnam Singh AIR 1955 SC 590. The judgment in Delhi Cloth and General Mills Co. Ltd. notes a settled rule that the obligation of a bank to pay the cheques of a customer rests primarily on the branch at which he keeps his account and the bank can rightly refuse to cash a cheque at any other branch. A customer must make a demand for payment at the branch where his account is kept before he has a cause of action against the bank. This case and the cases that follow it consider the identity of a branch as a distinct and separate entity in the context of ascertaining the situs of the debt and also in the context of the jurisdiction of the Court from the point of view of the place of accrual of cause of action. The case of Agencia Commercial International Ltd. contains peculiar facts. Originally, Banco Nacional Ultramarino (the National Overseas Bank) with its Head Office at Lisbon in Portugal had branches in Goa before the territories of Goa, Daman Diu w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a public limited company with its Head Office at Lisbon and the branch at Panjim did not possess a separate judicial personality from the company and could not be said to possess assets or liabilities of its own; that transactions by the Panjim branch were made under the direct superintendence of the Head Office and the credit was granted directly by the Head Office; and that the credit in question was incorporated in promissory notes lying with Banco Nacional Ultramarino which had already informed its debtors that it would take action on the bills directly or by transferring them to a third party. On these facts and contentions, the Supreme Court considered the question as to the separate identity and existence of the branch. On facts, it was found that the loan agreements were signed by the manager of the relevant branch and the loan accounts were opened by the branch in its books; that payments were made by the branch to the appellants; that deposits by way of repayment were made in this account maintained by the branch; and that the appellants hypothecated their goods in favour of the branch. In short, what was found was that though the Head Office authorized the branch to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent's counsel is in the context of jurisdiction in case of a banking transaction. It considers the question only in the context of the situs of the debt and also the situs of the defendant for the purpose of jurisdiction of the Court. We are not concerned here with the question of jurisdiction of the Court to entertain this Company Petition. That jurisdiction evidently lies with this Court since the Respondent Company's registered office is situated in the State of Maharashtra. What is alleged in this case is that the Petitioner only has a privity of contract vis-a-vis the particular branch at Hong Kong and not as a bank carrying on business in its head office or corporate office in India. That is plainly unsustainable. Besides, whatever may be the transaction of the Hong Kong branch of the Petitioner bank with the principal borrower, the document of guarantee is clearly executed by the Respondent in favour of the Petitioner which is described as having its registered office at Vadodara and its corporate office at Mumbai acting through its Hong Kong branch. The promisee, in the present case, accordingly, was not the branch but ICICI Bank Ltd. having its registered offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the document, forming the basis of the debt, on account of inadequacy of stamp duty paid thereon. This may well be a defence to the debt but then there is nothing to show or claim that the creditor will enforce his debt in the State of Maharashtra. He may well do so in the State of Gujrat, where the document can be acted upon as adequately stamped and admissible in evidence. The Company Petition is, accordingly, based on a debt to which there is no defence if the Petitioner were to file a suit in an appropriate court of law. The Company Petition can surely be sustained on such debt and that the debt is not enforceable in the State of Maharashtra is no defence to the Company Petition. So much for the second defence of the Respondent. 8 The last defence of the Respondent is about want of a certificate by an authorized officer of the Petitioner in accordance with the terms of the Corporate Guarantee. The Corporate Guarantee inter alia provides ( in clause 15 thereof ) that a certificate in writing signed by a duly authorized officer of ICICI Bank shall be conclusive evidence against the guarantors of the amount for the time being due. In other words, a certificate referred to in Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also admitted the liability in its balance sheet as of 31 March 2011. No doubt the liability mentioned in the balance-sheet is stated to be a contingent liability in the sense that the liability had not yet accrued in presenti since there was no default of the principal borrower to pay the debt and no demand as yet on the guarantor. What is clear, however, is that the figure of the debt claimed by the Petitioner is not disputed. In other words, the quantum of the liability is admitted, even though the same is described as a contingent liability. Then there is also the failure to reply to the statutory notice. A collective reading of all these facts, in the light of documents produced by the Petitioner before this Court, makes it quite clear that the Petitioner's debt over ₹ 22 Crores cannot be said to be disputed bona fide by the Respondent. The Petitioner has correctly disclosed the position of the debt as of the date of the Petition. In its rejoinder, the Petitioner has disclosed the payments made by the principal borrower to the Petitioner during the pendency of the Petition. After giving credit for all these payments, a sum of about ₹ 33.53 Crores as of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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