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ICICI Bank Ltd. Versus M/s Classic Diamonds (India) Ltd.

Winding up petition - Held that:- The Company Petition is admitted and made returnable on 4 January 2016.

The Petitioner is directed to advertise the Petition in two local newspapers, viz. “Free Press Journal” (in English) and “Nav- Shakti” (in Marathi) and also in Maharashtra Government Gazette. Any delay in publication of the advertisement in the Maharashtra Government Gazette, and any resultant inadequacy of the notice shall not invalidate such advertisement or notice and shall not .....

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ules is dispensed with by the company. - COMPANY PETITION NO. 317 OF 2012 - Dated:- 19-10-2015 - S.C. GUPTE, J. 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 o .....

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e 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 guarantee calling upon the Respondent company to pay a sum of USD about 5.20 millions as on 6 February 2012. Upon non-payment of the amount under the corporate guarantee, by its statutory demand notice issued under S .....

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three defences were urged by learned Counsel for the Respondent. Firstly, it is submitted that the contract of corporate guarantee was executed by the Respondent with the branch of the Petitioner bank at Hong Kong. It is submitted that for the purpose of banking transactions, a branch has a separate existence from the head office or other offices or branches of a bank. It is submitted that there is no privity of contract as between the Petitioner carrying on business at its registered office or .....

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t the various payments made by the principal borrower to the Petitioner in discharge of the guaranteed debt. 4 In support of his submission that the transaction between parties is entered into by the Hong Kong branch of the Petitioner and, therefore, the present petition cannot be maintained by the Petitioner carrying on business at its principal or corporate office in India, learned Counsel for the Respondent relies upon the judgment of the Supreme Court in case of Agencia Commercial Internatio .....

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. 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 t .....

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nal Ultramarino closed its branches in Goa and moved a substantial portion of valuable assets held there to its Head Office at Lisbon and other places overseas. The closure of the branches of Banco Nacional Ultramarino at Goa gave rise to a considerable confusion. It was necessary to take measures for exchange of over nine crore rupees worth of Portuguese currency and likewise to provide for payment of monies and return of valuables deposited with the now closed branches. (As Banco National Ultr .....

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ed bank independent of Banco National Ultramarino for the limited purpose of disposal of business pending on the date of the transfer of power and closure of the bank as well as transfer of liabilities of the bank to, and their vesting in, the Custodian. The dispute before Supreme Court arose from a suit filed by the custodian in the Court of Civil Judge at Ilhas, Panaji against one Agencia Commercial International, its managing partner and his wife. It was alleged in the suit that the branch of .....

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omissory notes were not in possession of the plaintiff and were presumably removed to Portugal. The plaintiff, in the premises, prayed for a joint and several decree against the defendants. The suit was resisted by the defendants principally on the ground that Banco Nacional Ultramarino was 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 .....

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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 execute docu .....

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ing business of the branches and discharge of existing liabilities and recovery of existing debts and assets with a view to the ultimate winding up of the bank. The Supreme Court held that the particular provisions of the Regulation clearly proceed on the basis that the branches must be regarded as entering into and carrying out transactions identifiable as theirs. The Regulation treated these transactions as distinct from those carried on by the Head Office. Accordingly, effect had to be given .....

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nd followed in the banking law are all decisions pertaining to the question of jurisdiction of the Court to entertain a dispute with a particular branch and reflect on the situs of the debt or situs of the defendant branch for the purposes of jurisdiction. None of these decisions has ever considered the question of identity and separate existence of a branch from the point of view of privity. None of these decisions suggest that when a constituent enters into a transaction with the branch of a b .....

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ion 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 .....

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nt case, accordingly, was not the branch but ICICI Bank Ltd. having its registered office at Vadodara, its corporate office at Mumbai and acting through its Hong Kong branch. This puts the matter beyond the pale of any controversy, since even if the transaction was actually executed through or with the Hong Kong branch, that branch itself was merely acting as an agent of ICICI Bank with its registered office in Vadodara and corporate office in Mumbai. So much for the first defence of the Respond .....

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er, submitted is that when this document comes into the State of Maharashtra, by virtue of Sections 18 and 19 of the Bombay Stamp Act as applicable in the State of Maharashtra, the requisite stamp duty payable on the document in accordance with the Stamp law of the State of Maharashtra must be paid on it within a stipulated period. It is submitted that if such stamp duty is not paid, the document is not only inadmissible in evidence but cannot be acted upon in the State of Maharashtra. The argum .....

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the company has thereafter neglected to pay the sum or secure the same to the reasonable satisfaction of the creditor, the company is deemed to be unable to pay its debts. The Company Court is essentially concerned with the debt of the company and its inability to pay the same. No doubt the company may raise a defence, and it may even be termed as a bona-fide defence, that if the creditor were to enforce the debt in a Civil Court, the creditor would not be entitled to rely upon the document, fo .....

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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 .....

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ence is not produced before the Court. So much for the third and last defence of the Respondent. 9 In sum, there is no defence at all to the liability owed by the Respondent to the Petitioner. The Respondent has not only executed a Corporate Guarantee but has also addressed a letter of 22 April 2009 to the Petitioner submitting an undertaking as follows: 4. In consideration of your having agreed to enter into the Facility Letter with the Borrower, we hereby agree, confirm and undertake that: (I) .....

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y Letter (annexed hereto) and each of the other Finance Document(s) (copies of such have been provided to me.) The Respondent has also annexed a further letter of 17 May 2010 to the Petitioner reiterating the position as follows: 4. In consideration of your having agreed to enter into the Supplementary Facility Letter with the Borrower, we hereby agree, confirm and undertake that: (I) the Guarantee continues to subsist and remains valid and binding on us for all the obligations of the Borrower u .....

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to the terms of the Amendatory Facility Letter. The Respondent 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. .....

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