TMI Blog2015 (9) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, saying that because of clause 13.3 of the Trust Deed, the option of filing of Company Petition by the appellant Trustee is taken away, would not be correct. As we have already observed above, questions of law can always be looked into by the Courts in India by applying, either Indian law or English law, as the case may be. For deciding this question, all that would be required is interpreting the provisions of the Trust Deed by applying Indian law or English law. In our view, the same can always be done by the Company Court, if such question is raised before it during the course of the proceedings. The position of law is absolutely clear, that it is for the company petitioner to prove that the debt liable to be paid is either admitted or duly proved, and also that the company is unable to pay such debt. It is only in such circumstance, the petition for winding up would be allowed. In the present case, since such question has not been gone into by the Company Judge, who has dismissed the petition only on the ground of lack of jurisdiction, we would not be inclined to make any observation in this regard, and would leave it to the Company Court to record its finding on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay the same. A response to the same was given by the respondent-Company on the same day through E-mail, wherein request for recalling the notice was made. Thereafter, correspondence was exchanged between the petitionerappellant and the respondent-Company. When the Company still did not even pay interest due in March, 2010, then on 12.08.2010, a statutory notice for winding up under Section 433, read with section 434, of the Companies Act, 1956, was issued by the appellant, calling upon the Company to pay the interest amounting to 1,050,000 (Euro One Million and Fifty Thousand) which was the total of the amount of interest payable on 18th September 2009 and 18th March 2010. Further, the accreted principal amount under the bonds for a sum 46,672,420.79 (Euro Forty-Six million, Six Hundred and Seventy-Two Thousand, Four Hundred and Twenty and Seventy-Nine cents only) along with the accrued interest on the principal amount of the bonds, was also demanded. In the said notice, it was specifically mentioned that in default of payment of the said amount, the appellant would be constrained to initiate appropriate legal proceedings, including proceedings for winding up of the Company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ordered to be wound up? ( 7. ) While dismissing the Company Petition, the learned Single Judge had primarily considered the second point, which relates to the jurisdiction of the Company Court in entertaining the Company Petition. After considering the provisions of the Trust Deed, mainly clauses 20.1, 20.2, 20.3 and 20.4 and also the conditions in the Offering of the Bonds, the Company Court, after holding that the English Courts would have jurisdiction to entertain a winding up petition against the respondent-Company, even though it may be a Company registered in India, further observed that or for that matter, it could even be with reference to the winding up proceedings under the Companies Act, 1956, subject to the petitioner satisfying that there has been an adjudication and findings on the assertions as to the breach of contract, the liability thereof and the inability on the part of the respondent to pay its debts, with reference to English law, by a competent court with jurisdiction on which this court could act . ( 8. ) The Company Court, thus, held that in terms of the Trust Deed, the jurisdiction was agreed to be conferred on the English Courts and not the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to do so within a reasonable time and such failure is continuing. 20 Governing Law and Jurisdiction 20.1 Governing Law This Trust Deed and the Notes and all matters arising from or connected with them are governed by, and shall be construed in accordance with, English law. 20.2 English Courts The Courts of England have exclusive jurisdiction to settle any dispute (a 'Dispute'), arising from or connected with this Trust Deed or the Bonds (including a dispute regarding the existence, validity or termination of this Trust Deed or the Bonds) or the consequences of their nullity. 20.3 Appropriate forum The parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary. 20.4 Rights of the Trustee and Bondholders to take proceedings outside England Clause 20.2 (English courts) is for the benefit of the Trustee and the Bondholders only. As a result, nothing in this Clause 20 (Governing Law and Jurisdiction) prevents the Trustee or any of the Bondholders from taking proceedings relating to a Dispute ('Proceedings') in any other courts with juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (2) of the Companies Act, 1956 are reproduced below. S.2(11) : 'the Court' means (a) with respect to any matter relating too a company (other than any offence against the Act), the Court having jurisdiction under this Act with respect to that matter relating to that company, as provided in section 10; (b) with respect to any offence against this Act, the Court of a Magistrate of the First Class, or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence. S.9: Act to override memorandum, articles, etc - Save as otherwise expressly provided in the Act (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be creditors within the meaning of clause (b) of sub-section (1). (3) (4) .. (5) .. (6) .. (7) .. (8) .. ( 13. ) SECTION 57(2) of the Indian Evidence Act, 1972 is also reproduced below: S.57: Facts of which Court must take judicial notice: (1) (2) All public Acts passed or hereafter to be passed by Parliament of the United Kingdom, and all local and personal Acts directed by Parliament of the United Kingdom to be judicially noticed. ( 14. ) The submission of the learned counsel for the appellant is that though under clause 20.2 of the Trust Deed, Courts of England are to have exclusive jurisdiction to settle any dispute arising from or connected with the Trust Deed or the Bond or the consequence of their nullity but by virtue of clause 20.4, the Trustee (i.e., the appellant) would have a right to take proceedings relating to a dispute, in any other Court with jurisdiction and are also permitted to take concurrent proceedings in any number of jurisdictions. It is submitted that though Clause 20.1 provides that all matters arising from or connected with the Trust Deed are governed by, and shall be construed in accordance with English law, but ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en dismissed, is because of lack of jurisdiction and thus, it is the third point which has to be decided by this Court in this appeal. ( 17. ) It is contended by learned Senior Counsel for the respondent that by agreeing to the jurisdiction of the English Courts, appellant had given up the right of filing a winding up petition in India. It is contended that the question of appellant having right to file a winding up petition has to be decided by the English Courts alone and that too by applying the English law, and thus, nothing can be looked into by the Indian Courts, if it is a matter arising out of the terms of the Trust Deed. According to the learned counsel, appellant has to first approach the English Court to know whether it has a right to file a winding up petition or not, and if yes, then it may file such petition in England or India, as the case may be. It is further submitted that though clause 20.4 of the Trust Deed gives a right to the Trustee or Bond holder to approach the Court having jurisdiction, but since the Company Court would not be the Court with jurisdiction to entertain the winding up petition, learned Company Judge has rightly dismissed the Company Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Company. Clause (e) of section 433 provides that the Company can be wound up if it is unable to pay it debts. Section 434 gives the details as to when the Company would be deemed to be unable to pay its debts. ( 21. ) While passing the impugned order dismissing the Company Petition for lack of jurisdiction, learned Company Judge has relied on the decision of Swastik Gases Pvt Ltd Vs Indian Oil Corporation Ltd, 2013 9 SCC 32, wherein the issue was with regard to invoking of jurisdiction in Jaipur Court, where a part of the contract had been performed by the parties in Jaipur and also in Kolkata, but the agreement provided that the Kolkata Court would have jurisdiction to entertain all cases arising out of the dispute with regard to the agreement. In such facts, it was held that Kolkata Court would have the jurisdiction and not Jaiput Court. Relying on the said decision, learned Company Judge has considered and interpreted clause 20 of the agreement and held that the English Courts alone would have jurisdiction to try any case regarding a dispute with regard to the Trust Deed. ( 22. ) There cannot be any quarrel with regard to the law laid down by the Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Holders to raise a dispute in any other Court with jurisdiction, or to take concurrent proceedings in any number of jurisdictions, meaning thereby that the restriction imposed by clause 20.1 would be only on the respondent Company and not on the appellant/Trustee or the Bond Holders, as clause 20.2 is for the benefit of Trustee/Bondholders only. The right of the Trustees of the debenture holders to file a winding up petition has been given under Section 439 of the Companies Act. As such, it cannot be disputed that, in the facts of the present case, the winding up petition filed by the Trustee, would be maintainable in the High Court of Karnataka, which has the territorial jurisdiction to entertain such petition. As already noted in paragraph 18 hereinabove, learned counsel for the respondent Company has also accepted that under clause 20.4 of the Trust deed the appellant Trustee would have a right to approach either the Courts in India or England, with regard to any dispute. He has, however, made his submission on other issues which shall now be considered. ( 26. ) The other question raised by the respondent is whether for enforcement of such right, Trustee can file a winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Company to the Bond holders, which has not been paid. ( 31. ) The only question which remains is as to whether the appellant Trustee can represent the Bond holders or not. With regard to this, learned counsel for respondent has relied on clause 10.1 of the Bond. Firstly, the same is a clause of the Bond and not the Trust Deed. Secondly, it provides that the Trustee, at his discretion, and if so requested in writing by holders of not less than 25%, may proceed to initiate proceedings. It is the interpretation of this clause, which learned counsel for respondent states, that the Company Court cannot decide in a Company Petition for winding up, and it is the English Courts, applying the English law, which alone can interpret the said clause. In our view, the said contention does not have merit because, as we have already clarified hereinabove that English law can be applied by Courts in India, and also that the bar of approaching the Indian Courts is on the Company, and not the Trustee/appellant. Further, the interpretation of clause 10 of the Bond is a question of law to be interpreted in terms of the relevant law, which may be Indian law or the English law, which can alwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Uttar Pradesh Vs North India Petrochemicals Ltd, 1994 3 SCC 348. In the said decision, reliance has been placed on another decision of the Apex Court in the case of Madhusudhan Gordhandas Vs Madhu Wollen Industries Pvt Ltd, 1971 3 SCC 632 wherein it has been held that 'principles on which the court acts are firstly that the defense of the company is in good faith and one of substance; secondly, the defense is likely to succeed on point of law; and thirdly, the company adduces prima facie proof of the facts on which the defense depends'. Reliance has also been placed by the Apex Court on another of its decision rendered in Amalgamated Commercial Traders (P) Ltd Vs ACK Krishnaswami Anr, 1965 35 CompCas 456, wherein it has been held that 'it is well settled that a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bonafide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances, may be stigmatized as scandalous abuse of the process of court'. ( 35. ) There cannot be any dispute with regard to such proposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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