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2013 Supreme(Bom) 2425
High Court of Judicature at Bombay
N.M. JAMDAR, J.
Intesa Sanpaolo S.P.A.
Versus
Videocon Industries Limited
Company Petition No.528 of 2012
Decided on : 05-12-2013
For the Petitioner:Haresh Jagtiani, Senior Advocate a/with Ms. Vandana Mehta, Ms. Kathleen Lobo, Ms. Olga Lume–Pereira, Ms. Nausheen Rayani i/by Siddhesh Bhole, Advocates.
For the Respondent:Dinyar Madon, Senior Advocate a/with R.D. Soni, M.A. Saiyed i/by M/s. Ram & Co., Advocates.
Headnote:
Petitioner, an Italian Bank, filed a petition for winding up of Respondent Company, an Indian Company, for non-payment of a sum of Euros 38,000,000 (Euros Thirty Eight Million) due under a letter of guarantee -Patronage Letter- executed by Respondent Company in favour of Petitioner. Respondent Company resisted the petition on various grounds, including that the petition was based on a foreign decree and not on the Patronage Letter, that the Patronage Letter had merged into the decree of the Turin Court, that the petition was barred by limitation, that the Turin Court had exclusive jurisdiction to construe the terms of the Patronage Letter, that the claim of the Petitioner was not a debt, that the suit filed in Calcutta was a collusive suit, that the Respondent Company was commercially solvent, and that the petition was liable to be dismissed on grounds of bona fide dispute raised by the Respondent Company.
Fact of the Case:
Petitioner, an Italian Bank, filed a petition for winding up of Respondent Company, an Indian Company, for non-payment of a sum of Euros 38,000,000 (Euros Thirty Eight Million) due under a letter of guarantee -Patronage Letter- executed by Respondent Company in favour of Petitioner. Respondent Company resisted the petition on various grounds, including that the petition was based on a foreign decree and not on the Patronage Letter, that the Patronage Letter had merged into the decree of the Turin Court, that the petition was barred by limitation, that the Turin Court had exclusive jurisdiction to construe the terms of the Patronage Letter, that the claim of the Petitioner was not a debt, that the suit filed in Calcutta was a collusive suit, that the Respondent Company was commercially solvent, and that the petition was liable to be dismissed on grounds of bona fide dispute raised by the Respondent Company.
Finding of the Court:
The Court found that the petition was based on the Patronage Letter and the admissions of the Respondent Company, that the events of default contemplated under the Patronage Letter were clearly admitted in the correspondence between the parties, that the ad-interim order in the suit instituted in Calcutta by one of the bond holders was not a bar for entertaining the petition, that commercial solvency of the Company was not a stand alone ground, and that commercial morality and the need to instill confidence in the mind of international investors, were also matters of public interest.
Issues: Whether the petition was based on a foreign decree and not on the Patronage Letter, whether the Patronage Letter had merged into the decree of the Turin Court, whether the petition was barred by limitation, whether the Turin Court had exclusive jurisdiction to construe the terms of the Patronage Letter, whether the claim of the Petitioner was not a debt, whether the suit filed in Calcutta was a collusive suit, whether the Respondent Company was commercially solvent, and whether the petition was liable to be dismissed on grounds of bona fide dispute raised by the Respondent Company.
Ratio Decidendi: The Court held that the petition was based on the Patronage Letter and the admissions of the Respondent Company, that the events of default contemplated under the Patronage Letter were clearly admitted in the correspondence between the parties, that the ad-interim order in the suit instituted in Calcutta by one of the bond holders was not a bar for entertaining the petition, that commercial solvency of the Company was not a stand alone ground, and that commercial morality and the need to instill confidence in the mind of international investors, were also matters of public interest.
Final Decision: The Court admitted the petition and directed the Respondent Company to deposit the amount claimed by the Petitioner in Court within a specified time, failing which the petition would stand admitted without further reference to the Court.
1. By this petition, the Petitioner viz. Intesa Sanpaolo S.P.A, an Italian Bank incorporated under the laws of Italy, seeks winding up of the Respondent-Videocon Industries Limited, a Company incorporated under the Companies Act, 1956.
2. The authorized share capital of the Respondent Company is Rs.600,00,00,000/-divided into Rs.50,00,00,000/- of equity shares of Rs.10/- each and 1,00,00,000 redeemable preference shares of Rs. 10/- each.
3. The main object of the Respondent Company is to carry on business of trading, manufacturing, fabrication, alteration etc. in India and abroad, dealing in electronic and consumer durables and home appliance, all kinds of electrical and electronic goods, conductors, capacitors, micro processors, computers, software, household items, television sets and other allied products and activities.
4. Grievance of the Petitioner is that the Respondent Company has not paid the Petitioner a sum of Euros 38,000,000 (Euros Thirty Eight Million) approximately equivalent to Rs. 259,73,00,000/-(Rupees Two Hundred Fifty Nine Crores Seventy Three Lakhs only), due under a letter of guarantee -Patronage Letter dated 5 June 2007.
5. Before the facts are adverted to, various companies that involved need to be specified : first is the Petitioner : Intesa Sanpaolo S.P.A, an Italian Bank incorporated under the laws of Italy, Second is the Respondent -Videocon Industries Ltd., third : VDC Technologies S.P.A (VDC), having registered office at Localita Fratta Rotonda, 03012 Anagni (FR), Italy and the fourth : EAGLE Corporation Limited (EAGLE) is a Company incorporated under the laws of Cayman Islands with registered office in Cayman Islands. At the relevant time VDC was a wholly owned subsidiary of EAGLE. EAGLE was in turn a wholly owned subsidiary of the Respondent Company. Thus VDC was a step down subsidiary of the Respondent Company.
6. In or about September/ October, 2006, the Respondent Company approached the Petitioner for a financial assistance for its step down subsidiary -VDC. The Respondent Company sought financial assistance to the tune of Euros 35,000,000 (Euros Thirty Five Million), for the purpose of financing an investment program in the plant located in Italy where VDC had its registered office. The financial assistance was to be provided by a consortium of two banks, one was the Petitioner and the other was Intesa Mediocredito S.P.A. Both the banks had their registered offices in Italy. It was agreed that the Petitioner would lend Euros 20,000,000 (Euros twenty million) and Mediocredito would lend Euros 15,000,000 (Euros fifteen million) to the VDC. The Petitioner was to act as an agent of the lenders and was to be treated as an agent for the financial transaction of Euros 35,000,000 (Euros Thirty Five Million) to VDC.
7. On 5 June 2007, a guarantee was executed by the Respondent Company in favour of the Petitioner, giving guarantee for the financial assistance to be provided to VDC. This guarantee was termed as a “Patronage Letter”. The Patronage Letter was issued by the Respondent Company and it was signed by the Chairman and Managing Director of the Respondent Company - Mr. Venugopal N. Dhoot who was authorized by the Respondent Company vide its board resolution dated 27 April 2006 to execute the Patronage Letter. By this Patronage Letter the Respondent Company undertook to pay a maximum amount of Euros 38,000,000 (Euros thirty eight million) inclusive of cost, expenses etc. to the Petitioner as per the terms set out in the Patronage Letter. The Patronage Letter referred to the board resolution passed by the Respondent Company and the request of VDC to the Petitioner to extend credit line up to the capital amount of Euros 35,000,000 (Euros thirty five million). The Patronage Letter specified that Respondent Company owned 100% of the capital of the EAGLE which in turn owned 100% of the VDC's capital. The Patronage Letter specified that the Respondent Company undertakes not to dispose of its
