Case: Pearl Engineering Polymers Limited Vs. Deutsche Bank Ag, London &amp; Others

2. The Petitioner company is engaged in polyester chips manufacturing and its unit is located at Kurkumbh in Pune District. The company was set up in 1993 however, due to the industrial sickness, it was required to be registered with the Board of Investment and Financial Reconstruction (BIFR), which proceedings concluded with the execution of an amended Loan Agreement dated 24 November 2003 with AFIC i.e. Respondent No.4 herein.3. The Petitioner Company has borrowed from Respondent No.4 and the borrowing is in the nature of External Commercial Borrowings (ECB). The initial borrowing is in compliance with the provisions of the Foreign Exchange Management (Borrowing or lending in foreign exchange)Foreign Exchange Management Act 1999 and in consonance with ECB policy. It is not the matter of doubt that as a result of the failure of the company to repay the debt, the loan agreement came to be terminated. Loan amounting to US$ 3,128,855 together with interest of US$ 96,950.37 was due from the Petitioner as on 30 September 2006. Respondent No.4 entered into a Sale and Purchase Agreement of the debt with Respondent No.1 and the Petitioners debt qua AFIC came to be assigned to Respondent No.1. An Application was moved by Respondent No.1 for condonation of delay occurred in registering the debt with Registrar ofNo.2 herein, and on payment of the charges levied by Respondent No.2 on account of delay and in pursuance to the Application tendered by Respondent No.1, the debt came to be registered with Respondent No.2, on 29 July

Court's reasoning:
9. Being aggrieved by the order, the Petitioner approached the Honble High Court of Bombay and filed Writ Petition No. 2037 of 2013. The Writ Petition came to be allowed and matter came to be remitted back to the Regional Director/Company Law Board with a direction to examine the case of the Petitioner and take decision on merits and in accordance with law. The Honble High Court also observed that Section 141 of the Companies Act, 1956, clearly indicates that the Company Law Board is entitled to rectify any omission or misstatement made to the Registrar regarding particulars of any charge created by the Company and Company Law Board, therefore, can entertain the application for rectification which can be preferred either by company or any person interested as envisaged in(b) of Section 141 (1). In the present case, the Petitioner who claims to be the person interested has filed the application on the ground that the change recorded in the Register of Charges has been done on account of omission or misstatement of facts with respect to such charge. Though it is well settled that under section 141, the Company Law Board is not to go into the validity of the charge, it can certainly consider the rectification of the omission or misstatement of particulars of any charge. It is further recorded by the High Court that, in the present case, according to the Court, the Company Law Board has overlooked the aspect of omission or misstatement and, therefore, has erred in holding that it did not have jurisdiction to entertain the Petition. The Company Law Board ought to have considered the Petition so far as it relates to allegation that Respondent No.1 had misrepresented or made misstatement of the particulars of charge; and after giving an opportunity to the Petitioner, should have decided whether any rectification should be made or not by the Registrar. According to the High Court, the Company Law Board has clearly committed an error of Law which is apparent on the face of record.10. That so far as the transaction between the ACTIS AFIC and AFIC as has been recorded, in view of the internal arrangement concluded by the Trust Deed dated 7 June 2005 between the Groups of Companies, the outstanding debt owed by the Petitioner was agreed to be held by ACTIS AFIC Credit Management Limited. The deed of assignment with Respondent No. 1 has been executed by Respondent No.4 in its capacity as Trustee of the outstanding debt of the Petitioner on its own behalf and on behalf of ACTIS AFIC credit Management Limited. The challenge to the Deed of Assignment, in fact, is beyond the scope and purview of the adjudicatory forum, since it is not a Civil Court. The issues, including the validity of documents between two private parties cannot be adjudicated by the Company Law Board under the provisions of Section 141 of the Companies Act, 1956 and those are required to be adjudicated by a Civil Court.11. It is also pointed out that the cover page of Deed of Assignment dated 30 March 2007, mentions the title of document as Participation and Sale and Purchase Agreement between AFIC Limited on behalf of itself and as investment Manager as ACTIS AFIC Credit Management Limited and Deutsche Bank, London as the assignee. On the last page of the document, two parties have signed, out of which one is mentioned as AFIC Limited in its capacity as Investment Manager of ACTIS AFIC Credit Management Limited and the other party is Deutsche Bank, London. The Assignment Deed reveals that AFIC Ltd. is party to the document.12. So far as challenge raised to the legality and enforceability of document is concerned, the same does not fall within the purview of the Company Law Board and the liberty of the Petitioner to question the validity of the document has been kept open in the order dated 29 July 2015. The Petitioner has also raised certain objections in respect of the proceedings initiated by Respondent No.1Deutsche Bank. In fact, those proceedings relate to the winding up of the Company. The Company, in its capacity as the lender under the Sale and Purchase Agreement dated 30 march 2007, in its own right has presented the Company Petition. The Company Petition presented by Respondent No.1 was not entertained for the reason that it involves various questions, which need to be adjudicated before accepting the averments of the present Petitioner Pearl Engineering Polymers Ltd. It is observed by the Court that, the transaction, based upon which the Company Petition was presented, unless screened and declared, the order in respect of winding up of the Company does not deserve to be passed. The foundation of exercise of the discretion shall be, neglect to pay due and agreed amount. It is observed that since the Petition raises disputed questions and the writ petitioner i.e. Respondent No.1 is not remedyless to recover the amount, and as such, the Court refused to entertain the Company Petition.13. The order passed in Company Petition No. 221 of 2012 is a matter of challenge in Appeal 124 of 2013 presented by Respondent No.1Deutsche Bank and the same is admitted and pending for adjudication. The Petitioner herein has raised all the objections relating to the permissibility to recover the amount on account of bar of limitation, so also the issue relating to the validity of the Sale and Purchase Agreement with Respondent No.1Deutsche Bank. These objections are likely to be considered in the pending Appeal. Even otherwise, considering the scope of Section 141 of the Companies Act, the prayers made in the instant Petition do not deserve to be considered.