Anand Byrareddy, J. - (1.) THE petitioner is a company incorporated and registered under the laws of the United States of America and is said to have its registered office in California, United States of America. It was said to have been incorporated in the year 2001.
(2.) THE petitioner is said to be engaged in the business of manufacture of integrated circuits, components and sub -systems used in various applications including wired and wireless communications. The respondent is a company incorporated under the Companies Act, 1956 (Hereinafter referred to as the Act', for brevity). It is said to have its registered office at Bangalore. It is stated that M/s. Bharat Sanchar Nigam Limited, (Hereinafter referred to as the 'BSNL', for brevity), a Government of India undertaking, had placed a purchase order, dated 27.1.2006 for the supply of equipment described as FWTs and IFWTs, upon the Indian Telephone Industries (Hereinafter referred to as the TTF, for brevity), also a Government of India undertaking. ITI, in turn, is said to have placed a purchase order on the respondent for the same goods. The respondent is said to have sought to source the same from the petitioner and is said to have placed a purchase order on the petitioner, dated 28.4.2006. It is stated that ITI had paid 75% of the total value in advance, to the respondent. The petitioner claims to have supplied the goods to the respondent in terms of the purchase order during the period June 2006 to March 2007. The petitioner is said to have raised invoices on the respondent for the said supplies made. The aggregate amount of the invoices so raised was said to be in a total sum of US $ 180,476,670.40. The petitioner has acknowledged payments made by the respondent in a sum of US $ 9,738,733.29. It is stated that in the year 2007, an Asset Purchase Agreement was said to have been entered into between M/s. Xalted Networks Inc. and M/s. Xalted Information Systems Private Limited, i.e., the respondent, who were together described as the 'Sellers', M/s. Arasor Cayman Acquisition Limited Company, was described as the 'Purchaser' and which was said to be a subsidiary of the petitioner. Under the said agreement, it was indicated that the Sellers had entered into several contracts with third parties, which formed the assets transferred under the agreement. It was said to have been agreed that for the purpose of fulfilling the obligations under those contracts, the parties would enter into back to back purchase orders, under which the Purchaser would undertake the duties and responsibilities of the Sellers to obtain all rights, obligations and benefits of those contracts. And further that the contract which the respondent had with ITI, was part of those contracts. It is stated that under the said agreement, the following obligations were cast on the respondent, namely: a. That the "Sellers", transferred all their rights in the purchase orders with ITI Limited to the aforementioned subsidiary of the petitioner. In consideration of which, US $ 2,311,642.00 (Two Million Three Hundred Eleven Thousand Six Hundred and Forty Two) shares in Arasor International Limited (i.e. the Parent Company of the Petitioner) were transferred in the favour of the "Sellers" on 30.1.2007. b. Further, a joint bank account was to be opened, wherein all the receivables under the Purchase Orders including those from ITI Limited were to be deposited. The "Sellers" had to provide a Special Power of Attorney authorising the "Purchaser" i.e., the aforementioned subsidiary of the petitioner, to unilaterally operate the bank account. It is stated that the respondent had failed to comply with the above obligations. And further it is alleged that the respondent had failed to make further payments against the supplies made by the petitioner as aforesaid. The petitioner is said to have particularly addressed a letter dated 10.7.2008 seeking confirmation of the outstanding debt payable by the respondent. It is claimed that the respondent had duly acknowledged a liability of US$ 4,565,162.16. Notwithstanding the same, the respondent had failed to make any further payments. It is stated when repeated demands for payment were not met, the petitioner is said to have issued a notice dated 7.10.2009, invoking Section 433(e) and Section 434 of the Act. The same was said to have been served at the registered office of the respondent. The respondent is said to have denied the liability and is said to have raised irrelevant issues by way of a reply dated 1.12.2009. And hence the present petition. The respondent having entered appearance has filed statement of objections disputing its liability. It is contended that the purchase order placed on the respondent by ITI was for 3,43,700 units of IFWT and FWT products. The respondent is said to have placed a purchase order on the petitioner on the same terms and conditions. The petitioner is said to have indicated that it was in a position to supply only 27,000 units and the remaining would be outsourced from a Hong Kong based company, M/s. Abakus Communications Company (HK) Limited. It is claimed that the petitioner had also instructed the respondent to make direct payments to the said company, on any supplies to be made. Pursuant to this arrangement, the petitioner is said to have supplied only 27,000 units and had received full payment in a sum of Rs. 4.30 crore. And that in so far as the supplies made by Abakus Communications of the major portion, a sum of Rs. 40.92 crore is said to have been paid by the respondent. Hence, it was contended that there is no payment whatsoever due to the petitioner. That the claim is made on the basis of false and fraudulent documents. Insofar as the alleged acknowledgment of debt said to have been made as per letter dated 10.7.2008 is concerned, it is contended that in the first place, the said letter is not endorsed or signed by the respondent or any of its authorized representatives. The said letter has been signed by one Mr. Ajay Jalan, an independent consultant, who was engaged by the respondent to provide financial and accounting advice. The respondent has entered into a Consultation and Project Services Agreement with the said Mr. Ajay Jalan. The said consultant is paid consultancy fees and as per the provisions of Rule 31(1)(b) of the Income Tax Rules, tax is deducted at source vide Form No. 16A. It is stated that had the said Mr. Ajay Jalan been an employee of the respondent, he would have been issued Form No. 16, and not Form No. 16A. That as could be seen from the said agreement, Mr. Ajay Jalan was an independent consultant, who had been engaged as a consultant with a defined scope of work. The said consultant was neither authorized to sign on behalf of the respondent nor did his signature bind the respondent. Therefore, it is contended that the endorsement by the said consultant on the said letter dated 10.7.2008 was not an acknowledgement of debt by the respondent. Moreover, the consultant had endorsed the said letter dated 10.7.2008 without knowing the various disputes concerning the supply of goods by the petitioner and also without knowing the imposition of liquidated damages on the respondent. As such, the said letter dated 10.7.2008 could not by any means, be treated as an acknowledgement of debt by the respondent and was only an auditing response and not confirmation of debt. It is emphasized that the respondents finances are in a sound state and that the petitioner had not alleged or demonstrated prima facie that the respondent was heading towards insolvency.
(3.) THE petitioner had filed a detailed rejoinder to the said statement of objections refuting the several contentions urged therein. By Order dated 10.11.2010 of this court, the petition was admitted, on a prima facie appreciation of the rival contentions. The said order was challenged by the respondent in appeal before a division bench in appeals No. OSA 44/2010 and OSA 43/2010. The division bench had allowed the appeals by its judgment dated 15.10.2011 and had remanded the matter for a fresh consideration, while granting leave to the respondent to either, amend the statement of objections or to file a separate application as regards a contention as to the maintainability of the petition. On such remand, the respondent has filed Company Application No. 118 of 2012 to contend as follows: That the respondent had come across some shocking news which goes to the root of the filing of the company petition itself, in that, the respondent itself had ceased to exist under the laws of its incorporation in the United States of America (USA). Consequently, the company petition itself could never have been initiated and hence the company petition requires to be rejected in limine. Under California, Delaware and U.S. Federal Law, at the time of its suspension by the States of California and Delaware, the respondent ceased to be a corporation and unable, inter alia, to operate as a corporation and lost its corporate powers including without limitation, the power to file a lawsuit, to defend a lawsuit or to appeal a lawsuit. The respondent is a company incorporated under the laws of State of Delaware, USA. The respondent was incorporated on November, 15, 2000 in the State of Delaware. The respondent's corporation status has been "void" as of March 1, 2010. The respondent has also filed as a foreign corporation to do business in the State of California on April 9, 2001 and the corporation status in the State of California is "forfeited" as of date of the filing of the application before the Division Bench. It is contended that the respondent did not make any annual filing nor paid the franchise taxes in Delaware between October 14, 2005 and the date of its filing of the petition. It is contended that the appellant had obtained a certificate of Mr. Christopher L. Rasmussen, Attorney, licensed to practice in the State of California who confirms that as of the date of the certificate, the respondent had forfeited its right to initiate or continue any legal proceedings. A copy of the certificate is produced as Annexure -A. The appellant states that under Section 510 of the Delaware Code, the charter of a company which does not pay the State of Delaware the state franchise taxes or does not make the annual filing, void and all powers conferred by law including the power to sue under Section 122(2) are declared inoperative. Since the respondent has been declared to be "void" in the State of Delaware, the respondent does not have power to initiate or continue any proceedings in India. Similarly, under California Statutory (Section 23301 of the California Revenue and Taxation) and case law, a corporation, which is declared forfeited, as is the case with the respondent, whose headquarters was in California and where it operated its business, loses its rights, powers and privileges to conduct its business in California, and cannot use its name, and cannot initiate, defend or appeal lawsuits. Additionally, U.S. federal law recognized that a void or forfeited corporation (as is the case with the respondent) cannot file, defend or appeal a lawsuit during the period of forfeiture or suspension. It is contended that the company petition itself is barred and could not have been initiated by the respondent. The company petition was filed on April 3, 2010 when the respondent had forfeited its right under the laws of Delaware and California as of March 1, 2010 itself. The respondent has contended in OSA 44/2010 that subsequent to the filing of the application in OSA No. 44/2010, the respondent has taken steps to revive the corporation and that the corporation has been revived under the laws of Delaware. The respondent contends that upon such revival, the respondent's status stands revived from the day it was declared void and therefore the company petition was maintainable. Even if one were to assume this to be correct, in Indian law, the position that would require to be examined is from the point of view of the date on which the petition was filed. Indian law would govern proceedings in India and if a person did not exist on the date of filing of the petition such petition suffers from being void ab initio and hence not maintainable. It is contended that the conduct of the respondent in not disclosing these fundamental facts have to be taken into account. In that, the respondent had deliberately failed to place before this court the fact that it does not have the power under the laws of its incorporation to prosecute any proceedings. When the respondent has a status of "void", the respondent does not have any right to continue the company petition and the very filing of the company petition is illegal and irregular. Such conduct in a winding up petition is completely unacceptable and on this ground, the petition merits rejection. It is contended that in the initiation of any proceeding, the person who initiates the proceeding must have the right to do so. When the respondent did not have the right to initiate the company petition before the court, the petition deserved to be rejected at the threshold.;