Case Note & Summary
The appeals arose from an order of the Learned Single Judge on a Company Petition for winding up. By the impugned order, the Learned Single Judge admitted the Company Petition and appointed an administrator. The claim of the Respondent in the Petition for winding up arose from moneys due and payable under two series of convertible bonds (a series of 2006 and of 2011). On 15 September 2006, the Appellant offered USD 36 million three per cent convertible bonds which became due for payment on 21 September 2011. The Appellant entered into a Trust Deed with the Respondent, covenanting under Clause 2.2 to unconditionally repay the principal amount. On 14 August 2007, the Appellant offered the second series consisting of USD 50 million three per cent convertible bonds. A Trust Deed was executed with a covenant for unconditional payment. On 27 September 2011, the Respondent issued a default notice calling upon the Appellant to pay the outstanding principal amount of the first series. On 30 September 2011, a notice of cross default was issued to the Appellant. Following this, a notice was issued on 10 October 2011 stating that the amount under the first series was due and payable immediately. By a subsequent notice dated 12 October 2011, the Respondent accelerated the payment of the amount under the second series declaring that it was due and payable as a result of a cross default. A statutory notice was issued on 4 November 2011 claiming that an amount of USD 36.141 million and USD 53.915 million was due. The winding up petition was instituted before the court. The Learned Single Judge admitted the petition and appointed an administrator. The appeals challenged this order. The court considered the submissions and upheld the order of the Learned Single Judge, finding that the company had defaulted on its payment obligations under the trust deeds, and the admission of the winding up petition and appointment of an administrator were justified.
Headnote
A) Company Law - Winding Up - Admission of Petition - Default on Convertible Bonds - The court considered whether the company's default in repaying convertible bonds justified admission of the winding up petition and appointment of an administrator - Held that the company's failure to pay the principal amount under the trust deeds constituted a clear default, warranting admission of the petition and appointment of an administrator to protect the interests of the bondholders (Paras 2-5).
Issue of Consideration
Whether the Learned Single Judge was justified in admitting the winding up petition and appointing an administrator based on the default in payment of convertible bonds.
Final Decision
The appeals were dismissed. The order of the Learned Single Judge admitting the winding up petition and appointing an administrator was upheld.
Law Points
- Winding up petition
- default on convertible bonds
- admission of petition
- appointment of administrator
- cross default
- unconditional repayment covenant
