Case Note & Summary
The litigation stems from a company petition filed by HDFC Bank Ltd. under the provisions of the Companies Act, 1956 seeking winding up of Rohan Dyes & Intermediates Ltd. on the ground that the company was unable to pay its debts. The petition claimed a debt of approximately Rs.8.74 Crores, comprising a principal sum of Rs.8.19 Crores and simple interest of Rs.54.96 Lakhs, arising from certain derivative transactions. The respondent company, a large exporter and importer, faced foreign currency fluctuation risks due to its business. In 2007, to hedge these risks, it approached Centurion Bank of Punjab (CBOP), which later merged with HDFC Bank on 23 May 2008 under a scheme of amalgamation sanctioned by the Reserve Bank of India. CBOP issued a sanction letter dated 8 November 2007, and the company's board passed a resolution on 14 November 2007 authorizing its directors to enter into derivative transactions and execute necessary documentation. Consequently, an ISDA Master Agreement and a schedule were executed on 15 November 2007, along with a Risk Disclosure Statement. Following the amalgamation, the petitioner bank stepped into the shoes of CBOP and continued the transactions. On 26 June 2008, a deal confirmation was entered into between the petitioner bank and the respondent company for a series of USD/INR options transactions with maturities spread over one year from June 2012 to May 2013. Under this confirmation, if the USD traded below Rs.43.15, the company would sell USD 500,000 to the bank at that rate; if above, it would sell USD 800,000. The deal also included a mark-to-market (MTM) margin condition, allowing the bank to make a margin call if the negative MTM exceeded Rs.5 Crores after six months from the trade date. The company provided a post-dated cheque of Rs.5 Crores as security. The negative MTM exceeded Rs.5 Crores on 26 December 2008, reaching Rs.10 Crores. The bank issued margin calls on 30 December 2008, 13 May 2009, and 15 July 2009. The company responded by a letter dated 20 May 2009, stating its inability to comply due to cash constraints, global slowdown, and prior commitments, but expressed its intention to continue the transactions and clear all dues at settlement. The company later disputed the authenticity of this letter. The bank presented the security cheque on 4 December 2012, which was dishonoured for insufficient funds, leading to the filing of the winding-up petition. The petition was originally heard by S.C. Gupte J., who dismissed it on 7 September 2015. The petitioner bank appealed to the Division Bench of the High Court, which on 4 February 2016 set aside the dismissal and remanded the matter for fresh hearing. The matter was listed for admission before B.P. Colabawalla J. The provided excerpt of the judgment ends before recording any further arguments, findings, or the final decision.
Issue of Consideration
COMPANY PETITION NO. 320 OF 2013
