Indian Kanoon - Search engine for Indian Law

Johnstone replied on the very same day by email confirming that these documents seemed to be in order. It is, according to the appellants, in these circumstances that the two documents, Exhibits "C" and "D" to the petition, were signed and issued. The minutes are signed by both Balwanis; the "certificate" by Pankaj Balwani alone.

27. On that very day, i.e., 29th June 2007, an amount of £92,500 (approximately equal to Rs. 75,36,900/-) was remitted to Advansys's bank account by Johnstone's firm, CK Chartered Accountants. On 30th June 2007 HSBC Bank issued a FIRC for these remittances of £ 92500. The FIRC categorically states that the purpose of the remittance as disclosed by the remitter, i.e., CK Chartered Accountants, was toward invoices.

(e) Ponds throughout acted as a majority shareholder and never as a buyer of goods manufactured by Advansys. This, according to Mr. Bharucha, is inter alia established from much of the correspondence which shows that Ponds made payment towards capital expenses, played a role in the deployment of funds for civil works and construction etc. The FIRC statement (1969) 2 WLR 114 26 of 62 CA14-2014-F.DOC or certificate issued by HSBC is unreliable. On enquiries made by Ponds, HSBC appears to have confirmed, some three years later, that it has no records available of the SWIFT message from NatWest Bank, the originating Bank, mentioning the purpose of remittance. How the purpose of invoices came to be stated in the FIRC issued by HSBC was, according to Mr. Bharucha, unexplained. That FIRC certificate is, therefore, according to Mr. Bharucha, entirely unreliable.

55. Even on Mr. Bharucha's formulation of the case, and his reading of the correspondence and documents, it is difficult to see how it can be said that complicated questions of fact do not arise in this case relating to Ponds' title to shares in question. There is very little, for example, to evidence a concluded agreement between the parties for this share issue. There is a significant dispute and a considerable grey area regarding the consideration that Ponds claims to have paid for its 75% equity shareholding to Advansys. There is also no manner of doubt that the question of the remittance of £92,500 and its application -- Advansys claiming that it was toward pending invoices, and Ponds claiming it was towards share subscription -- only further muddies already turbid waters. There seems to have been no approval at a shareholders' meeting or a board meeting for an issue of shares to Ponds. Then, there are, also the other issues of coercion, undue influence, fraud, misrepresentation and economic duress set up by Balwani and Advansys. These are not merely matters of whistling in the wind; for both Advansys and Balwani referred to a considerable amount of material to demonstrate the dire financial position in which the Advansys found itself at the relevant time. Finally there remains the inexplicable endorsement on FIRC by HSBC Bank. I am unable to understand how any bank could have made an endorsement of the purpose of that remittance unless it was specifically so stated by the remitter and the originating bank. On the face of it, the explanation 44 of 62 CA14-2014-F.DOC set up by Ponds is no explanation at all. Ponds merely says that it had not indicated that the purpose of the remittance was towards invoices. It has not affirmatively stated what, if any, purpose was stated on that remittance when it originated from NatWest Bank in the UK. It defies credulity that such a substantial amount would have been remitted, without specifying or identifying a purpose, especially given the fact that the transactions and the correspondence between the parties pertained to a large number of interlocking issues. The FIRC is dated 30th June 2007. HSBC's clarification on which Mr. Bharucha places so much reliance is of 8th November 2012, and in this, HSBC only says that it is not able to trace the communication that discloses the purpose of the remittance. Till date, the FIRC has never been amended. I do not think that it is possible to accept to Mr. Bharucha's submission that merely because HSBC is, four years down the road, unable to find the originating document, therefore it must be held that the stated purpose of the remittance is something other than what is stated in the FIRC. Indeed, it appears to me that exactly the reverse should be the case. There does not seem to be any indication in the prior correspondence to explain how this figure of £92,500 is actually derived. What that figure actually does achieve is a complete and an explicable match with the reconciliation statement of outstanding invoices. Thus, on the one side, as postulated by Mr. Chinoy, on behalf of Advansys, there is entirely plausible explanation for the remittance. There is the endorsement of the FIRC certificate. The amount can be traced and exactly matched to the invoices in a reconciliation statement sent by Hunjan himself. On the other hand, the case propounded by Ponds, remains in a shadowy, grey area absent all specifics.

62. It is equally impossible to sustain the Company Law Board's second finding, implicit in the first, and also explicitly stated, that 50 of 62 CA14-2014-F.DOC valid consideration flowed from Ponds to Advansys for the issue of these shares. As I have already noted, this is unsupported either by the FIRC or the reconciliation statement. The FIRC must also be read not only in isolation but in the context of the email from Hunjan, specifically those of 5th October 2007 and 30th July 2008, where Hunjan said that the remittance of £93,500 was towards invoices. This is in complete consonance with the endorsement on the FIRC. Hunjan not only maintained this at that time but also in his email of 22nd April 2009, responding to Balwani's email saying that the amount received was against overdue payments.