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48. Number of meetings were thereafter held. Vide letter dated 1st November, 2004, Mr. Ray informed the bank that he had resigned as director of the company with effect from 31st August, 2004.

49. Be as it may, pursuant to the Agreement, the company requested the bank to grant permission for opening an account with ABN AMRO Bank, 19/1, Haddows road, Chennai for receiving the new investors money. Believing the said representation of the company, the bank permitted the opening of the account with ABN AMRO Bank for the limited purpose of receiving the investors money. Account No. 1130826 in the name of M/s Data Access (India) Limited was accordingly opened. In the said account, the company received 17 million US $ from M/s Data Access America Inc. which is 100 per cent subsidiary of the company. This amount received was on account of the debt due to the company and which is charged/hypothecated with the bank. On receiving this information, the bank vide its letter dated 13th November, 2004 called upon ABN AMRO Bank to remit the amounts received in the account of the company. After receiving this letter the Manager of ABN AMRO Bank spoke with the manager of the Bank on 16th November, 2004 and informed the Bank that the funds have been transferred to some other account and the account of the company only had Rs. 48,000/-. After receiving this information, the bank issued notices dated 17th and 18th November, 2004 to ABN AMRO Bank and the company calling upon them to remit the amount book debts/receivables realized by the company with the bank. However, the ABN AMRO bank did not reply to the said notice. Reply dated 19th November, 2004 was received from the company through its counsel M/s Dua Associates wherein this fact that the remittances were received in the account of the company with ABN AMRO Bank was not denied. ABN AMRO Bank had not revealed the details of the amount to which the money have now been transferred by the company. The prayer essentially is to protect the diversion of the said amount of 17 million US $ (which is equivalent to approximately Rs. 75 crores) to other channels as it legitimately belongs to the bank/consortium.

53. In order to understand the case of each party, I may state at this stage the nature of applications filed by these parties.

54. CA No. 35/2005 is filed by the company seeking vacation of interim order dated 17th December, 2004 passed in CA No. 1582/2004. According to the company, amount of 17 million US $ was not received from its American subsidiary, namely, Data Access America, Inc.. Case set up by the company is that Odyssey America Reinsurance Corporation (hereinafter referred as `Odyssey Re') had agreed to lend this amount of US $ 17 million and the money was in fact remitted by them. The amount was given to the company on two conditions, namely, (a) roll-over of all loans and bank guarantees with the bank and Syndicate Bank for a period of at least 12 months and (b) reinstatement of all points of interconnect with BSNL and extension by BSNL of all outstanding dues. Hamblin Watsa Investment Counsel (for short `Hamblin'), which the investment advisors of Odyssey sent a letter dated 12th August, 2004 to Data Access America about this term loan on the aforesaid conditions. The company also sent a letter dated 12th August, 2004 informing the bank about the term loan of Rs. 75 crores from the new investors subject to certain conditions. Even M/s Cheran Enterprises Pvt.Ltd.(CEPL) sent a letter dated 12th August, 2004 to the bank stating that the loan was conditional. CEPL is a joint venture between O.R.E. Holdings Ltd. which in turn is subsidiary of Odyssey Re. Since the loan was to be given subject to conditions, Hamblin vide its letter dated 18th August, 2004 requested Data Access America to direct the company to place the loan proceeds with Cheran pending fulfilllment of the pre-disbursement conditions. Thereafter, the funds of US $ 17 million were sent to India on 18th August, 2004. As per the directions of Hamblin the monies were transferred to Cheran. It is also the case of the company that various conditions imposed on Mr. Ray and his companies have not been fulfillled. Details of the meetings which took place between the parties are mentioned. It is also alleged that Mr. Ray has committed various acts of frauds. The gist of the company's case is that money has not been sent by Data Access America to the company. Rather, it was a loan which Odyssey Re agreed to give to the company subject to fulfilllment of certain conditions and awaiting the fulfilllment of those conditions, money was kept with Cheran. Since conditions are not fulfillled, Odyssey Re has right to take its money back. Thus, according to the company, money does not belong to the company or its subsidiary Data Access America and, therefore, the bank has no right over this money

The Company officials shall arrange for infusion of Rs. 75 crore by the investors money to set right the irregularities.

65. As a follow up of the consortium meeting of 7th September, 2004, Canara Bank received letters dated 16th September, 2004, 17th September, 2004 and 21st September, 2004 and in the said letters also there is no mention of the receipt of any loan amount of Rs. 75 crore from the investors. Infact, in para 2 of the letter dated 21/7/2004, the Bank was informed that a sum of Rs. 83.81 crore is due from Data Access America to the Respondent Company as on 31/8/2004, which was not correct and was contrary to remittance of 17 Millions USD by Data Access America to Data Access India Ltd. on 19th August, 2004 along with a swift message that the said payment was on account of the outstanding liability towards services rendered. It is relevant to mention that during this period i.e. in November, 2004, the Bank received copies of the letters addressed by the Chairman of the Respondent Company to Enforcement Directorate and to the Revenue Authorities, stating therein that the new management had fraudulently transferred funds of 'DAIL' to their own Companies. The said letter also mentioned that the amount of 17 Million US Dollars received in the account of 'DAIL' with ABN AMRO Bank, Chennai were receivables to be deposited with Canara Bank. In fact, after receiving the amount of 17 Million US Dollars on 19th August, 2004, ABN AMRO Bank filed the Inward Remittance Certificate with the Reserve Bank of India the same day, i.e. on 19th August, 2004, declaring that the remittance was received on the account of the respondent Company against outstanding bills of services rendered. It is further submitted that under the provisions of Section 6 read with Section 47(2) of FEMA, read with Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations 2000, there is a prohibition to borrow or lend any foreign exchange. The Relevant Regulation 3 framed under the said Act reads as under:-

67. On the other hand, case of the company and other parties supporting it is that the money was given as loan by Odyssey and that too on certain conditions and conditions have not been fulfillled not even loan transaction came into existence. According to the company, CHPL/KCPAHL along with Mr. K.C.Palaniswamy had entered into a joint venture with Mr. Ray group on 1st July, 2004 for acquiring the shareholding in the company and had accordingly effected payment of Rs. 33 crores for the purpose. Further, the incoming promoters had agreed to bring in Rs. 75 crores as first trench towards debt resturcturing/revival of the company. However, CHPL/KCPAHL had agreed to bring in further amount totalling Rs. 300 crores in the company. Simultaneously, CHPL/KCPHL had nominated 4 directors in Data Access America Inc., a subsidiary of the company on 1st July, 2004 itself. Board resolutions were according passed thereby appointing Mr. Ashutosh Mishra shall report to Mr. Ray and the operations in the bank accounts of Data Access America Inc.over Rs. 1 million to be carried forth on instructions by Mr. Gobinath Attahpan. CHPL had, in turn, approached Odyssey a large financial institution in US for arranging the funds. On 12th August, 2004 Hamblin sanctioned the loans on the fulfilllment of certain conditions by the company on the request of CHPL. On 13th August, 2004 money was transmitted from Citi Bank A/c of Odyssey to Wells Fargo A/c of the company. On the same date, Mr. Gobinath Attahapan issued instructions to Mr. Ashutosh Mishra to transfer US $ 17 million to the account of CHPL. On 16th August, 2004 a swift message was sent for transfer of US $ 17 million from Data Access America Inc.to CHPL in its ABN AMRO account at Chennai. It is further sought to be explained that account with ABN AMRO Bank was opened for specific purpose for getting the investors fund from CHPL. In the meantime, change in instructions were received on 18th August, 2004 at US by Mr. Ashutosh Mishra on receiving the confirmation regarding the opening of the account by the company by observing that the transfer was made to a wrong account and reflecting the said amount as payment against outstanding dues by Data Access America Inc.Even Mr. Ray, on this basis, wrote on 18th August, 2004 to ABN AMRO regarding change of instructions. Therefore, on 19th August, 2004, on the basis of these instructions, money was transferred to CHPL on realization of the error in transfer. Otherwise, it is clear from the joint meetings of the company with the bank and Syndicate Bank etc. that Data Access America was not in a position to realize its amount due to various problems. Therefore, remittance of these amounts by Data Access America did not arise. Thus, according to the company, remittance of amount of US $ 17 million in the account of th company maintained with ABN AMRO Bank was by mistake and this mistake was immediately corrected on the very first day i.e. 19th August, 2004. In the meantime, as conditions entailed by the Odyssey were not met by 1st September, 2004 on the basis of which the loans were to be provided but it sought withdrawal of the loan facility on 2nd September, 2004. The money of Rs. 78.45 crores was, therefore, held by the company in trust and such a trust money is not to be intermingled with other funds of the company and is to be give a separate treatment. In support of the proposition reliance is placed on New Bank of India v. Pearey Lal 1962 32 Comp. Cas. 91, Barclay Bank Ltd. v. Quistclose Investment Ltd. (1968) All ER 651, P.V. Narain v. Aaron Spinning and Weaving Mill Ltd. (1961) 31 Comp. Cas. 261 and Official Liquidator v. V. Chandranarayan (1973) 43 Comp.Cas. 245.