Column: Legal

LEGAL
Going By The Book

No director will be liable for punishment if he proves that he has exercised all due diligence to prevent the commission of the offence.

By Diljeet Titus, Titus & Co. Advocates

Q. We have obtained a decree from an Indian court against a foreign company, which does not have a place of business in India or own any asset in India. How do we enforce the decree?

A. India has entered into reciprocal arrangements with several countries which allow decrees of superior courts to be executed in a reciprocating country, as if it had been passed in that reciprocating country. A determination must first be made whether or not the country of residence of the foreign company, against which you have obtained the decree, is a reciprocating country. If it's a reciprocating country, the laws of that country will provide for execution of the decree of the Indian court (if the Indian court is notified as a superior court). The execution proceedings will require filing a certified copy of the decree of the Indian Court in a competent court, within whose jurisdiction the foreign company has its registered or principal place of business. If the country of residence of the foreign company is not a reciprocating country, then the execution of the decree of the Indian court will have to be in terms of legislation of that country-applicable to execution of foreign orders and decrees.

A cheque issued to one of our company's vendors was dishonoured for insufficiency of funds. The vendor has served notice on our company to make payment of the cheque amount, failing which it has threatened to file a complaint against our company. What liabilities do we have as directors?

It is a criminal offence punishable under the Indian Penal Code if a cheque is returned by the bank unpaid, either for insufficient funds or because the amount is not arranged for by the drawer. The offence is complete if the vendor has sent a notice to your company within 15 days from receiving information from its bank, regarding the return of the unpaid cheque and if your company fails to repay the cheque amount within 15 days from receipt of the notice. Every person including the directors who, at the time the offence is committed, is in charge of the conduct of the business of your company, will, together with the company, be deemed guilty of the offence and it is not necessary for the vendor to issue notices separately to the directors. However, no director can be made liable for punishment if that director proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of the offence.

Can the Monopolies And Restrictive Trade Practices (MRTP) Commission pass an order to restrain a foreign company from dumping its goods in India?

If proved by an affidavit during the course of an inquiry into an alleged restrictive or monopolistic trade practice that such trade practice is likely to effect prejudicially the public interest or the interest of traders/ consumers, the MRTP Commission can, for purposes of staying or preventing such prejudicial effect, grant a temporary injunction restraining the offending party from carrying on such trade practices until the conclusion of the inquiry. Such orders are usually passed on grounds of predatory pricing.

There are, however, instances where orders against a foreign company has been challenged in the Supreme Court, with one of the grounds being that the proper forum for adjudication of anti-dumping complaints is the authority designated under the Customs Tariff Act, 1975, and not the MRTP Commission. Pending final determination of the matter by the Supreme Court and in the absence of a stay of the order of the MRTP Commission, the foreign company will need to comply with the order of the MRTP Commission to the extent the alleged restrictive or monopolistic practices are carried on in India and to the extent the order actually applies to it.

The view expressed here should not be construed as legal opinion and is for reference only. Business Today and/or the author will not be responsible for any decision taken by readers on the basis of these views. Please send in your queries to legal.bt@intoday.com or Going By The Book, c/o Business Today, F-26, Connaught Place, New Delhi-1

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