FEDERAL COURT OF AUSTRALIA

Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 6) [2014] FCA 1041

THE COURT NOTES THAT:

1.    The applicant (Traxys) by its solicitor gives an undertaking to the Court to ensure that one or more directors and a secretary will be appointed to the second respondent (Booyan) within 14 days of lodging this order with ASIC if the former directors of Booyan cannot be contacted or will not undertake their roles and responsibilities.

THE COURT ORDERS THAT:

2.    Rule 2.8(3) of the Federal Court (Corporations) Rules 2000 is dispensed with for the purpose of the making of Order 3 below.

3.    The registration of Booyan be reinstated by ASIC pursuant to section 601AH(2) of the Corporations Act 2001 (Cth) (the Act).

4.    As soon as practicable, the applicant serve a sealed copy of these Orders upon ASIC.

THE COURT DECLARES THAT:

5.    The share sale transaction between the first respondent (Balaji) and the third respondent (Concast), concerning the shares (Shares) held by Balaji in Booyan, apparently entered into by Balaji and Concast on 16 July 2011 is a sham.

THE COURT ALSO ORDERS THAT:

6.    Pursuant to ss 23 and 57 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 14.21 of the Federal Court Rules 2011 (Rules):

(a)    Andrew Cummins and Brian Silvia of BRI Ferrier (NSW) Pty Ltd (Receivers) be appointed by the Court as receivers of the Shares with the powers of receivers and managers;

(b)    within seven (7) days of the making of this order the Receivers file with the Court a guarantee in accordance with r 14.22 of the Rules; and

(c)    the order in subparagraph (a) above shall take effect only upon filing of the guarantee provided for in subparagraph (b) above.

7.    Under rr 7.33 and 14.21 to 14.25 of the Rules and ss 23 and 57 of the FCA Act, the powers of the Receivers as receivers and managers include, but are not limited to:

(a)    appointing a solicitor, accountant or other professionally qualified person to assist the Receivers;

(b)    inspecting the books and records of Booyan, access to which must be provided by Booyan;

(c)    at the option of the Receivers:

(i)    selling the Shares by private sale or auction within six (6) months of the appointment of the Receivers or within such other term as the Court may fix; or

(ii)    causing the voluntary winding up of Booyan under s 491 of the Act, including by causing the calling of a general meeting of Booyan to:

(A)    resolve to wind up Booyan; and

(B)    appoint a liquidator or liquidators (including the Receivers if so

qualified) for the purpose of winding up the affairs and distributing the property of Booyan and may fix the remuneration to be paid to him, her or them;

(d)    Within five (5) business days of the completion of any such sale or the receipt of the surplus of the winding up, as the case may be, pay into Court:

(i)    the proceeds of such sale; or

(ii)    the proceeds payable to the Receivers as receivers of the Shares under s 501 of the Act; and

(e)    Within ten (10) business days of the completion of any such sale or the receipt of the surplus of the winding up, file accounts with the Court and serve on Balaji and Booyan a copy of those accounts. In the event that the Receivers are also appointed as liquidators of Booyan, such obligation is additional to and not in derogation of the obligation to file liquidators’ accounts in accordance with s 539 of the Act.

8.    The reasonable costs and disbursements of the Receivers be borne:

(a)    first, from the proceeds of the sale or winding up referred to in Order 7 above, which costs and disbursements may be paid before the payment of any amount into Court but only after the Court has approved the amount thereof;

(b)    second, by Balaji.

9.    The amount referred to in Order 7(d) above be applied:

(a)    first, to payment of the amount referred to in Order 8(a) above;

(b)    second, to the payment of the amounts referred to in Orders 3 to 5 of the orders made on 18 April 2012 (April 2012 Orders); and

(c)    third, to payment of the amount referred to in Order 10 below;

and then Balaji.

10.    Balaji pay the costs of Traxys of and incidental to the Court’s determination of the issues remaining in the proceedings following the making of Orders 1 to 6 of the April 2012 Orders, in an amount to be taxed or agreed, or pursuant to any order for a gross sum amount of costs the Court might in the future make following the making of any application for such order.

11.    The bank guarantee dated 1 December 2011 provided to Balaji by Traxys on 2 December 2011 as security for Balaji’s costs be terminated and all originals and copies of the guarantee forthwith be delivered to the solicitors for Traxys.

12.    All parties and the Receivers have liberty to apply on three (3) days’ notice.

THE COURT ALSO NOTES THAT:

13.    Orders 3 to 11, 13 and 14 contained in the Freezing Order annexed to the orders initially made by the Court on 2 September 2011 and marked “A” have been continued from time to time and, in accordance with an order of the Court made on 23 March 2012, now stand continued and remain in full force and effect until further order of the Court.

14.    The said Freezing Order remains in place upon the basis that Traxys continues its undertaking as to damages first given to the Court by its Counsel on 2 September 2011.

15.    The said Freezing Order does not prevent the Receivers from exercising any of the powers given to them by Orders 6 to 9 above.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 9 September 2014, I delivered Reasons for Judgment (Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 5) [2014] FCA 976) (Traxys No 5) which dealt with all outstanding issues in this proceeding. On that day, I made orders requiring the parties to address the form of final orders which should be made in order to give effect to Traxys No 5.

2    On 10 September 2014, the applicant submitted a draft of the declaration and orders which it proposed. The respondents were required to indicate their attitude to the applicant’s draft by 16 September 2014. None of the respondents has done so. Nor have any of the respondents brought forward any alternative set of orders.

3    The applicant’s proposed declaration and orders address most of the matters required to be addressed. I intend to make orders substantially in accordance with the applicant’s draft. Those orders are largely self-explanatory.

4    By way of explanation of the orders which I propose to make, I wish to make a few observations about some specific matters. Those matters are:

(a)    Whether the Court should make a declaration that the share sale transaction between the first respondent and third respondent embodied in the agreement dated 16 July 2011 entered into by those parties whereby the first respondent apparently sold all of its shares in the second respondent to the third respondent is a sham. At [132] of Traxys No 5, I said that such a declaration should be made. I adhere to that view. I propose to make a declaration substantially in the terms sought by the applicant.

(b)    Orders 2 to 7 in the applicant’s draft are essentially the same as the orders sought in its Originating Application relating to the appointment of receivers to the shares held by the first respondent in the second respondent. I propose to make orders substantially in accordance with those paragraphs.

(c)    For the same reasons as I continued the Freezing Order after final judgment in Coeclerici Asia (Pte) Ltd v Gujarat NRE Coke Limited [2013] FCA 882 (as to which, see [113] and [114]), I propose to leave the Freezing Order in this case in place until further order of the Court.

(d)    I have also provided that the Receivers may be paid their reasonable costs and disbursements up to the point in time when a sale of the shares is completed or the second respondent is wound up before paying funds in their hands into Court provided that they have first obtained the approval of the Court to the amount thereof.

(e)    I will also grant liberty to apply to all parties and to the Receivers. It is intended that this liberty may be exercised if the Court needs to determine any issue that may arise in respect of the sale of the shares in the second respondent or the winding up of the second respondent or in respect of the Freezing Orders.

5    When the matter was called on for judgment this morning, each of the applicant and the first respondent was represented by its solicitor. There was no appearance either by or on behalf of the second respondent or the third respondent.

6    The solicitor for the applicant informed that he had only recently discovered that, in December 2013, Booyan had been deregistered by ASIC. He then applied to have Booyan reinstated and to dispense with r 2.8(3) of the Federal Court (Corporations) Rules 2000 in order to enable orders to be made today.

7    I acceded to that application and made orders accordingly. Those orders were added to the declaration and orders which I had otherwise intended to make.

Associate:

Dated:    26 September 2014