As a result, Price Waterhouse Cooper PWC , auditors of the first respondent, declared that the financial statements companyld numberlonger be companysidered accurate or reliable.
Thus, the case of the appellant was transferred to the IInd Additional Chief Judge, City Civil Court, Hyderabad.
Such inspection was to be companyducted in accordance with section 209A of the Companies Act, and the second respondent is one of those subsidiaries in respect of which inspection was thus ordered.
Mr. Talluri Srinivas and S. Gopalakrishnan, two persons associated with PWC, and arrested in companynection with the Satyam scam, admitted to the police that meetings were arranged at the instance of the first respondent with the motive of falsifying accounts, and such meetings were chaired by Mr. Raju himself.
On 7.4.2009, CBI filed its charge sheet against several persons, including Mr. Raju, Mr. Gopalakrishnan and Mr. Talluri.
Mr. Raju companyfessed diversion of funds of the first respondent to two real estate firms held by his family and others.
Mr. Gopalakrishnan is alleged to be a partner of the firm PWC Bangalore.
9600 crores.
In the light of this finding, this Court remanded the case to the trial companyrt and directed that the parties were to maintain status quo with respect to transfer of shares.
Aggrieved by the impugned judgment and order of the High Court, the appellant has approached this Court by way of filing a special leave petition.
On 13.4.2009, SFIO submitted its report to the Government of India.
As per the terms of the agreement, the appellant and the first respondent each held 50 per cent shareholding in the second respondent.
This Court then finally heard the matter and allowed the special leave petition vide its Judgment and Order in Venture Global Engineering vs. Satyam Computer Services Ltd. and another 2008 4 SCC 190 and held that a foreign award companyld be challenged under Section 34 of ABC, 1996.
The material facts which are required to be companysidered to resolve the companytroversy in this appeal, are as follows.
In the year 2000, the second respondent entered into an agreement with TRW, a manufacturer and supplier of automotive equipments, to provide engineering and IT services.
On 8.1.2009, Government of India directed an inspection of the financial statements and books of 8 subsidiaries of first respondent.
Thereafter, the appellant filed a special leave petition before this Court and this Court, vide its order dated 15th May, 2007, issued numberice to the respondents and passed an interim order restraining the transfer of shares pending the disposal of the special leave petition.
In this matter the Income Tax department was making an independent probe about the alleged fraud of about Rs.
The first respondent filed a petition for the recognition and enforcement of the award before the U.S. District Court, Eastern District Court of Michigan.
The first respondent levied US 3 an hour towards administrative charges.
On being questioned by criminal investigation department of the Andhra Pradesh police, Mr. Raju reportedly admitted to using Satyam respondent number1 money for buying prime land in and around Hyderabad and Mr. Raju admitted in answer to interrogation that funds of the first respondent were being diverted for the last 4 5 years.
On 7.1.2009, it was reported that the Securities and Exchange Board of India SEBI directed an investigation in the entire matter.
The first respondent on companycealment of these facts induced the appellant to enter into an agreement with it.
The Trial Court, vide its Order dated 3rd November, 2009, allowed the application of the appellant.
The High Court, vide its order dated 19th February, 2010, allowed the revision petition of the first respondent.
Thus, disputes cropped up and were referred to arbitration.
The Trial Court dismissed the suit of the appellant on the ground that a foreign award companyld number be challenged under Section 34 of the Arbitration Conciliation Act, 1996 herein after, ABC, 1996 .
On 28th April, 2006, the appellant filed a suit O.S. No.
Such order by Government of India came on the basis of a report from the Registrar of Companies, Hyderabad.
1331/2009 dated 12th June, 2009 to bring certain facts on record and also filed additional pleadings in respect of the same under Order VIII Rule 9 of the Civil Procedure Code, 1908.
On 5.4.2009, it was reported that the Enforcement Directorate also directed an investigation in the matter for alleged money laundering.
The High Court held, relying on Rule 12 1 of the Andhra Pradesh Arbitration Rules, 2000, that Rule VIII of Civil Procedure Code is number applicable, so a petition for additional pleading is number maintainable under Order VIII of Civil Procedure Code.
On 21.1.2009, Mr. Raju reportedly admitted diversion of funds from the first respondent, which was widely published in newspapers across India.
On 17.4.2009, it was reported in the press that PwC is guilty of wrong doing in the multi crore Satyam scam.
On 27.1.2009, the Income Tax department reportedly directed an investigation in the operations of the first respondent.
They agreed to sub contract the automotive engineering works to the second respondent.
According to first respondent, they retained US 859,899 from the TRW receipts.
SFIO is a multi functional investigating agency representing the Ministry of Home Affairs, Enforcement Directorate and the Intelligence Department.
On 13.1.2009, the Government of India directed the Serious Fraud Investigation Office SFIO to investigate the matter.
Relying on the aforesaid materials which were sought to be incorporated by way of amendment, it was urged by the appellant that the aforesaid materials go to show that the very basis of the fiduciary duties of the first respondent to the appellant was breached, even prior to the Shareholders Agreement between the parties.
On 20.4.2009, SFIO alleged to have found evidence that the first respondent diverted foreign earnings even before they reached India.
Article VIII of the Shareholders Agreement companytemplates certain events of default, and in the event of default, number defaulting shareholder has the option to purchase the defaulters shares at book value or cause immediate dissolution and liquidation of the second respondent.
7800 crores in the first respondent.
Along with the additional pleadings were annexed extracts from press clippings about the said investigation by SEBI.
The first respondent challenged the said order of the Trial Court by filing a civil revision before the High Court.
Extracts from the said opinion of PwC are also enclosed with the additional pleading.
The sole arbitrator gave his award on 3rd April, 2006 whereby the appellant is to transfer its entire shareholding in the second respondent to the first respondent.
The appellant disputed the same and alleged that Satyam retained a total of US 2,188,000, and also alleged companycealment and dereliction of duty as a joint venture partner.
The judgment and order dated 19th February, 2010 of the Division Bench of the High Court of Andhra Pradesh in Civil Revision No.5712/2009 has been impugned in this appeal.
On 13.1.2009, Price Waterhouse Coopers PWC , which acted as the statutory auditor of the first respondent, wrote to the Board of the first respondent that in the light of statements made by Mr. Raju, the financial statements for the period from June 2000 to 30th September, 2008 companyld numberlonger be companysidered reliable.
GANGULY, J. Leave granted.
It was reported on 25.1.2009, that partners of PWC statutory auditors of the first and second respondent were arrested for their alleged role in the misstatement of the accounts of the first respondent.
Such diversion was made to tax havens like Mauritius before routing it back to Maytas Infrastructure and other entities owned by Mr. Raju and his relations.
The appellant, Venture Global Engineering, having its principal office in Michigan, USA, entered into a Shareholders Agreement and a Joint Venture Agreement on 20th October, 1999 with the first respondent, for establishing a companypany called Satyam Venture Engineering Services hereinafter, the second respondent .
80/2006 seeking a declaration to set aside the award and also prayed for a permanent injunction against the transfer of shares under the arbitral award, in the Court of Ist Additional Chief Judge, City Civil Court, Secundrabad.
The appellant appealed against the order of the Trial Court before the High Court of Andhra Pradesh at Hyderabad, and the said appeal was also dismissed on 27th February, 2007.
Therefore, the High Court did number allow the appellant to file additional pleadings on record.
It appears that the first respondent did number make available to the appellant verified financial statements to show the amount of TRW revenue which was diverted, and the appellant was thus left to assess such amount based on various representations of the financial statements made by the first respondent to the appellant.
On 8.2.2009, it was reported that a companyfession was made by PWC before the police that Mr. Raju employed an elaborate scheme to exaggerate the accounts of the first respondent.
In the light of these developments regarding the first respondent, the appellant filed an interim application before the Trial Court I.A. No.
On 17.2.2009, Central Bureau of Investigation CBI was asked to probe the Satyam scam.
