2022 (4) TMI 1042 - HC - Companies Law

Court upholds winding-up petition, appoints Official Liquidator, dismisses appeals

The court upheld the admission of the winding-up petition under Sections 433(e) and (f) of the Companies Act, 1956, as the debt was found not to be ... Admissibility of Winding up petition filed invoking Sections 433 (e) and (f) of the Companies Act, 1956 - appointment of the Official Liquidator - HELD THAT:- According to the petitioner (the respondent in the appeal), the respondent Company (the appellant in the appeal) is indebted to it for more than 24 million USD. The petitioner had given notice to the Company, as required under Sections 433 and 434 of the Act on 21.01.2015, which was duly served, which was not responded. On these points, there is no dispute. For this reason, the deeming fiction under Section 434 (1) (a) of the Act would come in play and in view of the provision of Section 439 (1) (b) of the Act, the petitioner, whose status is of a creditor, would be entitled to move this Court for winding up of the Company, which it has done. The admission of the winding up petition is not automatic. If the debt is bonafidely disputed and the defence is a substantial one, the Court will not wind up the company. Therefore, before admitting such a petition, it needs to be ascertained by the Company Court, what defence the Company has taken and whether the said defence can be said to be bonafide - The Company Court has, on the basis of the material on record, arrived at satisfaction that, the defence which the respondent Company has taken can not be said to be bonafide. The defence raised by the Company is two fold. Firstly that the documents relied by the petitioner Credit Suisse, Switzerland are not stamped and therefore the Courts in India will not take cognisance thereof and secondly, the S.R.Technics did not have valid license from the Director General of Civil Aviation (DGCA) and therefore it could not have legally maintained the Aircrafts / Engines of the appellant Company and consequently no amount could be said to be payable by the appellant to it and thereby there is bonafide dispute with regard to the said payment. Both the defences raised by the appellant are rejected. At least, they are not accepted as bonafide defence. The admission of the petition therefore need not be interfered with. The stand of the appellant as quoted above would also justify admission of the petition under Section 433 (f) of the Act as well. Appointment of Provisional Liquidator - HELD THAT:- Though no observation for / or against any of the parties in this regard is made, the fact remains that the said pendency has not helped the petitioner in any manner. The appellant claims to be one of the largest passenger carrier in the civil aviation industry of our Country, which by its own stand has carried hundreds of thousands of passengers for all these years without maintenance of its Air Crafts and engines from any service provider with valid license from DGCA. The admission of petition under Section 433 (f) of the Act may become more relevant in this background - Though learned Senior Advocate for the appellant has relied on number of authorities, which are noted above, according to us, in the facts and the findings which are noted above, none of the said authorities would help the appellant. Further, none of the said authorities would make the order of the Company Court, admitting winding up petition and appointment of Official Liquidator as Provisional Liquidator, unsustainable. These appeals are dismissed. Issues Involved:1. Admission of the winding-up petition under Sections 433(e) and (f) of the Companies Act, 1956.2. Appointment of the Official Liquidator as Provisional Liquidator.3. Validity of the documents relied upon by the petitioner.4. Validity of the service provider's license from the Director General of Civil Aviation (DGCA).Issue-wise Detailed Analysis:1. Admission of the Winding-Up Petition:The appeals challenge the Company Court's order admitting the winding-up petition under Sections 433(e) and (f) of the Companies Act, 1956. The petitioner claimed the respondent company owed it more than 24 million USD. A notice under Sections 433 and 434 was served on the respondent, which was not responded to, invoking the deeming fiction under Section 434(1)(a). The court found that the debt was not bonafidely disputed and the defense was not substantial, thus justifying the admission of the petition.2. Appointment of the Official Liquidator as Provisional Liquidator:The Company Court also appointed the Official Liquidator as Provisional Liquidator. The court found this appointment justified given the circumstances, including the respondent's failure to pay the admitted dues. The court noted that the winding-up petition, filed in 2015, was only taken up for admission in 2021, indicating a significant delay that did not benefit the petitioner.3. Validity of the Documents Relied Upon by the Petitioner:The appellant argued that the documents relied upon by the petitioner were not stamped, and thus, Indian courts should not take cognizance of them. The court rejected this argument, noting that at the stage of admission of the winding-up petition, the focus is on whether the debt is bonafidely disputed, not on the sufficiency of the stamp on the documents. The court cited binding decisions from the Division Bench and the Bombay High Court to support this view.4. Validity of the Service Provider's License from DGCA:The appellant contended that SR Technics did not have a valid license from the DGCA, and thus, any maintenance services provided were illegal, nullifying the debt. The court rejected this argument, noting that the appellant had accepted the invoices and signed bills of exchange related to the services. Additionally, the appellant's previous stance in international arbitration proceedings contradicted this defense, further undermining its credibility.Conclusion:The court dismissed the appeals, finding no error in the Company Court's orders. The defenses raised by the appellant were not considered bonafide, and the admission of the winding-up petition and appointment of the Provisional Liquidator were upheld. The court extended the stay granted by the Company Court until 28.01.2022 to allow for a meaningful challenge to this order.