TaxTMI 
TaxTMI 
2017 (2) TMI 563
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....(Holdings) Limited ('UBHL' for short) and in these ten winding up petitions, the secured creditors, consortium of Banks, 14 in number, led by State Bank of India (SBI) and various unsecured creditors like suppliers of Aero Engines, Lessors of Aircrafts and Service Providers who have invoked Corporate Guarantees furnished by the Respondent - Company, UBHL, to them to secure their loans, advances and supplies to King Fisher Airlines Limited (KFAL), have approached this Court, against the Respondent Company - UBHL, which was initially a Holding Company of the King Fisher Airlines Limited, but, later on diluting its shareholding in that, the said King Fisher Airlines Limited (KFAL) did not remain a Subsidiary Company, however, the existence and validity of Corporate Guarantees given by the Respondent Company - UBHL continued. 2. The King Fisher Airlines Limited (KFAL) has already been ordered to be wound up recently by this Court in its judgment and order dated 18/11/2016 in Company Petition No.214/2016 a/w. C.A.No.1183/2012 & C.A.No.1184/2012 (Aerotron Limited Vs. Kingfisher Airlines Limited) and various other winding up petitions against KFAL. 3. It is also reported that the Founde....
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....ese winding up petitions by Mr. Udaya Holla, Senior counsel for UBHL and other counsels appearing for the supporting creditors to oppose the winding up by Mr. Sajan Poovayya, Senior Advocate and Ms. S.R. Anuradha, learned counsels appearing for workmen of the Respondent - Company, UBHL and other allied companies. 7. The dues claimed from the Respondent - Company were relating to the KFAL and it is on the anvil of the Corporate Guarantees of UBHL and personal Guarantees given by Dr. Vijay Mallya to these petitioning creditors, which were invoked and on account of the failure to discharge the said Guarantee obligations, these winding up petitions were filed by the different secured and unsecured creditors and the learned counsel appearing for the petitioning creditors also made emphatic arguments before this Court for seeking the winding up of the Respondent - Company, as they submitted that not only the Respondent - Company, UBHL has failed to pay its admitted liability and debts arising under these Corporate Guarantees but the defences put forth by them are flimsy and unsustainable and the Respondent - Company, UBHL cannot wriggle out of its Guarantee obligations and the net-worth....
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.... their rights and interest as secured creditors and are also pursuing other remedies available to them for realization of the Securities created in their favour, without the assistance of this Court for sale/realization of the secured assets. However since according to them, the dues of the petitioners are far in excess of the security interest, which they hold with them, therefore, they are before this Court, seeking the winding up of the Respondent - Company, UBHL. 14. The petitioners have stated before the Court that the petitioners, State Bank of India (SBI), Axis Bank Limited, Bank of Baroda, Bank of India, Central Bank of India, Corporation Bank, The Federal Bank Limited, IDBI Bank Limited, Indian Overseas Bank, Jammu and Kashmir Bank Limited, Punjab & Sind Bank, Punjab National Bank, State Bank of Mysore, and UCO Bank have stated before the Court that in April 2010, at the request of KFAL, some of the petitioners - Banks, since 2005, have provided Working Capital facilities, both fund based and non fund based and Rupee Term loan facilities including Short Term loan to KFAL and subsequently in view of the financial difficulties faced by it, KFAL requested the petitioners - B....
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....so stated before the Court in para.29 of the petition that the Respondent - Company, UBHL, has filed a Civil Suit, namely Suit No.263/2013 (R311/2013) before the Bombay High Court, inter alia, challenging the validity of the Corporate Guarantee given by it and sought a declaration to that effect and also another collusive Suit filed by the United Spirits Limited in Special Civil Suit No.31/2013/A, before the Civil Judge, (Sr.Dvn.) at Mapusa, Goa, whereas these Companies had no jurisdiction and the whole purpose of the said Suit was to some how create as many hurdles for recovery of outstanding dues to the petitioners as possible. 19. The petitioners have also submitted that the Respondent - Company, led by its Chairman, Dr. Vijay Mallya surreptitiously entered into a deal of sale of shares owned by Respondent - Company, UBHL to Diageo Plc and Relay B.V., Foreign Companies and the said shares held by it in its Group Company, USL was intended to be sold at Rs. 1440/- per share as against the much higher market price available and thus on account of failure of the Respondent - Company to pay its admitted dues under the Corporate Guarantees and raising sham defences which deserve to b....
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....ioner - Company, on 15/02/2012, invoked its two Guarantees and called upon the Respondent - UBHL to pay the entire outstanding amount of USD 11,877,573.01 under "V2500 Rework Agreement and USD 18,804,678 under "Repayment Agreement". The statutory notice under Sections 434 and 439 of the Companies Act, 1956 was served on 29/02/2012 which was not responded to by the Respondent - Company. However, on 21/03/2012, the Respondent - Company, UBHL only replied stating that they are trying to resolve the issue amicably. Thus, a total sum of USD 30,682,251.01 (approximately Rs. 153 crores) was due for which the petitioner -Company filed the present winding up petition in this Court on 26/03/2012. Company Petition No.121/2012 & Company Petition No.122/2012 - RRPF Engine Leasing Limited & Rolls-Royce & Partners Finance Limited Vs. UBHL. 24. The petitioner - Company (in Co.P.No.121/2012) incorporated under the Laws of England is engaged in the business of renting Air Transport Equipments including Aircraft Engines. 25. The petitioner and its Holding Company, Rolls-Royce & Partners Finance Limited (RRPF) (petitioner -Company in Co.P.No.122/2012) entered into a Master Engine Lease Agreem....
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....2011 and the Respondent, UBHL is said to have executed an unconditional and irrevocable Corporate Guarantee to the maximum amount of USD 25,000,000, vide Guarantee dated 14/10/2011, Annexure E of this Company petition. 30. On 23/03/2012, the said Guarantee was invoked and upon failure of the Respondent to discharge its related obligations, the statutory legal notice was served by the petitioner on the Respondent vide Annexure J on 03/08/2012 claiming an amount of USD 16,899,970.60 (Rs. 101,39,98,200/-). Company Petition No.248/2012 - BNP Paribas Vs. UBHL 31. The said BNP Paribas also registered in France claims to be a Bank, having financed for the purchase of three ATR 72-212A Aircrafts or Engine bearing Number, "MSN 699", "MSN 728" and "MSN 730" under the Loan Agreements facilitated by "campagnie Franqaise d' Assurance pour le Commerce Exterieur ("Coface") the Export Credit Agency of France. According to petitioner, all three parties to Agreement dated 05/06/2006 Kingfisher Airlines Limited, KF Aero, and the petitioner, BNP Paribas. The KF Aero, lessor agreed to purchase the Aircrafts from G.I.E. Avoins de Transport Regional (the Manufacturer) of Blagnac, France and KF Aero ag....
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.... 146.11 crores), by serving a Notice dated 15/07/2012, under Sections 433 and 434 of the Companies Act, a copy of which is placed on record as Annexures NN and PP respectively, the present winding up petition was filed on 05/11/2012. Company Petition No.51/2013 - United Bank of India Vs. United Breweries (Holdings) Limited 34. The petitioner - Bank claims that initially it had sanctioned credit limits to M/s. Deccan Aviation Limited since October 2003 and further credit limits were also sanctioned to KFAL since November 2005 and M/s.Deccan Aviation Limited was taken over by KFAL vide Merger of the two, sanctioned by the Karnataka High Court on 16/06/2008 in Company petition Nos.45, 46 and 47 of 2008. 35. The Respondent - Company, UBHL had granted a Corporate Guarantee in favour of the petitioner - Bank and other Banks on 25/02/2003 which was invoked by the petitioner - Bank on 25/02/2013. The petitioner Bank is not a part of the SBI and 13 other banks in a consortium which have filed Company Petition No.162/2013 in this Court, on its own head, claiming a sum of Rs. 386.62,31.757.07 along with interest by serving a legal notice on the Respondent Company, UBHL and KFAL on 08/11/20....
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.... the Petitioners 39. Since the different creditors, secured and unsecured creditors, Banks and Financial Institutions and other trading creditors like suppliers and service providers have filed various winding up petitions, it is considered appropriate to deal with the contentions of the petitioners raised by various learned counsels appearing for the different petitioners as follows:- For SBI & 13 other Banks : Mr.S.S.Naganand, Senior Advocate for Petitioner (Co.P.No.162/2013) 40. For State Bank of India and other Banks Mr.S.S.Naganand, Senior Advocate made submissions on behalf of the State Bank of India, the lead Bank representing the consortium of various banks who had made advances and extended loans to the Company - Kingfisher Air Lines Ltd., ('KFAL' for short) and the Respondent-company United Breweries (Holdings) Limited ('UBHL' for short) was earlier the Holding company qua its subsidiary KFAL and the claim of these petitioning creditors are based on the Corporate Guarantees given by the Respondent-company UBHL to secure the loans and advances by these petitioner- Banks to KFAL, which company has already been ordered to be wound up by this Court on 18.11.2016. 41. Mr.S....
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.... 1956. 44. Mr.S.S.Naganand submitted that the petitioner-Banks being secured creditors, standing outside the winding up proceedings, insofar as secured interest are concerned, they have initiated action against the respondent-company before the DRT, Bangalore also, but that does preclude them from pursuing the present winding up petitions against the Respondent-company UBHL. He also drew the attention of the Court towards one settlement proposal dated 29.03.2016 filed on behalf of KFAL and Respondent-company UBHL and Kingfisher Finvest(India) Ltd., through its Chairman Dr.Vijay Mallya, but he submitted that the said proposal was an eyewash and a ruse to wriggle out of the winding up proceedings initiated by the petitioners-Bank and several other creditors before this Court and such proposal was filed before the Hon'ble Supreme Court in Special Leave Petition Nos.6828-6831/2016 was not accepted even by the Hon'ble Supreme Court and the counter filed by Dr. Vijay Mallya in the aforesaid SLP before the Hon'ble Supreme Court itself was clearly admitted that the assets of the Respondent company are presently worth only Rs. 4,986/- crores, whereas, the liabilities of the respondent aggr....
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....ning the Aircrafts leased by the petitioner to KFAL. He submitted that the Corporate Guarantees executed by the Respondent-company in favour of the petitioner on 01.08.2011 and 10.11.2010 were unconditionally irrevocable and same contained covenant to pay to the petitioner-company within 5 business days of a written demand and the said Undertaking was given by the Respondent - UBHL in the capacity of Principal Obligor and not merely as a Surety. 47. Mr.Shreyas Jayasimha, submitted that series of Agreements were executed between the petitioner and KFAL including the Agreement called V2500 Rework Agreement dated 27.10.2010 and FPA (Fleet Power Agreement) Termination Agreement and Agreement for mutual release and waiver of claims between the petitioner and KFAL, Deeds of lease for Aircraft Engines and for repayment of outstanding amounts which fell due between 2005-10 and all these series of Agreements were executed on 27.10.2010. The Corporate Guarantees were executed by UBHL in favour of the petitioner on 10.11.2010 and on 01.08.2011 and upon the default in payment by KFAL under Rework Agreement and Repayment Agreement, the petitioner- company invoked the Guarantees by issuing two ....
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....ompany also deserves to be wound up, so that the Official Liquidator can take charge of whatever assets of the Respondent company are available and by realizing the sum by sale of assets of Respondent company UBHL and distribute the same to the petitioner company and others like, who have filed various winding up petitions before this Court in accordance with the provisions of the Companies Act. The total dues of all the petitioners in the form of a Chart are given below:- Sl. No. Case No. Petitioner Date of filing the Co.P. Date of Statutory Notice U/S.433, 434 & 439 of Co.Act,1956. Amount claimed in USD Amount in Indian Rupee converted in approximate rate of `60/USD 1. Co.P.No.57 of 2012 IAE International Aero Engines AG (IAE) 26/03/2012 a) 29/02/2012 b) 16/03/2012 * 1,18,77,573 **1,88,04,678 3,06,82,251 184,09,35,060/- 2. Co.P.No.121 of 2012 RRPF Engine Leasing Limited 12/06/2012 28/03/2012 7,32,710 4,39,62,600/- 3. Co.P.No.122 of 2012 Rolls-Royce & Partners Finance Limited 12/06/2012 28/03/2012 1,04,37,866 62,62,71,960/- 4 Co.P.No.185 of 2012 Avions de Transport 03/09/2012 03/08/2012 1,68,99,970 101,39,98,200/- 5 Co.P.No.24....
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....ned subsidiary of Diageo plc, pursuant to the Agreement entered into with the Respondent-UBHL on 09.11.2012, as contemplated under the Shareholders Agreement, the USL entered into Deed of Adherence and thereby become the party to that Shareholders Agreement on 04.07.2013. 54. Mr.Ramanand Mundkur further submitted that in view of the events as developed later on, the prior affidavit of USL filed in this Court on 25.01.2016 seeking protection of the Court by appropriate orders in the present winding up petitions, the change of stand shifting from opposing winding up petition to supporting the same now by this Affidavit 10.01.2017 happened in the following circumstances:- 55. That the Company USL originally filed its Affidavit dated 25.02.2015 opposing the winding up of UBHL but slightly shifted its stand by subsequent affidavit dated 25.01.2016, seeking protection against the respondent-UBHL from the court of its own interest and the financial exposure by way of loans given to UBHL and finally took a stand for supporting the winding up of the Respondent - UBHL by its Affidavit filed during the course of arguments on 10.01.2017. 56. When the Respondent - Company, UBHL failed to dis....
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.... UBHL according to the learned counsel, Mr.Ramanand Mundkur, was clearly a moonshine and demonstrates its malafide intention to evade and avoid payment of its legitimate dues. He further submitted that in all its audited statements and Balance Sheets, after the order of the Hon'ble Supreme Court dated 11.02.2014, for the Financial Years ending on 31.03.2014, 31.03.2015 and 31.03.2016, the respondent company UBHL has clearly recognized and recorded the amount owed to USL under the Loan Agreement as a liability and therefore, its U-turn taken in the un-audited financial statements submitted to the Stock Exchanges on 10.11.2016 that there is no loan outstanding to USL is completely contrary to the admission of the liability made by the Respondent company in its audited statements and the correspondence issued by the respondent company to USL in the year 2015-16. 59. Therefore, in paragraphs 8 and 9 of the said Affidavit dated 10.01.2017, the said USL company submits that it now supports the winding up petitions filed by the other petitioner-Creditors against UBHL for these reasons. 60. Paragraphs 8 and 9 of the said Affidavit dated 10.01.2017 are quoted below for r....
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....covery under special enactment, the Securitization and reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI' Act) and have also filed the winding up petitions. 63. The second most emphatic argument made by Mr. Udaya Holla, Senior Counsel is that the Respondent - UBHL itself has filed Civil Suit No.6406/2012 in Bangalore City Civil Court against the supplier of Aero Engines to KFAL not only claiming declaratory relief of declaring Corporate Guarantees given by UBHL to IAE International Aero Engines and others as void and non-est but have also claimed compensation to a large extent against these suppliers for supplying defective Aero Engines to KFAL which have not only resulted in huge losses to the said erstwhile subsidiary Company of the Respondent - UBHL, but for whose financial obligations, it gave the Corporate Guarantees in question in the year 2010- 2011 when the Master Debt Re-structuring Agreement was executed between the parties and thus on account of failure of these suppliers and other Companies, who are defendants in the said Civil Suit No.6406/2012, in which KFAL itself is a defendant in the Bangalore City Civil Court and on acco....
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.... establishment in India, to seek requisite approval and Registration from the Registrar of Companies and RBI and since the petitioner - M/s. IAE International Aero Engines, while it was actively engaged in the business of supply of Aero Engines to KFAL, had a business establishment in India and was admittedly neither registered with the Registrar of Companies in India nor had obtained any approval from RBI and other competent Authorities, the winding up petitions filed by such Foreign Company before this Court was not maintainable and deserved to be dismissed. 67. Mr. Udaya Holla, Senior Advocate also submitted that the Debt Recovery Tribunal where the secured creditors like SBI and other consortium of Banks had filed recovery proceedings was seized of the said case in O.A.No.766/2013 filed on 25/06/2013 and the Debt Recovery Tribunal is yet to finally determine the amount outstanding and due to be paid by the Respondent Company to them and therefore the winding up proceedings cannot be undertaken in view of the yet unascertained amount of debt due to the petitioners. 68. Besides raising the aforesaid contentions, the learned Senior Counsel for the Respondent - Company, UBHL, Mr.....
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....arantees 75. UBHL, along with Kingfisher Finvest India Limited ("KFIL") and Dr. Vijay Mallya have filed a Suit in the Hon'ble Bombay High Court, being Suit No. 311 of 2013 on 26th March, 2013 ("Bombay High Court Suit"), inter alia, seeking a declaration that the Corporate Guarantee dated 21st December, 2010 given by UBHL ("Corporate Guarantee") and the Personal Guarantee dated 21st December, 2010 given by Dr. Vijay Mallya ("Personal Guarantee") are void ab initio and non est, inter alia, on the ground of coercion and duress. It is pertinent to note that the Bombay High Court Suit was filed even prior to recall of the Kingfisher Airlines facilities and/or invocation of either the Corporate Guarantee or the Personal Guarantee. 76. Each of the members comprising the Consortium is a party defendant to the Bombay High Court Suit. The issues raised in the Bombay High Court, are still pending, and are sub-judice. The Respondent herein has also made a counter claim of Rs. 3200 crores against the petitioners - Banks in the said Suit. In fact, none of the members of the Consortium have filed their Written Statement in Suit No. 311 of 2013. 77. In these circumstances, it is submitted t....
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....dered investment into KFA by external investors, resulting in UBHL and KFIL, by themselves, and through their subsidiaries and associates, being compelled to fund KFA in an aggregate amount of Rs. 3199.68 crores just from 1st April, 2011 till the end of March, 2013. UBHL has claimed the said amount from the Petitioner Banks in Suit No. 311 of 2013 filed in the Hon'ble Bombay High Court. 82. The aforesaid constitute unlawful acts by the Consortium and are clearly in breach of the principles of good faith and fair dealings between the parties and the Consortium has now even gone to the length of attempting to initiate draconian measures in an attempt to leave KFA, UBHL and Dr. Vijay Mallya, without an avenue to pursue their legal remedies according to the procedure established by law. 83. The concerted action of the consortium in targeting KFA, UBHL and Dr.Vijay Mallya is a blatant example of a private enterprise being victimized and being made an example to others in similar situations. In proceeding against KFAL, UBHL and Dr.Vijay Mallya in the manner as aforesaid, the Consortium has reinforced its decision to apply selective measures against KFAL, UBHL and Dr. Vijay Mallya to th....
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....Seamless Steels and Alloys, reported in 2002 (112) Comp. Case. 314 and QSS Investors v. Allied Fibres, reported in 2001 (107) Comp. Case 587 and the Himachal Pradesh High Court in Azeet International v. HPH Produce Marketing, reported in 2001 (107) Comp. Case. 587 have held that even in respect of winding up petitions, parallel remedies cannot be pursued. The petitioners have admitted that Respondent is solvent 88. The State Bank of India (which is the lead bank in the consortium) has on the one hand declared UBHL as a Willful Defaulter stating that although UBHL has the means to pay, it has not paid the dues of the petitioners and therefore UBHL has been declared as a Willful Defaulter. A copy of the order has been produced by way of a memo. Further, the consortium of banks in their arguments before the DRT on 10th January, 2017 have categorically made a statement that the Respondent has substantial assets to recover the whole of the claim before DRT in OA 766/2013 (approximately Rs. 6,280 crores), and if sold the realizable value of these assets will be sufficient for recovery of almost the entire dues of the Banks. Proposals for Settlement have not been considered by the Peti....
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....ter of a serious dispute arising out of and in view of the inherently defective, both in design and manufacture, IAE V 2500 - A5 Engines fitted on the entire fleet of Airbus A320 family aircraft of KFA, rendering them incapable of commercial use. The investment of the Respondent Company and its subsidiaries (including by way of equity share capital and shareholder loans) in KFA has been seriously damaged primarily on account of the operational and financial woes of KFAL, which in turn has been primarily or in any event decisively been caused by the defective engines supplied, and further on account of the false assurances/representations given made by IAE (the Petitioner Company) and/or its constituent joint-venture partners, viz. Rolls-Royce plc, Pratt & Whitney, a division of United Technologies Corporation, Japanese Aero Engines Corporation and MTU Aero Engines GmbH. 92. As a result, the Respondent Company has been constrained to file a suit in the City Civil Court, Bangalore, being Suit in O.S.No.6406 of 2012, inter alia, against IAE (the Petitioner Company) and its aforesaid constituent joint-venture partners. From a mere perusal of the plaint it is clear that the Respondent ....
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....d to survive as an airline, it had to come to terms with IAE and get its fleet back in the air. It is in this background that KFA commenced negotiations with IAE sometime in mid 2010 to try and reach an amicable resolution of this issue. Oral representations were made, in the course of negotiations, by senior officials and officers of IAE to the representatives of KFA and the Respondent to the effect that steps taken by IAE by way of replacing the drums with fully silver coated nuts with new drums without fully silver coated nuts, and the proposed installation of Single Crystal Panels in the combustion chamber, were allegedly a "complete fix" for the HPC Stage 3 to 8 Drum defect and the Hot Section Distress defect respectively. KFA and the Respondent were left with no alternative but to rely upon these representations. KFA and the Respondent accepted at face value the representations made by IAE regarding the complete fix of the problem of the engines. On the basis of such representations, KFA entered into the various Agreements and UBHL entered into the guarantee. 97. It has now come to the attention of KFA and the Respondent herein that the mandatory terminating action prescribe....
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....ce of all laws within the territory of India. Foreign law is not included. As the court does not take judicial notice of foreign law, it should be pleaded as any other fact, if a party wants to rely on the same. 102. The Bombay High Court in Iridium India Telecom v. Motorola Inc., reported in MANU/ MH/1125/2003 (BOM) has held that the legal position is well settled that foreign law is a question of fact and must be pleaded by the parties who relies upon it. 103. The petitioner in the present winding up petition has neither pleaded nor proved English law which is the foreign law. This being the case, the guarantees being governed by English law, the same cannot be regarded by this Hon'ble Court and consequently the very petition is not maintainable as the very enforcement of guarantees is not shown before this Hon'ble Court. Ex-Parte Decrees of Foreign Courts are not binding 104. The petitioner has contended that it has obtained a foreign judgment from the English Court in summary proceedings on the basis of which it is seeking to foist a liability on the Respondent in support of the winding up petition. 105. It is submitted that the said judgment of the English Court is a summ....
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....judgement of the Delhi High Court in Dabur (Nepal) P. Ltd. v. Woodworth Trade Links P. Ltd., reported in 2012 (175) Comp. Cas. 338. COP 248 / 2012 - BNP Paribas v. United Breweries (Holdings) Limited 111. The Respondent had agreed to guarantee the amounts due to M/s KF Aero. In this regard an application was submitted to the Reserve Bank of India (RBI) seeking permission to provide such a guarantee, guaranteeing the dues of KF Aero. However, the RBI gave permission only to issue the corporate guarantee in favour of KF Aero and not to its successors and assigns. KF Aero in turn appears to have assigned its rights in favour of BNP Paribas which is the petitioner in the present petition. Since RBI permission was not there for assigning the Corporate Guarantee in favour of BNP Paribas the same is void. It is hit by provisions of Section 13 of Foreign Exchange Management Act. Further, the very assignment has not been effected as BNP Paribas has not yet notified the Respondent in writing about the same as required by the very documents. In fact, even post the purported assignment by KF Aero in favour of BNP Paribas, KF Aero continued to raise invoices for lease rentals till termination....
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....jections of UBHL. (pg. 24)). Thus, there was no permission of the RBI allowing assignment of the three corporate guarantees to KF Aero's assignees, and although such permission had been expressly sought, it had not been granted. 115. It is submitted that unless prior permission was duly obtained from the RBI, the purported assignment of the three corporate guarantees in favour of BNP Paribas would be void and/or unenforceable in law for such permission would have to precede and not follow the assignment. That BNP Paribas was aware of this position in law is evident from the legal opinion(s) given by M/s Rajinder Narain & Co. (Annexures R-2 (Pg 34), R-3 (Pg. 46) and R-4 (Pg. 58) of the Additional Objections of the Respondent dated 28.02.2014) to, inter alia, BNP Paribas who had duly examined the RBI Permission dated 12th June, 2006 and, inter alia, opined as follows:- "The RBI has given approval for issuing the Guarantee in favour of the Lessor. Any change in its terms would require RBI's approval." (emphasis supplied) 116. This position also emerges from the plain language of Regulation 3 of the Foreign Exchange Management (Guarantees) Regulations, 2000 as well as in light of th....
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.... do not refer to the decision of the Supreme Court in Mannalal Khetan and therefore are per incuriam and not good law. 120. The contention that the corporate guarantees are void and/or unenforceable in law is further buttressed by a perusal of Article VIII 2(b) of the Articles of Agreement of the International Monetary Fund. The said article states: "Article VIII: General Obligations of Members Section 2. Avoidance of restrictions on current payments (b) Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member maintained or imposed consistently with this Agreement shall be unenforceable in the territories of any member. In addition, members may, by mutual accord, cooperate in measures for the purpose of making the exchange control regulations of either member more effective, provided that such measures and regulations are consistent with this Agreement." 121. The International Monetary Fund has clarified that the meaning and effect of this provision is that Parties entering into exchange contracts involving the currency of any member of the Fund and contrary to exchange control regulations of that mem....
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....ount claimed in the present Petition. 123. BNP Paribas was therefore, obliged to invoke the Asset Value Guarantees before approaching this HonRs. ble Court by way of the present Company Petition. The Guarantees are governed by Foreign Law, which has to be pleaded and proved 124. The guarantees are governed by English Law. The petitioner in the petition has neither pleaded nor proved English Law. Under the circumstances, the very petition is not maintainable and no order of winding up can be passed against this Respondent. CO.P.No.121/2012 - RRPF Engine Leasing Limited v. United Breweries (Holdings) Limited CO.P.No.122/2012 - Rolls-Royce & Partners Finance Limited v. United Breweries (Holdings) Limited Petitioners are part of the Rolls Royce group, which is a party to the IAE Suit 125. From (i) the websites of Rolls-Royce and IAE, (ii) the Annual Report of Rolls-Royce Holdings plc, and (iii) the Directors Report and Financial Statements for 2011 for Rolls-Royce plc - the details of which are set out in the statement of objections, it is clear that the petitioners are a constituent of the Rolls-Royce Group of companies which includes Rolls-Royce plc - which admittedly was at....
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....mited Petitioner being a Foreign Company has failed to comply with Section 592 129. The Respondent Company submits that erstwhile Kingfisher Airlines Limited ("erstwhile Kingfisher"), which inter alia, operated Scheduled Air Transport Services within India and was a part of the UB Group of Companies, had entered into Agreements with the Petitioner for purchase of ATR 72-500 aircraft as well as General Maintenance Agreements ("GMA") for maintenance of these aircraft. Erstwhile Kingfisher had entered into a Purchase Agreement dated 13th December, 2005 ("the erstwhile Kingfisher PA"), and GMA dated 21st June, 2006 with the Petitioner ("the erstwhile Kingfisher GMA"). Similarly, Deccan Aviation Limited (now known as KFA) had also entered into a Purchase Agreement dated 11th February, 2005 ("the Deccan PA"), and GMA dated 11th June, 2003 with the Petitioner ("the Deccan GMA"). Both erstwhile Kingfisher and Deccan Aviation Limited prior to the de-merger, made payments titled "Pre Delivery Payments" to the Petitioner in respect of the aircraft booked under these purchase Agreements as also payments under the GMA for maintenance services and supply of parts by the Petitioner. Thereafter,....
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....asis in respect of the operating fleet of ATR aircraft and also acted as a communication channel between the airline and the Petitioner. 135. Thus, the petitioner had a place of business in India and accordingly had to comply with the requirements of Section 592 of the Companies Act, 1956, which the petitioner has not complied with. As a result of such non-compliance, Section 599 of the Companies Act bars the petitioner from instituting any legal proceedings. Thus, there is a bar to the present proceedings and the present proceedings are not maintainable. CO.P.No.99/2013 - HPCL v. United Breweries (Holdings) Limited Petitioners' claim is for interest 136. It is submitted that the entire claim of the petitioner herein is for delayed payment service charges (interest). The entire outstanding amount with respect to the fuel supplied has been paid in full by KFA. What is being claimed in the present petition is only the amounts allegedly due from KFA on account of the interest. 137. The High Court of Karnataka in Southern Industrial Polymers (P.) Ltd. v. Amar Pharmalators and Electronics (P.) Ltd., reported in [(1984) 56 Comp. Cases 77] has held that where the agreed amount toward....
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....- UBHL itself, has dues to the extent of Rs. 94.33 crores against the Respondent - Company. But, it is hopeful and quite positive that the Respondent - UBHL will repay its dues and winding up of UBHL therefore will not be the solution of the financial crisis, which the Respondent - UBHL may be temporarily facing. 145. He submitted that even the secured creditors like HDFC Bank who have their financial exposure in the Respondent - UBHL, want to oppose these winding up petitions. He urged that of course, with the sale of some of the share holding of the UBHL, by the said HDFC Bank, their exposure is much less when compared to the debts claimed by the petitioning creditors, but they are also opposing these winding up petitions, because they are hopeful of the recoveries from the 'Going concern' of the Respondent - Company, UBHL. 146. Mr. Poovaiah also urged that under different orders passed by this Court in various proceedings, there is a huge sum of approximately Rs. 1,280 crores lying deposited in the Account of the Respondent - UBHL with this Court itself, which is more than the total claims of the petitioning creditors, who are also unsecured creditors like the objector, Presti....
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....national were defective and various other grounds and even that suit is pending trial at Bengaluru and the application filed by the defendants under Order 7 Rule 11 of the Civil Procedure Code, 1908 seeking dismissal of the suit at the threshold has already been rejected by the learned Trial Court on 30/04/2016 and even though the Revision Petitions have been filed by the defendants before this Court, however, there is no stay order granted by this Court in such Revision Petitions and they are pending consideration before this Court. 150. Finally, Mr. Poovaiah also submitted that the winding up petitions cannot be converted into Money Recovery Suits and as per the well settled legal position, if the liability to pay is seriously and bona fide disputed by the Respondent - UBHL, the present objecting creditors also have the right to save the Respondent - UBHL from winding up, in which, nobody's interest would be served and the economic and production activity of the Respondent - UBHL will come to a standstill causing loss of employment, devaluation of the worth of the assets of the Company and various other negative fallouts and therefore, the present winding up petitions deserve to....
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....erence:- "These observations, in our opinion, do not advance the contention of Sri.Shetty any further. Section 529(1) of the 'Act' attracts the rules of insolvency to winding up in relation to "the respective rights of secured and unsecured creditors" and confines these Rules so attracted to matters that arise between these two classes of creditors. Sections 528 and 529 of the 'Act' are in the chapter "Proof and Ranking of Claims" and deal with the question of proof of debts and the rights of secured and unsecured creditors. Section 529(2) itself, in so far it expressly envisages, and provides for, the contingency that if a secured creditor proceeds to realize his security he should pay the expenses incurred by the Liquidator, by implication, rules out the construction contended for by Sri.Shetty. The words "in winding up of insolvent company" in Section 529(1) of the 'Act' has obvious reference to a post winding up stage. The point to note is that this rule of insolvency is attracted to winding up in the matter of proof of debts. That is after the stage of the winding up order. A secured creditor is, under Section 439(2) of the 'Act' as much a creditor entitled to present a windi....
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....e contentions of Mr.Tripathi are misconceived and are accordingly rejected. The contention that the petitioner could chose one of the remedies available in case where two or more than two remedies are available is applicable when the remedy provided for is one and the same but when two different remedies are provided for two different reliefs, in that event the plea of election of remedies is not applicable. We, therefore, hold that the winding up court is concerned with the issue as to whether or not a company could be declared as commercially insolvent and, therefore, comes within the ambit of provisions of Section 433 of the Companies Act. The Debt Recovery Tribunal does not have any jurisdiction to entertain any such application for winding up of a company whether the same is by any bank and/or other financial institution. We also hold that both the remedies are jurisdictions are mutually exclusive of each other and, therefore, there cannot be any inconsistency between the two different remedies provided for in two different legislations". (iii) The Division Bench of this Court in the case of Kingfisher Airlines Limited itself, when the said company challenged the action of th....
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....g up petition". (iv) In the case of Official Liquidator, Uttar Pradesh vs. Allahabad Bank & Others (2013) 14 SCC 381, the Hon'ble Supreme Court has held that RDB Act is a complete code in itself and DRT has exclusive jurisdiction for sale of properties for realization of dues of Banks and Financial Institutions. However, being protector of interests of workmen and creditors of the company in winding up petition, the Official liquidator shall mandatorily be associated at the time of auction and sale by Recovery Officer under RDB Act and if the Official Liquidator is not satisfied with the manner in which auction was conducted he can challenge the said auction by filing the appeal before the Debt Recovery Appellate Tribunal as a person aggrieved under Section 30 of the RDB Act. However, the official liquidator cannot approach the Company Court to set aside the auction/confirmation of sale under RDB Act, 1993. (v) In Bank of New York Mellon vs. Cranes Software International Ltd., (2016) 195 Comp Case 17 (Karn), the Division Bench of this Court held that Section 9 of the Companies Act provides that the provisions of the Act shall have effect, notwithstanding anything to the con....
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....e learned company judge has considered and interpreted clause 20 of the agreement and held that the English courts alone would have jurisdiction to try any case regarding a dispute with regard to the trust deed. There cannot be any quarrel with regard to the law laid down by the apex court in the case of Swastik Gases P. Ltd. Vs. Indian Oil Corporation Ltd.,[2013] 9 SCC 32. However, the facts in the present case are quite different. The trust deed (clause 20) does not impose a blanket ban on the jurisdiction of the Indian courts to try any matter. It may be reiterated that what is stated in clause 20.1 is that the cases relating to the trust deed would be decided as per English law, and in clause 20.2, though it has been mentioned that the courts of England would have exclusive jurisdiction, but clause 20.4 would clarify that the embargo is not for the trustee/appellant or the bondholders. Clause 13.3 relates to legal proceedings which may be taken by the trustee "at any time after the bonds have become due and payable" and it provides that the trustee may, at his discretion and without further notice, take such proceedings against the issuer, i.e., the company, as it may think f....
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....basis of the Patronage Letter as a creditor of the Company for presenting this petition for winding - up. There is no question of merger of the Patronage Letter into the decree. The admissions as regards the liability given in the correspondence is sufficient to form basis of the petition for winding-up. Even assuming that there is a suit filed for enforcement of a foreign decree it cannot be said that the Petitioner has ceased to become a creditor of the Company. 48. It was further contended by the Respondent in the Patronage Letter that the decree of Turin Court was an ex-parte decree and obtained by fraud and is opposed to principles of natural justice. In view above discussion this point does not have much relevance. Even other wise there is no substance in this grievance". 67. To sum up: the petition is based on the guarantee contained in the Patronage Letter and the admissions, and not on the decree of the Turin court. Question of merger of the Patronage Letter in the decree of Turin Court therefore does not arise. Merely because the Petitioner has obtained a decree from the Turin court and has instituted a suit for enforcement of the same, the Petitioner cannot be deprived....
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....ral management and control actually abides". De Beers Consolidated Mines Ltd. V. Howe, (1906) AC 455, 458 (see above). While a company is domiciled where it is incorporated, it is resident where its controlling power and authority is vested. Although dual residence is conceivable where there is division of management and control, it is nevertheless imperative that in some degree, in some measure, to some extent it can be said that the foreign corporation is centrally managed and controlled in India. This test can by no means be satisfied unless the corporation has a fixed place of business in India for sufficiently and reasonably long period of time. Although in Dunlop Pneumatic Tyre Co. Ltd. V. Actien- Gesellschaft Fur Motor Und Motor- fahrzeunbau Vorm. Cudell & Co., (1902) 1 KB 342, a very short period of residence at a fixed place was considered to be sufficient on the special and peculiar facts of that case, it was nevertheless recognized in that case by Romer, L.J. that, in principle, to satisfy the concept of residence the business should be carried on for a "substantial period of time" (p.349). These are the essential tests which must be satisfied if a foreign corporation ha....
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....company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable (See London and Paris Banking Corporation). Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed.(See Re. Brighton Club and Norfold Hotel Co. Ltd.) Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt (See Re. A Company 94 S.J. 369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debt precisely (See Re. Tweeds Garages Ltd.) The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduces prima facie proof of the facts on which the defence depends. Another rule ....
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.... be "neglect to pay" within the meaning of Section 433(1)(a) of the Companies Act, 1956. The relevant portion of the judgment is quoted below for ready reference. " A party to the dispute should not be allowed to use the threat of winding-up petition as a means of enforcing the company to pay a bona fide disputed debt. A Company Court cannot be reduced to a debt collecting agency or as a means of bringing improper pressure on the company to pay a bona fide disputed debt and should not permit a party to unreasonably set the law in motion, especially when the aggrieved party has a remedy elsewhere. Of late, there are several instances where the jurisdiction of the Company Court is being abused by filing winding-up petitions to pressurize the companies to pay the debts which are substantially disputed and the courts are very casual in issuing notices and ordering publication in the newspapers which may attract adverse publicity. A creditor's winding-up petition implies insolvency and is likely to damage the company's creditworthiness or its financial standing with its creditors or customers and even among the public and which may also have other economic and social ramifications. Com....
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....s have original jurisdiction to settle claims of all kinds when it exercises its power under Sec.446 of the Act. But the nature of jurisdiction and the nature of power exercised under the two sections are widely different. Under the latter section jurisdiction is acquired only if an order is made under Sec.433 of the Act and not otherwise. If there is no order under Sec.433 of the Act, including the appointment of a provisional liquidator then there is no jurisdiction acquired by the Court under Sec.446 of the Act. If this is borne in mind then Sec. 433 of the Act which is normally a discretionary jurisdiction should necessarily be so understood only when the Court is fully satisfied that it is called upon to examine the merit of the need of a winding-up order and not settling the disputes of civil nature that may arise out of a contract or obligations arising under an Agreement. In fact, I will go to the extent of stating that even if a company is sought to be wound up on the basis of a promissory note, if the Company disputes either receipt of consideration or the execution thereof, then this Court would be compelled to refer such a petitioner to the civil Court for obtaining the....
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....rnished by the petitioner- Company and in such circumstances, leaving the parties to settle the disputes in an appropriate Civil Court, the learned single Judge dismissed the winding up petition against the Respondent - Company. 161. The argument of Mr. Holla based on this case was, that when the Respondent - UBHL also has raised claims against the petitioning creditors in Civil Suits filed by it and has disowned its Corporate Guarantees and there are claims and counter claims between the parties, the winding up petitions deserve to be dismissed. 162. On the issue of Foreign Law to be proved as a matter of fact, Mr. Holla relied upon the Supreme Court decision in the case of Hari Shanker Jain Vs. Sonia Gandhi, decided on 12/09/2001, [(2001) 8 SCC 233], paragraphs 27 to 28 where dealing with the question, whether the returned candidate, Mrs. Sonia Gandhi was a citizen of India and was so qualified to contest the election or not, the Court held, Italian Law is a Foreign Law so far as the Courts in India are concerned and under Section 57(1) of the Indian Evidence Act, 1872, the Court shall take judicial note of, inter alia, all laws in force in the territory of India. Foreign....
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....pany like the petitioning Banks, SBI and others are pleading before this Court, Mr. Udaya Holla relied upon the judgment of the Bombay High Court in the case of Dalmia Cement (Bharat)Ltd. Vs. Indian Seamless Steels and Alloys Limited, decided on 31st August, 2001 [2002(112) Comp.Case 314(Bom)] in which the learned Single Judge of the Bombay High Court held that the winding up petition is not a legitimate means to seek to enforce payment of a debt which is bona fide disputed by the Company and merely because one creditor claiming a large amount of debt seeks the winding up of a Company, the Court will not admit such petitions and advertise the same to cause further damage and injury to the Company. The Court further held that the petitioner - Company had already resorted to its legitimate civil remedy by way of filing a Civil Suit which would examine the correctness of the contention of both the parties and thus having resorted to alternative remedy, it was not proper and legitimate for the petitioner - Company to seek winding up of the Respondent - UBHL on the basis of the same debt. 167. To the same effect, he relied upon the Himachal Pradesh High Court judgment in the case of Az....
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....lar place of business for the Company and to which, the correspondence was addressed and the Company kept Banking Accounts in London, but it was contended by the Respondent - Company that the Company could not be wound up under Section 338 of the Indian Companies Act, 1929, since it never had an established place of business under the jurisdiction of the Courts within the meaning of the Companies Act, 1929. Section 343, which refers to "companies incorporated outside Great Britain which....establish a place of business within Great Britain" it was held, that it was sufficient for the purposes of the Companies Act, 1929. Section 338 for the Company to have a place, not an "established" place of business in England and thus there was jurisdiction of the Court to wind up the Company, since it had, through its Directors carried on business in England for a substantial period and at a fixed place. 171. In M/s. Greenhills Exports (P) Ltd., and others Vs. Coffee Board, decided on 16/03/2001,(ILR 2001 Kar.2950), a Division bench of this Court held that the petition for winding up on the ground that the Company is unable to pay its debts under Section 433 (e) of the Companies Act cannot be....
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....leged defences of pendency of civil suit filed by holding company against the manufacturers but not against petitioner- Aerotron Ltd., locus standi of petitioner company to file this winding up petition, there being chance of revival of the business etc., are all, moonshine and sham defences raised without any material basis for them. The respondent-company is commercially insolvent and is unable to pay its huge debts and there appears to be no useful purpose to keep this company out of the process of winding up or to keep these winding up petitions pending unnecessarily waiting for some magic to happen for a turnaround of this company, which has been left to fend for itself even by its own holding company, even though UBHL facing similar winding up petitions against itself filed allegedly for not discharging its own guarantee obligations for discharging the debts of its own subsidiary- the Respondent company, and UBHL is hotly contesting winding up petitions filed against itself. This is nothing but self serving suicidal contradiction of these two companies. 18. The failure of the respondent- company even to make any alternative arrangement to argue and oppose the present case an....
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....does not find any substantial ground in law upon which the Respondent - UBHL hopes to succeed in such proceedings. 178. The assertion of duress or coercion on a corporate body like Respondent - Company, UBHL, at the point of time when these Guarantees were extended to the creditors for securing the financial obligations of KFAL towards them, firstly, is a question of fact to be established by the plaintiff, UBHL and secondly these guarantees were extended in normal course of business in the contemporary period on account of business exigencies as normal business contracts and not any grudge or grievance against their execution was ever raised by the respondent UBHL during the contemporary period at the time of execution of these Corporate Guarantees or even thereafter before filing of these Suits. Now raising such a grievance and alleging that there was some kind of coercion at that point of time is too far-fetched a claim rather than any modicum of fact or truth on the face of it. This kind of Suits whatever worth or merit they have, will of course be examined by the competent Courts where they are pending but this Court does not find the mere institution of these Civil Suits as ....
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.... execution of such guarantees, being the holding company and the Chairman and as Rajya Sabha member. It is unfortunate that the defendants are challenging these guarantees without any basis or material to support their contention of coercion. If insistence on guarantees by the banks for realizing the loans are to be considered as coercion, then no loan can be properly secured by any bank. In fact, the banks will be failing in their legal and public duty in discharging of their functions if such guarantees are not obtained. Further, the defendant 2 being the parent company of first defendant and third defendant being the Group Chairman and man of sufficient net worth and as Member of Rajya Sabha, were bound to execute guarantee documents for the repayment of loan availed by first defendant. The third defendant who was also a Member of Parliament cannot be heard to say without any basis or material that he was coerced by Nationalized banks into execution of personal guarantee at the time of availing thousands of crores as loans from the banks. At best, this claim of defendants 2 and 3 can add a bit of humour value in this otherwise serious claim for recovery of thousands of crores of....
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....n who were in dominant position of demanding restructuring of the loan by not repaying the huge loans already availed by them from the banks. In my opinion, therefore, it was the bank which, just for the sake of arguments, can be heard to say that they were coerced into entering into MDRA so as to recover its huge outstandings and not the other way around. However, in view of the above, I am therefore of the considered view that the defendants have not experienced any coercion at any stage and they have entered into the guarantee agreements MDRA and all other documents voluntarily. XX XX XX XX ORDER 1. Present OA stands allowed as prayed for with costs in the following manner (a) Defendants No.1 to 4 jointly and severally shall pay a sum of Rs. 6203,35,03,879=42 (Rupees Six Thousand Two Hundred and three Crores Thirty Five Lakhs Three Thousand Eight Hundred and Seventy Nine and Paise Forty Two only) with further interest at the rate of 11.50% p.a. with yearly rests from the date of the application till the date of complete realization. (b) The charge of 6th defendant shall rank as 2nd charges over the schedule properties and other receivable after satis....
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....ly hard month for me to get anything meaningful done. We have had one of the most stormy sessions of Parliament in recent history that has occupied the minds and time of the Government and my own. The Indian economy has slowed considerably with growth forecasts now pegged at 7.5% of GDP. Certainly better than most developed economies but disappointing given our own expectations, and the inevitable comparison with China. The Indian currency is in free fall against the USD and has depreciated by almost 20% in the last 8 weeks. Any USD payments cost us significantly more as a result. Forward contracts have also been banned for the time being. Inflation has been a major cause for concern and the RBI (Federal Bank) has raised interest rates more than a dozen times with the current rate being 14% per annum. Despite all this, the Civil Aviation sector continues to grow strongly but with yields that are insufficient to cover high jet fuel costs and the even higher ad-valorem sales tax that is added. The depreciation of our Indian currency has added a straight 20% increase in our USD denominated costs including lease rentals and maintenance reserves. As a result every Airlines in Indi....
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.... Government Ministers that I have explained. However, I write with confidence that everything will get sorted out and put in place during the month of January 2012. Specifically, we will secure: 1. USD 130 mio of new funding 2. Cashflow relief from Government owned fuel suppliers/direct importation of fuel thereby improving cash flow throughout. 3. A new policy allowing foreign airlines to invest in our share capital 4. Equity Raise-first tranche-USD 50 mio 5. Further rescheduling of Kingfisher's debt and financial costs. All or a combination of some of what I have stated will make us break even financially. Further grounding of Aircraft for lack of engines or parts will cause unnecessary and serious damage to Kingfisher. You have had the faith-please continue to have faith. If, during the course of January 2012, I sense that nothing is progressing, I will myself come back to you and keep you informed. Till then please bear with me and let us work together. With my best regards and wishes for the new year. Vijay Mallya 3/24/2012 Member of Parliament-India Chairman, The UB Group." 183. That not only the aforesaid letter of the Chairman of the Respondent Company, UBHL....
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....rge towards the said Guarantee obligations of the Respondent - Company in the following manner. 189. What stands out in the aforesaid comment, is that the Respondent Company chose to make no provision for the said Guarantee obligations even though it noted that KFAL, in which the Respondent UBHL has huge financial exposure is in severe financial stress, not a prudent commercially good stand by UBHL. The said Note No.4 is quoted below: " Note: 4. Attention is invited to the following: (i) Note no 39 regarding inclusion in the income for the year, an amount of Rs. 521.143 million of guarantee/security commission charged to Kingfisher Airlines Limited (KFA). KFA has not accrued the charge in view of the restrictions imposed by its lenders for the period commencing from 01-01-2011. The total of such charge, accrued by the company for the period from 01-01-2011 to 31-03-2012 is Rs. 646.770 million. (ii) Note no 35 regarding inclusion in the income for the year, interest of Rs. 1,285.272 million charged to certain subsidiaries and associates, the ultimate realization of which may take protracted period of time. (iii) Note no 40 regarding significant financial exposure to KFA i....
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....ave approached the Hon. High Court of Karnataka seeking winding up of Kingfisher Airlines and consequently also of the Company, relying upon purported guarantees issued in their favour by your Company. The validity of the guarantees had been challenged by your Company in a suit filed in the Hon'ble Bombay High Court well before the commencement of legal action by lenders and creditors." 192. It is significant that no reference was made by the Respondent - Company in this Report given on 13/08/2014 to the Original Suit, O.S.No.6406/2012, instituted by the Respondent - Company in the Bangalore City Civil Court, on 05/09/2012 even while referring to the Suit filed by it in the Bombay High Court. The Auditor in the Report dated 13/08/2014, by the same Chartered Accountant, Mr. Vishnu Murthy, in this very year, clearly noted that "accumulated losses of the Company are more than 50% of its net worth". The relevant extract from Auditor's Report is quoted below for ready reference. (x) Accumulated losses of the company are more than fifty percent of its net worth. The company has incurred cash losses during the financial year covered by our audit and during the immediately preceding fina....
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....llion arising out of invocation of its corporate guarantees [Ref. note no.31] and claims of Rs. 1,463 million made against it under agreements entered into with a banker [Ref. note no.31]. Had the company recognized the above, current liabilities in the Balance Sheet would have been higher by that amounts and guarantees under contingent liabilities and claims not acknowledged as debt would have been lower by Rs. 77,309 million and Rs. 1,463 million, respectively. 195. The Notes of Financial Statements in the said Annual Report of 2015-16, taking the basis of the Respondent Company as a 'Going concern', was qualified in the following manner: "(a) The Company is defending recovery proceedings by the consortium of banks of KFA based on corporate guarantees, the validity of which is being contested. As stated herein above, the company has filed in Bombay High Court, a suit seeking to declare the corporate guarantee null, void ab initio and non-est. The suit is still pending adjudication. (b) Connected with the Corporate Guarantees, the winding up petitions filed in Hon'ble Karnataka High Court referred to in the Directors report, in the opinion of Counsel, can be successfully resist....
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....unts for such possible loss. Xx xx xx xx xx xx xx The company has shown Rs. 358 million as due from a banker who has unilaterally encashed company's deposits lying with it and appropriated the amount towards its claims against a group company. The possible loss on account of this development has not been recognized in the financial statements (Refer note 42 to financial statements). An amount of Rs. 8,074 million is shown as dues from a contributory trust ("Trust") managed by a financial company which had sold the company's investments that were pledged with it and had appropriated part of the sale proceeds against dues from KFA (Ref note no.43 & 33(e)). Further, the said Trust still holds custody of 59,150,000 shares in KFA, belonging to the company (Ref note no.33(c)). The company has petitioned the City Civil Court of Calcutta and High Court of Karnataka challenging the validity of the pledge and for rendering full accounts. Pending outcome of the petitions, the company has shown the above amounts as good and recoverable. Should the company fail to get the reliefs as sought, there would be losses. The company has not provided for any possible losses in this regard. Accor....
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....iginal Application No.766 of 2013 filed by the Consortium of Banks, that between 28- 03-2013 and 25-04-2013 the Consortium of Banks recovered an aggregate sum of Rs. 544 crores from the sale of shares pledged by UBHL and Kingfisher Finvest (India) Ltd ("KFIL") to secure the loans advanced to KFA. The Offerors maintain that the various proceedings adopted against the Offerors are misconceived and without basis. The total liabilities of UBHL aggregate to approximately Rs. 12,012 crores as set out in Annexure "1" hereto. The total value of assets of UBHL (net of taxes) aggregates to approximately Rs. 4,968 crores as set out in Annexure "Z" hereto. The total value of shares held by KFIL in United Spirits Ltd (net of taxes), shares held by Dr. Vijay Mallya in United Breweries Ltd (net of taxes) and shares held by companies controlled by the Mallya family in United Breweries Ltd (net of taxes) aggregate to approximately Rs. 3,175 crores (of which the average shareholding of Dr. Mallya is less than 10% in the family controlled companies) as set out in Annexure "3" hereto. In the light of the aforesaid facts, and without prejudice to the respective rights and contentions of the ....
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....ing approximately Rs. 243 crores. These shares shall be liquidated so as to maximize the total amount recovered, subject to the Offerors receiving a minimum credit of Rs. 243 crores (net of MAT and dues payable to pledgees). (iii) The balance Rs. 1,853 crores shall be paid by the Offerors on or before 30th September, 2016 in the manner following: (a) An aggregate amount of approximately US$ 101,000,000 (equivalent to approximately Rs. 688 crores) is lying deposited with Airbus Industries S.A. which includes an amount of US$ 32 million (equivalent to approximately Rs. 217.60 crores) towards Pre-Delivery Payments ("PDP's") funded by the Pre- Delivery Payment Loans referred to hereinabove. Pursuant to orders to be passed by the DRT in O.A.No.158 of 2014 and/or O.A.No.1844 of 2014 or by the Hon'ble Supreme Court, Airbus Industries S.A. be directed to pay the aggregate amount of US$ 101,000,000 (equivalent to approximately Rs. 688 crores) to the Consortium of Banks. (b) Rs. 1,165 cores by the Offerors to the Consortium of Banks, failing which the Offerors shall cause the residual value of 17,773,404 equity shares held by companies controlled by the Mallya family and/or ....
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....rim or interim orders passed by any court(s) against the Offerors will prevent the Offerors from fulfilling this Offer if accepted in writing by the Consortium of Banks. This offer is being made on the basis that the contents hereof are STRICTLY CONFIDENTIAL, and that the Consortium of Banks/Asset Re-construction Company shall not disclose or disseminate the contents hereof to any third party, save and except such of their officers who are required to consider the same, but on condition that such officers maintain strict confidentiality of the contents hereof. Yours sincerely, (Dr. Vijay Mallya) Encls: As above. 199. Thereafter, the Hon'ble Apex Court by its order dated 07/04/2016 on I.A.Nos.5 to 8 of 2016, in the aforesaid Special Leave Petitions, made the following order:- "I.A.Nos.5-8 of 2016 - applications for impleadment on behalf of Oriental Bank of Commerce are allowed. Mr. Shyam Divan and Mr.S.S. Naganand, learned senior counsel appearing for the petitioners have submitted that the offer made by Respondent Nos.1 to 4, which is referred to in our order dated 30.03.2016, has been considered and the consortium is of the view that the offer is not acceptable. However, ....
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....f appearance in person before this Court. The petitioners and the intervenor are free to file reply to the response of Respondent Nos.1 to 4 on or before 25.04.2016. Post the matters on 26.04.2016 as first item." 200. That asfaras other technical objections or defences raised by the learned Senior Counsel for the Respondent Company, UBHL, Mr. Udaya Holla is concerned, they are also found to be devoid of any merit. They are dealt with below. 201. The contention of the learned Senior Advocate of UBHL that the applicability of the English law under the Contracts executed between the petitioning creditors and KFAL and UBHL was to be pleaded as a fact and proved in accordance with Section 57 of the Indian Evidence Act, does not impress this Court at all. 202. The petitioners are not seeking execution of any decree passed by English Courts or other Foreign jurisdiction against the Respondent - Company. They have invoked the winding up of Respondent- Company before this Court under Section 433 read with Sections 434 and 439 of the Companies Act, 1956 and have been able to satisfy this Court with the relevant and cogent material that the specified amounts of debts are due to be recove....
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.... of BNP Paribas has never been questioned by KF Aero itself. The Deed of Assignment and its due Notice to UBHL are on record. The RBI approval for Corporate Guarantee in favour of KF Aero will be equally good for BNP Paribas also. RBI has never objected to the execution of Corporate Guartntee by UBHL in favour of BNP Paribas. No additional approval could be insisted upon by the Respondent, UBHL itself. 205. The contention that multiplicity of the proceedings has been initiated by the petitioning creditors and therefore the winding up petitions should not be entertained, is also equally devoid of any merit. The petitioning creditors are entitled in law to take all suitable measures and remedies for not only to recover their just debts but if on the basis of that material they can establish the commercial insolvency of the Respondent- Company in terms of the provisions of the Companies Act for winding up, there is no legal bar in the institution and pursuing of two or more remedies against the Respondent - Company, UBHL, while the effect of the relief granted upon such institution of legal proceedings is bound to be different. 206. The winding up order of course results in divestin....
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....imited (USL), on account of its financial help extended to UBHL and KFAL and now later on upon change of its management by the purchase of shares by Foreign Companies like Diageo Plc and Relay B.V., had to change its stand from initial opposing winding up petitions but now supporting the winding up petitions, it appears that something seriously wrong has taken place in the Respondent - Company's Management and affairs, where it has been unable to perform its contractual obligations even towards its own group Company, what to talk of all other creditors, who are petitioners herein. This Court finds such a change of stand very serious turn of events and has no reason to disbelieve the genuineness of the strong reasons for the said Company, USL to change its stand for which the detailed Affidavits were filed before this Court explaining such reasons. 209. That as far as the contention of Supporting Creditors and Workmen of Respondent - Company, UBHL are concerned, they were more of the nature of proxy arguments raised on behalf of the UBHL itself and for the reasons aforesaid they also deserve to be rejected for the same reasons. 210. The deposits of Rs. 1280.00 crores made in the C....