TaxTMI 
TaxTMI 
2016 (11) TMI 1444
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns have also been filed against its holding company, M/s. United Breweries (Holdings) Ltd., (UBHL), which had also given guarantee to discharge the debts of the Respondent-KFA Ltd., and on account of alleged failure to honour and discharge its guarantee obligations, such winding up petitions were filed against UBHL by the consortium of Banks and Financial Institutions led by SBI. But while UBHL is hotly contesting those winding up petitions filed against it, it has not put forth any defence against the present winding up petition or against host of other winding up petitions against its own subsidiary KFA Ltd., though both batch of cases came up for hearing on the same day. 3. A detailed admission order was passed by the coordinate Bench of this Court on 6.12.2013 against which, the respondent-Company, at that point of time, took the matter before the Division Bench of this Court by way of intra-court appeal, namely, O.S.20/2014 (Kingfisher Airlines Limited v. Aerotron Limited) which too, came to be dismissed by the Division Bench of this Court on 15th July 2015. Admittedly, even thereafter, nothing was apparently paid to any of the creditors by the respondent-company towards it....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the respondent was not able to make any payments in terms of the above agreement and hence a notice under Section 433 and 434 of the Companies Act, 1956, dated 1.6.2012 was said to have been issued calling upon the respondent to pay a sum of US $ 5939914.41. The respondent is said to have failed to make any payment even pursuant to the same. It is contended that the respondent is in a very bad financial condition and is unable to pay its debts. It is also claimed by the petitioner, that the respondent is due phenomenal amounts of money to various other third parties and is said to be in complete default in repayments. It is in this background that the petition is filed. 3. The respondent, has by way of Statement of objections, resisted the petition contending that the petitioner had supplied a number of rotable aircraft components relating to V2500-A5 engines manufactured by M/s. International Aero Engines AG ("IAE"). It is stated that there is a civil suit pending before the Court of the City civil Judge, Bangalore, against IAE and its associate companies, in case No. O.S. No. 6406/2012, where in a serious dispute has been raised regarding the defects in design and manuf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of any of its assets without the leave of this court." 5. The relevant extract of order of Division Bench of Hon'ble Mr. Justice Vineet Saran and Hon'ble Mr. Justice Aravind Kumar, dismissing OSA No. 20/2014 dated 15/7/2015 is also quoted below: "Mr. S.V. Rajesh, Advocate for appellant,Mr. S.S. Naganand, Senior counsel along with Sri. A.C. Achappa, Advocate, M/s,. NDA Partners). "Respondent company Aerotron Limited, having its office in United Kingdom, had filed company petition No. 214/2012 under Section 433(e) and (f) read with Section 434 and 439(1)(b) of the Companies Act, 1956 for winding up of the appellant-company. 2. The case of respondent is that certain amounts were admittedly due to be paid by the appellant company to the respondent company for which an agreement was entered into between the two companies on 24.02.2012 whereby the appellant company had acknowledged its liability to pay the outstanding amounts in installments spread over several months between March and October, 2012. Appellant contested the matter by denying its liability to pay the said dues, on the ground that the same were disputed dues and it also raised an ob....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ligated to comply with Section 592 to 594 of the Companies Act, 1956. 5. Learned counsel for appellant has relied upon decision of the Delhi High Court rendered in the case of M/s. Dabur (Nepal) Pvt. Limited v. M/s. Woodworth Trade Links Pvt. Limited reported in (2012)175 Com p. cases 338 to support his contention that if a company has an office or establishment within the territory of India it would have to comply with the provisions of section 592 to 594 of the Companies Act. On facts, the said decision would not be applicable as in the said case the company in question was a subsidiary of an Indian Company which admittedly had its warehouse, store house in India where the goods of the company was stored. Said company also had transactions within India and had an address of correspondence in India. As such, we are of the view that the ratio of the said Judgment would not be applicable to the facts of this case. 6. As regards admission of the debts by appellant company payable to the respondent company, learned company Judge has placed reliance on the agreement between the two companies dated 24.02.2012 whereby the appellant company has acknowledged an outstandin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the Respondent Company), rendering them incapable of commercial use, and further stating that the operational and financial woes of the Respondent Company have been primarily or in any event decisively been caused by the defective engines supplied on account of false assurances/fraudulent mis-representations given/made by IAE and/or its constituent joint-venture partners. A copy of the plaint in the said Suit No. OS/6406 of 2012 is hereto annexed and marked "Annexure R-1" hereto. 7. The Respondent Company says and submits that a number of the components supplied by the Petitioner relate to the said inherently defective in design and manufacture V2500-A5 engines manufactured by IAE and its constituent Joint Venture partners. The Respondent Company is in the process of considering the said Suit("Annexure R1 hereto") and its implications as it has a direct bearing on the present Company Petition and is in the process of seeking legal advice in respect of the same. Therefore, assuming without admitting that the present Company Petition is maintainable it is humbly submitted that the present Company Petition be stayed pending final hearing and disposal of the said Suit ("An....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Company to the Petitioner or that the Petitioner was entitled to call upon the Respondent to pay any amounts in respect of the Components supplied, as alleged or otherwise. 25. With reference to paragraph 15 of the Company petition, in view of what is stated hereinabove, it is denied that the Respondent company owes any obligations to the petitioner either under the Settlement Agreement or otherwise, so the question of any alleged breaches of the alleged Settlement Agreement by the Respondent Company or the Petitioner calling upon the respondent-Company to remedy any such alleged breaches or there being any failure or neglect on the part of the Respondent Company to make payment of any alleged amount due or owing to the Petitioner, under the Settlement Agreement or/otherwise, as alleged or at all, does not and cannot arise. 26. With reference to paragraph 16 of the Company petition, in view of what is stated hereinabove, it is denied that the Respondent Company was or is obliged to make any payments to the petitioner, and therefore the question of the any alleged failure on the part of the respondent Company to pay any amounts either under the Settlement Agreement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any Airlines will also be in the interest of its approx.3150 employees and their families, whose livelihood depends on the revival of the respondent company. It is public knowledge that the Respondent company is in discussions with a number of foreign airlines who have shown interest in investing in the Respondent-Company. It is also public knowledge that the Respondent Company has submitted a revival plan to the Director General of Civil Aviation which is under consideration. In fact, recently Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Ltd., Indian Oil Corporation Limited and Reliance Industries Limited, the principal suppliers of aviation fuel in the country have come forward to support the said revival plan by issuing their No objection Certificates for supply of aviation fuel to the Respondent Company. The Respondent Company craves leave to refer to and rely upon the aforesaid No objection Certificates. Any adverse order at this crucial stage will have a devastating impact on the revival of the airline operations, which would be against public interest." 8. The objection raised on behalf of the respondent-company were pressed at the admission stage....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Four Hundred and Twenty-Three Thousand Five Hundred and Forty United States Dollars and Thirty- Two Cents) being payable by way of interest) ("Total Outstanding Amount". 2. Since Kingfisher expressed its inability to pay its dues in accordance with the agreed Terms and Conditions, Kingfisher and Aerotron entered into the Agreement whereby Kingfisher agreed to make payment of the Total Outstanding Amount in instalments as more particularly set out in the Agreement. 3. Under Clause 1.2 of the Agreement, Kingfisher was required to make payment of the first instalment of US$ 500,000 (Five Hundred Thousand United States Dollars) to Aerotron on 15th March, 2012. However, Kingfisher failed and neglected to make payment of the said amount of US$ 500,000 to Aerotron on 15th March, 2012. 4. The second instalment of US$ 500,000 under the Agreement was due on 30th March 2012, however Kingfisher once again defaulted in making payment of the said amount of US$ 500,000 to Aerotron, this being Kingfisher's second successive default under the Agreement. 5. Kingfisher further failed to pay the 3rd instalment of US$ 500,000 (Five Hundred Thousand United States ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent of the amount of US$ 5,939,914.41 (Five Million Nine Hundred Thirty Nine Thousand and Nine Hundred Fourteen United States Dollars and Forty One Cents Only) being the total outstanding amount as of date, due and owing by you to our client, for Components supplied to you by our client, within 21 (Twenty one) days from the date of receipt of this notice by you, failing which our client shall be constrained to adopt appropriate legal proceedings against you, at your sole risks as to costs and consequences. 10. Please treat this as a statutory notice under Sections 433 and 434 of the Companies Act, 1956. 11. This notice and the actions proposed to be taken by of our client hereunder are without prejudice to, any other rights and remedies which are client may have against you at law and at equity, with respect to your defaults under the Agreement and/or otherwise." 12. Learned counsel for petitioner further urged that, despite all such notices and correspondences, without even replying to them, the respondent-company has failed to pay anything towards its admitted liability to the petitioner's Company against supply of goods and on the contrary, in its statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e country even before the Hon'ble Supreme Court of India and who are now seeking his extradition back to India. He also drew the attention of the Court towards the last Balance Sheet of the Company as on 31st March 2012 and thereafter, no such current Balance Sheet for last 4 years appears to have been filed by the respondent-company before this Court. The last Balance Sheet as on 31st March 2012 itself shows, prima-facie, that net worth of the respondent-company is in negative. It is no longer operational and a going concern and the substratum of the company has been completely lost and there are no chances of any revival of the respondent-company. 13. Learned counsel for the petitioner also relied upon the following case laws in support of his submissions, viz., (i) M/s. Madhusudan Gordhandas & Co., v. Madhu Wollen Industries Pvt. Ltd. (1971 (3) SCC 632) para 20 and 21 thereon and the latest judgment from the Hon'ble Supreme Court in the case of IBA Health (India) Private Limited v. Infor-Drive Systems Sdn. Bhd (2010) 10 SCC 553 paras 20,22,23 and 24 of the said judgment. These paras are quoted below for ready reference. "(i) M/s. Madhusudan Gordhandas & Co., ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is bona fide disputed on substantial grounds, the court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is danger of abuse of winding-up-procedure. The Company Court always retains the discretion, but a party to a dispute should not be allowed to use the threat of winding-up petition as a means of forcing the company to pay a bona fide disputed debt. 21. xxxxxxx 22. The above mentioned decision was later followed by this Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. 1971) 3 SCC 632. The principles laid down in the above mentioned judgment have again been reiterated by this Court in Mediquip Systems (P) Ltd. v. Proxima Medical Systems (GMBH) (2005) 7 SCC 42, wherein this Court held that the defence raised by the appellant-company was a substantial one and not mere moonshine and had to be finally adjudicated upon on the merits before the appropriate forum. The above mentioned judgments were later followed by this Court in Vijay Industries v. NATL Technologies Ltd. (2009) 3 SCC 527. 23. The principles laid down in the above mentioned cases indicate that if the debt is bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or, urged that his client provided manpower under the contractual agreement to the respondent-company and for the dues of those workmen, he submitted that, if the respondent-company somehow survives or becomes operational, then, the workmen dues may be paid off by the respondent-company. The learned counsel for the said creditor, however, fairly submitted that, he has only a fond hope that the respondent-company-KFAL may again become operational. 16. This submission raised on behalf of the Creditors is not really in opposition of the winding up of the respondent-company but is only to safeguard the interest of his own clients viz., the workmen supplied through contractual agreement to the respondent-company. These workmen like any other workmen of the respondent-company and other creditors of the Company are certainly entitled in law under the provisions of the Companies Act, to make their respective claims before the Official Liquidator, once the winding up order is passed by this Court and the Official Liquidator is appointed to take the control and possession of the assets of the respondent-company and proceed further for the winding up of the respondent-company under the pro....