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TMI Blog2015 (2) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioners herein have established a place of business in India, the bar pleaded under Section 599 of the Act would not apply. The contention of the respondent in that regard is liable to be rejected. A cumulative perusal of the decisions referred to by the learned senior counsel on either side would disclose that the decisions of the Hon'ble Supreme Court and a learned Single Judge of this Court cited by the learned senior counsel for the respondent company are not in the context of maintaining a winding petition as against a recovery proceeding. Further, the decision of the learned Single Judge of the Bombay High Court was on its facts and not as laying down a principle of law. On the other hand the decisions of the Hon'ble Division of this Court and Delhi High Court cited by the learned counsel for the petitioner Banks has held that the winding up petition would be maintainable even in the teeth of the other recovery proceedings initiated. In that view, I am of the opinion that the winding up petition cannot be dismissed by considering it as a parallel remedy as it is a distinct statutory remedy though in appropriate cases, on facts, the Company Court may refus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to establish their bona fides and raise the dispute, but the deposit made is pursuant to the orders of this Court in the fringe proceedings relating to the sale of shares. For all the aforestated reasons, the above referred petitions are liable to be admitted. - Decided in favour of appellants. - CO. P.NOS.57,121 & 122 OF 2012 AND 51,99 & 162 OF 2013 - - - Dated:- 2-1-2015 - A.S. BOPANNA, J. ORDER Co. P.No.57/2012 1. The petitioner is a company in Switzerland engaged in manufacture, sale/lease and maintenance of Aircraft Engines and other related activities. The petitioner accordingly has sold/ leased Aircraft Engines to Kingfisher Airlines Limited ('Kingfisher' for short) of which the respondent company was the Holding Company. In respect of the said transaction the respondent company has executed the Corporate Guarantee based on which the instant petition is instituted. 2. The petitioner and 'Kingfisher' have thereafter signed an agreement for repayment on 27.10.2010 towards outstanding of the V2500 engines. The guarantee agreements dated 10.11.2010 and 01.08.2011 were executed by the respondent company making themselves liable as debtors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; defaulted in making the payments and no payments were made despite demand. Hence, the petitioner invoked the guarantee and addressed three letters dated 17.02.2012 calling upon them to pay the amounts. In respect of the other lease transactions also, it was the same case. The petitioner therefore got issued the statutory notice dated 28.03.2012 quantifying its debt at US $10,437,866 ( ₹ 57,94,05,941.70). It is stated that the amount due to its subsidiary is another sum amounting to US$ 732,710 (Rs.4,06,72,732.10) which has also not been paid as the respondent is unable to pay its debts. Hence the petitioner has filed the instant petition. 6. The respondent has filed its objection statement and disputed that they are liable to pay the amount claimed by the petitioner. The reference is made to the defective V 2500 engine as it is a joint venture partner. The very same civil suit in O.S.No.6406/2012, to which the petitioner herein is also impleaded as a defendant is raised as a defence to contend that there is dispute. Reference is made to the web details of the petitioner to contend that it has proclaimed to have business in India and as such provisions of Sections 592 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent is unable to pay and therefore the respondent company be wound up. 9. The respondent company has filed its objection statement. It is contended that the petitioners are secured creditors, having invoked the provisions of SARFAESI Act and RDDB Act, they cannot pursue parallel remedy by filing the petition for winding up. It is also their case that in view of filing the company petition the petitioners are deemed to have relinquished and surrendered the security interest. The manner in which the master circular of the RBI was made use to recast the package with 'Kingfisher' and the Master Debt Recast Agreement was entered is referred and the inappropriate manner which the respondent and Dr. Vijay Mallya were constrained to provide corporate and personal guarantee is averred. Hence, it is contended the said agreements are void for being vitiated by coercion and they stand discharged. 10. In that light, it is contended that in view of the repeated demand made relying on the guarantees the respondent company has filed a suit in the Bombay High Court seeking for declaration that the Corporate Guarantee dated 21.12.2010 by the respondent company, the Personal Guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso referred. In respect of the credit limit sanctioned, the respondent is stated to have executed corporate guarantee dated 21.12.2005 and 29.09.2009. The Master Debt Recasting Agreement dated 21.12.2010 and the pledge agreement are also relied upon. Since the amount was not paid by the borrower, the guarantees executed by the respondent company is stated to have been invoked. The petitioner contends that the respondent is due to pay the outstanding sum of ₹ 450,02,31,757.07. It is their case that the respondent company is unable to pay its debts and therefore they are liable to be wound up. 14. The respondent company has filed its objection statement denying the averments made in the petition with regard to the liability as contended. The nature of the transactions entered into between the petitioner and 'Kingfisher' has been referred to in detail. The contentions raised herein with regard to the declaration suit being filed in the Bombay High court and other issues are similar to the contentions which have been urged in the objection statement filed in Co.P.No.162/2013. Hence it is unnecessary to reproduce the objection once over again. The respondent however se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner Banks' as the contention raised by and against them are similar. 19. In the light of the rival pleadings of the parties, I have heard the learned Senior Counsel and the other learned Counsel representing the parties on either side at great length though the petitions are at the stage of admission and perused the petition papers. The learned Senior Counsel for the respondents contended that the defence in each of these petitions are separate and distinct. However, considering the fact that the exercise at this point is to consider the contentions relating to bonafide defence, if any and in that regard, since there is an overlap of the contentions on the legal aspect, the petitions are considered together with reference to the distinct contentions relatable to the respective petition. 20. In respect of the petitioners in Co.P.Nos.57/2012, 121/2012 and 122/2012, who are foreign companies, the learned senior counsel for the respondent has raised a bar against them to prosecute these petitions by referring to Sec.592 and 599 of the Companies Act. It his case that they are carrying on business in India and as such they are required to deliver the documents to the Registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the guarantee documents relied upon by the petitioners is governed by English laws and the same has not been pleaded, as such the petition is not maintainable. Decision in the case of Hari Shanker Jain v. Sonia Gandhi [2001] (8)SCC 233) is relied. In a matter relating to the election petition reference was made to Italian law and it was held therein that the Courts in India will not take judicial notice of the foreign law unless it is pleaded as it is a matter of fact. Further, the decision in the case of Chloro Controls (India) Pvt. Ltd. Etc., v. Seven Trent Water Purification Inc. and another [2006] (131) Comp. Cases 501-Bom.) is relied. In the said case, on the issue of amalgamation of the foreign companies it was held that the foreign law is a question of fact and must be pleaded by the party who relies upon it and in the facts of that case, it was held that the relevant laws of merger had not been pleaded. In my opinion, even if the said decisions are kept in view, the same is of no consequence. The petitioners herein have filed the instant petition seeking the statutory remedy of winding up based on the provision contained in the Companies Act and the pleading to the said e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-Cal) and in the case of Nutan Kumar v. II Addl. District Judge (AIR 2002 SC 3456) relied on by the learned counsel for the petitioners and overburden this order except to refer to the same to be fair to the learned counsel. 25. The learned senior counsel for the respondent with reference to company petitions filed by the petitioner-Banks and more particularly to Co.P.No.162/2013 has sought to contend that parallel proceedings is not permissible in law. In that regard the application filed under the RDDB Act in O.A.No.766/2013 before the Debts Recovery Tribunal, Bangalore; the suit filed in O.S.No.25877/2013 in the City Civil Court; the C.A.Nos.1471 and 1472/2013 in Co.P.No.57/2012 are referred and it is pointed out that the provisions of SARFAESI Act has also been invoked and such parallel proceedings is not permissible. The following decisions on that aspect are relied upon: (a) The case of Jai Singh v. Union of India and others [1977] (1) SCC 1) wherein, in a matter relating to lease of land for mining, it was held that filing a writ petition and a suit on the same subject matter cannot be permitted. (b) The case of Sharad V. Sampat and others v. The Karnataka State Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court of Delhi, in the case of Bank of Nova Scotia v. RPG Transmission Limited (ILR (2004) II Delhi 583)wherein, the proceedings initiated by the creditor Bank under the RDDB Act before the Debts Recovery Tribunal vis- -vis the winding up petition was considered, the distinction noticed and it was held that both the remedies and jurisdiction are mutually exclusive of each other and therefore there cannot be any inconsistency between the two different remedies provided for in two different legislations. 28. A cumulative perusal of the decisions referred to by the learned senior counsel on either side would disclose that the decisions of the Hon'ble Supreme Court and a learned Single Judge of this Court cited by the learned senior counsel for the respondent company are not in the context of maintaining a winding petition as against a recovery proceeding. Further, the decision of the learned Single Judge of the Bombay High Court was on its facts and not as laying down a principle of law. On the other hand the decisions of the Hon'ble Division of this Court and Delhi High Court cited by the learned counsel for the petitioner Banks has held that the winding up petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the following decisions; (a) IBA Health (India) Private Limited v. Info-Drive System Sdn.Bhd. [2010] (10) SCC 553)wherein among others it is also held that a dispute would be substantial and genuine if it is bonafide and not spurious, speculative, illusory or misconceived. The company Court, at that stage, is not expected to hold full trial of the matter. The grounds of dispute must however not consist of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a mere wrangle. The company Court always retains the discretion, but a party to the dispute should not be allowed to use the threat of winding petition as a means of forcing the company to pay a bonafide disputed debt. (b) The case of Amalgamated Commercial Traders (P) Ltd. v. A.C.K.Krishnaswami and another (1965 (35) Comp. Cases 456)wherein it is held that the winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bonafide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed. (c) The case of Ramakrishna Setty K.S. v. Clarian Fisheries Pvt. Ltd. others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision in the case of Hegde Golay (supra) to contend that the secured creditor can maintain the winding up petition. The decision in the case of IBA Health (India) Private Ltd. (supra) was cited to indicate the nature of consideration that is required to be made. In addition, the learned senior counsel referred to the decision in the case of M/s. Madhusudan Gordhandas Co. v. Madhu Woollen Industries Pvt. Ltd. [1971] (3) SCC 632)wherein it is held that two rules are well settled. First, where the debt is bonafide disputed and the defence is substantial one, the Court will not wind up the company. 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. 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 quantify the debt precisely. 34. The learned counsel for the foreign companies, apart from relying on the decisions noticed supra has also relied on the decisions in the case of Airwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in addition to their security interest, which has been approved by this Court. In so far as the petitioner Banks, the Master Debt Recast Agreement dated 21.12.2010 executed by 'Kingfisher' is produced at Annexure-C to their petition. 37. In that background, a perusal of the petition papers will disclose that the Corporate Guarantee dated 21.12.2010 executed by the respondent company is at Annexure-E to Co.P.No.162/2013. Similarly, the Corporate Guarantee dated 10.11.2010 and 01.08.2011 executed by the respondent is at Annexures-4 and 5 of Co.P.No.57/2012. In other petitions, the relevant Corporate Guarantee executed by the respondent-company is produced and relied upon. A perusal of each of the guarantee indicates that there is a covenant to pay the amounts due and payable by 'Kingfisher' by even qualifying the respondent company as the principal obligor. Though guarantee has been executed and has been in subsistence, the respondent company is presently contending that they are null and void. It is in that regard contended that insofar as the foreign companies the suit in O.S.No.6406/2012 is filed in the Civil Court and insofar as the petitioner Banks are conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, it is difficult for this Court to accept such contention on its face value as a valid defence. Even in the case of the petitioner Banks, though the suit seeking declaration against Corporate Guarantee dated 21.12.2010 is filed, it is clear that Dr.Vijaya Mallya having executed the personal guarantee was aware of the position and the challenge was made only at a stage when the recovery proceedings were initiated in Suit (L) No.263/2013 only on 26.03.2013 so as to putforth an ostensible defence, being aware that proceedings will be initiated. That being the position, none of the decisions cited would come to the aid of the respondent company so as to qualify the defence as a substantial or bona fide one at this stage. The defence raised not only appears as a moonshine, but is a mirage, rather it is a tailored defence as it appears from the circumstance. Further, the facts herein is not akin to the circumstance in which this Court had held that there is a dispute with regard to the corporate guarantee, in the case of TATA Capital Financial Services Ltd. v. Sea Rock Investments Ltd. (Co.P.No.211/2009 and connected petitions dated 01.09.2014) relied on by the learned senior counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that as per the book value and the assets of the respondent company they will not be able to discharge the entire liability. It is also observed therein that an attempt is being made by the respondent company by taking all possible technical defence only to wriggle out of the situation. In that view, all other contentions urged in the other petitions including the contention raised with regard to not being liable to pay interest as claimed in Co.P.No.99/2013 also will have to be considered as without merit and not as a bonafide defence. Though the learned senior counsel for the respondent company contended that they have deposited a sum of ₹ 1250 crores including FD receipts, the said amount will not satisfy the claim. Further, the said amount is not a voluntary deposit to establish their bona fides and raise the dispute, but the deposit made is pursuant to the orders of this Court in the fringe proceedings relating to the sale of shares. 42. For all the aforestated reasons, the above referred petitions are liable to be admitted. Hence, Admit. 43. Each of the petitions shall be advertised in 'The Hindu' English daily and 'Udayavanf Kannada daily. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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