‘BNP Paribas entitled to claim dues as a creditor invoking corporate guarantees’
The Karnataka High Court on Tuesday found prima facie reason to admit the plea of BNP Paribas, a French bank, which is seeking winding up of UB (Holdings) Ltd. to recover around Rs. 203 crore due to it. The bank had financed Kingfisher Airlines Ltd. (KAL), promoted by UBHL, for the purchase of three aircraft.
Justice Anand Byrareddy in his order said the defence of UBHL, which had sought for dismissal of the plea at the preliminary stage itself, was “prima facie invalid” while pointing out that company did not contest the claims of the bank despite receipt of notice under the provisions of the Companies Act, 1956, from the bank.
Pointing out that bona fides of disputes on claims would be a primary reason in the process of admitting pleas for winding up companies, the court said that UBHL, which is the promoter of KAL, should have disputed the claims at a time when the company was confronted with a notice of claims.
UBHL had acknowledged the receipt of notice under Section 434(1)(a) of the Act but had not responded to it, the court said while observing that “it is only after filing of winding up plea, the respondent [UBHL] has chosen to dispute its liability.” The notice was issued in July 2012.
UBHL had also not chosen to deny liability with reference to any liability of the assignment of the corporate guarantee, the court observed.
“This circumstance is in itself sufficient to hold that the defence is an afterthought and lacked the characteristic of bona fides,” the court said, and held that the bank was entitled to claim as a creditor of UBHL under corporate guarantees, and the debt was substantially ascertained sum. The court also ordered for issuance of public notice, after four weeks from Tuesday, in two newspapers about the winding up petition, which would be taken up for further consideration on January 16, 2014.
UBHL had claimed that the plea of winding up deserves rejection as it had given corporate guarantee only in favour of KF Aero, a special purpose vehicle through which KAL acquired three aircrafts, and assignment of such a guarantee in favour of the bank by KF Aero discharged UBHL from any liability towards the bank. UBHL also claimed that Reserve Bank of India, which permitted it to give corporate guarantee to acquire aircraft, did not permit assignment of such guarantees.
UBHL had also pointed out that KAL had suffered commercial loss due to defective engines in the aircraft and a civil suit against the manufacturer was pending before city court in Bangalore.
The bank, in 2006, financed KAL, through KF Aero, to acquire three aircraft after KF Aero assigned corporate guarantees furnished by UBHL. After KAL failed to pay instalments according to terms, it issued notices to UBHL between August and October 2011 seeking payment as per corporate guarantees before initiating action according to the Companies Act.