BPCL files suit for winding up of Kingfisher

BPCL files suit for winding up of Kingfisher
Comment E-mail Print Share
First Published: Wed, Sep 09 2009. 11 52 PM IST
Updated: Wed, Sep 09 2009. 11 52 PM IST
New Delhi / Mumbai: State-owned oil marketer Bharat Petroleum Corp. Ltd (BPCL) is stepping up its bid to get Vijay Mallya’s Kingfisher Airlines Ltd to pay up jet fuel dues, having filed a winding up petition in the Karnataka high court on 2 September, said two executives aware of the matter.
Kingfisher owed Rs950 crore to government-owned Indian Oil Corp. Ltd (IOC), BPCL and Hindustan Petroleum Corp. Ltd (HPCL) as of 24 August. Of this, BPCL’s dues were Rs314 crore, according to one of the executives working with one of three oil marketers who asked not to be named. IOC’s dues were Rs26.18 crore while HPCL’s stood at Rs587 crore at the time.
This is the first instance of a refiner filing a winding-up petition against a local airline following the slump in air travel last year that led some of them to rack up losses. A company that’s wound up would go into administration and its assets sold to pay off dues.
The petition filed by BPCL follows a plea for arbitration in the Bombay high court in June.
The second executive, who works with Kingfisher Airlines’ parent UB Group, who did not speak on record because he’s not authorized to speak to the media, confirmed the petition had been filed.
“BPCL approached Bombay high court on 11 August, asking us to deposit funds pending hearing and disposal of arbitration proceedings. The matter was heard on 4 September and the court has given us two weeks to file a response,” said a Kingfisher Airlines spokesman. “How can multiple court cases be filed on the same issue? We have no notice from the Karnataka high court.” A BPCL spokesman declined to comment on a questionnaire sent by Mint.
BPCL’s move would bring more pressure to bear on Kingfisher, said Sumeet Kachwaha, partner at New Delhi-based law firm Kachwaha & Partners.
“It could be seen as a pressure tactic because while the arbitration proceedings are going on, the agrieved party has an option to file a winding-up petition,” Kachwaha said. “But it could be a gamble because in certain cases the winding-up petition takes several years.”
The oil firm executive quoted above said the oil marketers and the airlines had reached an understanding on 22 October, requiring them to pay their dues in six equal instalments. Kingfisher Airlines, Jet Airways (India) Ltd and Air India were a party to this agreement, he said.
IOC and BPCL stopped giving Kingfisher credit as it wasn’t able to adhere to the agreement, Mint reported in April. The Mumbai-based carrier has been battling losses, much like rivals Air India and Jet Airways.
Manish Ranjan and Utpal Bhaskar contributed to this story.
Comment E-mail Print Share
First Published: Wed, Sep 09 2009. 11 52 PM IST