RE ASK RE LTD (Company Number 1056098)

HCCW 445/2020

[2021] HKCFI 3310

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 445 OF 2020

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D E C I S I O N

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1.  On 29 December 2020 the Petitioner, the Bank of Baroda, issued a petition seeking an order to wind up the Company on the grounds of insolvency. In order to prove insolvency, the Petitioner relies on a statutory demand served on 27 November 2020 in respect of a debt totalling US$2,374,010 arising under a Facility provided by the Petitioner to the Company (“debt”). The Facility included purchasing and discounting bills and a credit line.

2.  The Company does not dispute that the Petitioner advanced the sums claimed.  The Company’s defence is contained in the affirmation of Attaluri Prasad, who is apparently the founder as well as a director of the Company.  The defence in summary is that the Petitioner should not have purchased the relevant bills or made the relevant advances.  In what is extraordinarily disingenuous evidence Mr Prasad asserts that despite him expressly authorising the relevant transactions the Petitioner should not have made them and was in breach of the terms of the Facility.  If one wants to understand the meaning of the term chutzpah one need look no further than the nonsense that Mr Prasad has put before the court.

3.  Mr Cheung, who appeared for the Company limited his argument to the following components:

(1)  The Company has a cross-claim.

(2)  The cross-claim arises from an assumption of advisory and banker’s duties to the Company.

(3)  The Company breached its duties.

(4)  The breaches caused loss exceeding the debt.

4.  In order to defeat the Petition it is necessary for the Company to demonstrate that it has a bona fide defence on substantial grounds.  It seems to me self-evident that the Company cannot do so.  The evidence does not suggest any sensible reason for concluding that the Petitioner assumed advisory duties that would extend to advising the Company whether or not to undertake the relevant transactions.  Even if this were not the case the Company’s evidence does not come close to demonstrating that any resulting loss exceeds the debt.  The cross-claim of US$2,918,000 consists of figures manifestly conjured up to exceed the debt.  This is readily illustrated by the fact that the Company’s audited financial statements for the years ending 2016, 2017 and 2018 show that the Company’s annual sales never exceeded US$87.34 million and a profit of US$381,000.

5.  I shall make the normal winding up order.