In a setback to UB (Holdings) Ltd, the Karnataka High Court on Tuesday found a prima facie case to admit a plea by BNP Paribas, which is seeking winding up of UBHL.

The French bank is trying to recover around Rs 203 crore borrowed by Kingfisher Airlines Ltd (KAL), promoted by UBHL, to purchase three aircraft.

In his order, Justice Anand Byrareddy said the UBHL defence, which had sought dismissal of the plea at the preliminary stage itself, is “ prima facie invalid”. The Court said BNP Paribas is entitled to claim a corporate guarantee provided by UBHL.

Justice Byrareddy pointed out that UBHL did not contest BNP Paribas’ claims despite receiving a notice under the provisions of the Companies Act, 1956, from the bank.

The Court said that UBHL’s objections should have been raised when the company was confronted with a notice of claim.

UBHL had acknowledged receipt of the notice under Section 434(1)(a) of the Act, but had not responded to it, the Court pointed out.The notice was issued in July 2012.

UBHL had also not chosen to deny liability with reference to the corporate guarantee, the Court observed. “This circumstance is in itself sufficient to hold that the defence is an after-thought and lacked the characteristic of bonafides,” the Court said.

It also ordered issuance of a public notice about the winding up petition after four weeks, in two newspapers. The Court said the case would be taken up thereafter, on January 16.

UBHL had claimed that the winding-up plea deserved to be rejected as it had given a corporate guarantee only in favour of KF Aero, a special purpose vehicle through which Kingfisher Airlines acquired three aircraft.

UBHL also claimed that the Reserve Bank of India, which permitted it to give a corporate guarantee to acquire aircraft, did not permit assignment of such guarantees.

UBHL had also pointed out that KAL had suffered a commercial loss due to defective engines in the aircraft and a civil suit against the manufacturer is pending before a city court in Bangalore.

The bank, in 2006, had financed Kingfisher Airlines’ aircraft purchase through KF Aero. KF Aero had assigned corporate guarantees furnished by UBHL.

After Kingfisher Airlines failed to pay instalments, the bank issued notices to UBHL between August and October 2011, seeking payment in line with the corporate guarantee, and then initiated legal action.