Memorial On Behalf of Respondent

I
15TH SURANA & SURANA NATIONAL CORPORATE MOOT COURT COMPETITION,

2017
15th SURANA & SURANA NATIONAL CORPORATE LAW MOOT COURT
COMPETETION, 2017
BEFORE
THE NATIONAL COMPANY LAW TRIBUNAL, BANGALURU
Company Application (CA) 1 of 2017
in
Company Petition (CP) 10 of 2017
IN THE CASE CONCERNING WINDING UP PETITION
GLOBAL OFFICE SUPPLIERS PVT. LTD, BENGALURU (PETITIONER)
SHAREHOLDERS OF STALWART ONLINE STORES PVT LTD (PETITIONER)
ADDITIONAL COMMISSIONER OF INCOME-TAX, BENGALURU (PETITIONER)
DEPUTY COMMISSIONER OF COMMERCIAL TAX, BENGALURU (PETITIONER)
v/s
STALWART ONLINE STORES PVT LTD, BENGALURU (RESPONDENT)
MEMORIAL FROM THE SIDE OF RESPONDENT
MEMORIAL ON BEHALF OF RESPONDENT

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THE TABLE OF CONTENTS
 INDEX OF AUTHORITIES.................................................................................................
 LIST OF ABBREVIATIONS..............................................................................................
 STATEMENT OF JURISDICTION...................................................................................
 STATEMENT OF FACTS................................................................................................
 STATEMENT OF ISSUES..................................................................................................
 SUMMARY OF ARGUMENTS................................................................................................
 ARGUMENTS ADVANCED..........................................................................................................
[ISSUE I] THE WINDING UP PETITION AND IMPLEADING PETITION ARE NOT
ADMISSIBLE IN NATIONAL COMPANY LAW
TRIBUNAL.......................................................................
A. The winding up petition is not admissible.
[a] Petition filed u/s 433(e) should be dismissed.
[b] Petition filed u/s 433(f) should be dismissed.
B. Alternate remedies are not exhausted.
[a] Pendency of civil suit.
[b] The matter is to be adjudicated in arbitration.
[c] The 26% Shareholders Approached the Tribunal Directly.
[ISSUE II] STALWART IS NOT LIABLE TO WIND UP UNDER 433(e) & 433(f) OF
THE COMPANIES ACT,
1956? .........................................................................................
A. The Company is not liable to be wound up under section 433(e).
B. The Company is not liable to be wound up under section 433(f).

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[ISSUE III] THE IMPLEADING PETITIONS BY TAX DEPARTMENT ARE NOT
MAINTAINABLE.
A. The TD’s are neither necessary nor proper party.
B. Tax claims cannot be paid at par with secured creditors.
[ISSUE IV] STALWART CANNOT BE CONSIDERED AN ASSESSEE IN DEFAULT.
A. The provisions of ITA will not be applicable in the present case.

[a] Income from shares.
[b] Income from other rights.
B. Loan advancement cannot be considered as dividend
under DTAA.
[ISSUE V] Stalwart is not liable to pay sales tax in Karnataka.
A. Stalwart is only a service provider and not a dealer.
[a] Stalwart is not involved in selling, supplying or distributing goods.
[b] Stalwart is not liable to pay sales tax for the services rendered.
B. The impugned sales tax will not be payable in Karnataka
 PRAYER.......................................................................................................................

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THE INDEX OF AUTHORITIES
SUPREME COURT CASES
NO. CAUSE TITLE REF.

1 20th Century Finance Corpn. Ltd. v. State of Maharashtra, (2000) 6
S.C.C. 12.
2 CIT v. P.V.A.L Kulandagan Chettiar, [2004] 137 Taxman 460 (SC).
3 Cotton Corporation Of India Limited v. United Industrial Bank Limited
And Others (1983) 4 SCC 625.
4 Executive Engineer and another v. Shri Sitaram Rice Mills. 2011
Indlaw SC 822.
5 G.E. Technology Centre (P.) Ltd. v. CIT, [2010] 327 ITR 456 (SC).
6 Haleema Zubair v. State of Kerala, (2008) 16 S.C.C. 504.
7 Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt.
Ltd., (1971) 3 SCC 632.
8 Pradeshiya Industrial & Inv. Corpn. of U.P. v. North India Petro
Chemicals [1994] 79 Comp. Cas. 835 (SC).
9 Ramesh Hirachand Kundanmal v. Minicipal Corpn. of greater Bombay
& Ors. (1992) 2 SCC 524.
10 Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya,
(1972) 4 S.C.C. 600.
11 Shanti Prasad Jain v. Kalinga Tubes Ltd., AIR 1965 SC 1535.
12 State of Assam v. UOI & Ors., (2010) 10 SCC 408.
13 Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 S.C.C. 531
14 Tata Iron and Steel co. v. State of Bihar, AIR 1958 S.C. 452.
15 Thompson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd.,
(2013) 5 SCC 397.
16 Udit Narain Singh Malpaharia v. Additional Member Board of
Revenue, Bihar and another, AIR 1963 SC 786.
17 Vijay Industries v. NATL Technologies Ltd. [2009] 89 SCL 205 (SC).
18 UOI v. India Fisheries (P.) Ltd., [1965] 57 ITR 331 (SC).
19 UOI v. Azadi Bachao Andolan, [2003] 263 ITR 706 (SC).
20 Executive Engineer & Anr. v. Shri Seetaram Rice Mills, 2011 Indlaw

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SC 822.
HIGH COURT AND TRIBUNALS
21 Allahabad Bank v. Kothari Petrochemicals Ltd.; 2003 SCC OnLine

Mad 899.
22 Arabian Express Line Newspaper Ltd. of UK v. UOI, [1995] 212 ITR.
31 (Guj.).
23 B Bhaskar Stoneware Pipes Pvt. Ltd. v. Rajinder Nath Bhasker, (1988)
63 Comp. Cas.184 (Del.) (DB)
24 B Somaiah v. Amina Begum, AIR 1976 AP 182.
25 Bennet, Coleman and Co. Ltd. v. RSA Fox Advertising Pvt. Ltd.,
(2001) 107 Comp. Cas. 766 (P&H.).
26 Bhaskar Stoneware Pipes Pvt. Ltd. v. Rajinder Nath Bhasker,(1988) 63
Comp. Cas. 184 (Del.) (DB.).
27 Canara Bank v. Metallica Industries Ltd..,1997 SCCOnline Bom. 136.
28 CCE v. Salem Starch [2013] 39 taxmann.com 69 (Mad.)
29 CCT v. N.K. Poduval & Co., [2014] 42 taxmann.com 49 (Ker.).
30 Cinco Labratories Pvt. Ltd., In re,(1973) 43 Comp. Cas. 550 (Pat.).
31 Cine Industries & Recording Co., AIR 1942 Bom. 231.
32 CIT v. Boston Consulting Group Pte. Ltd., [2005] 94 ITD 31 (Mum.).
33 CIT v. Davy Ashmore India Ltd., [1991] 190 ITR 626 (Cal.).
34 CIT v. Estienne Andre, [2000] 242 ITR. 422 (Bom.).
35 CIT v. Muthaiah, [1993] 202 ITR 508 (Kar.).
36 CIT v. RajKumar [2009] 181 Taxmann 155 (Del.).
37 CIT v. Samsung Electronics Co. Ltd., [2012] 345 ITR. 494 (Kar.).
38 CIT v. Visakhapatnam Port Trust, [1983] 144 ITR 146 (AP).
39 Compact Griha Nirman v. Kusum Alloys ltd., 2007 SCC Online Kar.
180.
40 Etisalat Mauritius Ltd. v. Etisalat DB Telecom Pvt. Ltd 2015 S.C.C.
OnLine Bom. 3613.
41 Gangeshwar Ltd. v. India Coal Traders, (2007) 139 Comp. Cas. 138
(All.) (DB).
42 Hindustan Sanitary and Hardware Store v. J.C.T. Electronics ltd.,
(1990) 67 Comp. Cas. 585 (P&H).
43 ICICI Bank Ltd. v. Official Liquidator, MANU/TN/0013/2005.
44 In Re, Standard Aluminium and Brass Works Ltd., A.I.R. 1929 Bom 8.

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45 In re, Rishi Enterprises, [1992] 73 Comp Cas 271 (Guj).
46 ITO v. KA Govindaswamy, [1978] 113 ITR 593 (Mad.).
47 J. R. Srinivasa v. Sree Gururaja Enterprises (P.) Ltd. [2016] 72
taxmann.com 152 (Kar.)
48 Jagdamba Polymers Ltd. v. Neo Stock Ltd. (2006) 129 Comp. Cas. 160
(MP).
49 Jose J. Kadavil v. Malabar Industrial Co. Ltd.,(1986) 59 Comp. Cas.
969 (Ker.).
50 K. Appa Roa v. Sarkar Chemicas Pvt. Ltd., (1995) 84 Comp. Cas. 670
(AP) .
51 Kaka Singh v. Rohi Singh AIR 1978 P&H 30; Narayan Chandra v.
Matri Bhandar AIR 1974 Cal 358.
52 Kamadenu Enterprises v. Vivek Textile Mills P. Ltd.,(1984) 55 Comp.
Cas. 68 (Kar.)
53 Kiritbhai R. Patel v. Lavina Contruction and Finance Pvt. Ltd.(2000)
99 Comp. Cas 75 (Guj.).
54 Kirti D. Shah and Others v. Deluxe Roadlines P. Ltd. 2011 SCC
OnLine Kar. 3946.
55 Krishna Kilaru v. Maytas Properties Ltd. [2013] 36 taxmann.com 24
(AP)
56 Lord Krishna Bank Ltd v. Express (Malayalam) (P) Ltd.,
2003 S.C.C.Online Ker. 425.
57 Malabar Industrial Co. Ltd. v. A Join Anthrapper , (1985) 57 Com. Cas.
717 (Ker.—DB.).
58 Motiram Roshanlal Coal Co v. District Committee, Dhanbad AIR
1962 Pat 357
59 New Skies Satellites N.V. v. Asstt. DIT, [2009] 121 ITD 1 (Del.)(SB)
60 Ofu Lynx Ltd. v. Simon Carves India Ltd., v. United Industrial Bank
Ltd.,(1971) 41 Comp. Cas. 174 (Cal.).
61 Paramjit Lal Badhwar v. Prem Spg. & Wvg. Mills. Co. Ltd., (1986) 60
Com Cas. 420 (All.)
62 Pench Valley v. State of MP, (1973) 31 S.T.C. 64 (M.P.).
63 Punjab Ceramics Ltd. v. Punjab State Industrial Development
Corporation Ltd.,(1991) 70 Comp.Cas. 415. (P&H.) (DB.) .
64 Rameshbhai Ramanlal Patel v. Shree Bansidhar P. Ltd., (2005) 58
S.C.L. 396.

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65 Ranbaxy Laboratories Ltd. vs M.S. Shoes East (I) Ltd. 1998 93
Comp.Cas. 296 (Del.)
66 Rees v. Munday (1974) 3 All ER 506, 509.
67 Reliance Infocomm Ltd. and Another v. Sheetal Refineries P. Ltd. 2007
S.C.C.OnLine A.P. 935.
68 Sandan Vikas (India) ltd. v. State of Haryana [2013] 40 taxmann.com
672 (P & H.).
69 Shrabony Dey v. Howrah Motor Co. Ltd., (2004) 122 Com.
Cas.597(Cal.).
70 Shree Gauri Shanker Jute Mills Ltd.,(1982) 2 Comp. LJ. 607 (Cal.).
71 Shri. Rajiv Makhija v. Dy. Director of Income Tax., ITA
No.3148/Del/2008.
72 Smt. P. Sridevi v. Cherishma Housing (P.) Ltd. [2009] 147 Comp. Cas.
130 (A.P.).
73 Smt. Saraswathi Gopalakrishnan v. Surana Textile Mills Ltd.[2004] 119
Comp.Cas. 917 (Mad.).
74 Somashekara Rao v. Canara Land Investment Ltd. [2011] 16
taxmann.com 264 (Kar.).
75 Steel Equipment and Construction Co. Pvt. Ltd. 1966 S.C.C. OnLine
Cal 44.
76 Syndicate Bank v. Official Liquodator, AIR 1999 Bom. 243. Pg. 247.
77 T. Srinivasa v. Flemming Apotheke Pvt. Ltd.,(1990) 68 Comp. Cas.
506 (Kar.).
78 T.M. Mohandas v. Nectar Laboratories Ltd. [2007] 140 Comp. Cas.
257 (AP).
79 Uco Bank v. Service Tax, 2014 SCC OnLine CESTAT 3770.
80 Vasant Holiday Ho mes P. Ltd. v. Madan V. Prabhu, (2003) 116 Com.
Cas. 172.
81 Vasant Holiday Ho mes P. Ltd. v. Madan V. Prabhu, (2003) 116 Com.
Cas. 172.
STATUTORY PROVISIONS
1) Arbitration and Conciliation Act, No. 26 of 1996.
2) Finance Act, No. 32 of 1994.

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3) General Clauses Act, No. 10 of 1897.
4) Income Tax Act, No. 43 of 1961.
5) Indian Contract Act, No. 9 of 1872.
6) Karnataka Value Added Tax Act, 2003, No. 32 of 2004.
7) The Central Sales Tax Act, No. 74 of 1956.
8) The Companies Act, No. 18 of 2013.
9) The Companies Act, No. 1 of 1956.
10) The Civil Procedure Code, No. 5 of 1908.
TREATIES AND CONVENTIONS

1) Agreement for avoidance of double taxation and prevention of fiscal evasion, India-
Singapore, May 27th, 1994.
2) Vienna Convention on the Law of Treaties, 23 May 1969, United Nations, Treaty Series,
vol. 1155, p. 331.
BOOKS
1) 1, SWEET &MAXWELL, CHITTI ON CONTRACT,1227-28 (32nd ed. 2015).
2) 2, MULLA,THE CODE OF CIVIL PROCEDURE,(B.M. PRASAD eds. 17th ed. 2007).
3) 3, CR DATTA,THE COMPANY LAW,(ed. 6th ,2008).
4) 3, A RAMAIYA, GUIDE TO THE COMPANIES ACT,(ed. 17th,2010).
5) 5, TAXMANN,COMPANY LAW, (eds. RAKESH BHARGAVA, ed.,2014).
6) D.P. MITTAL, INTERPRETATION OF STATUTES (ed. 2nd 2012).
7) D.P. MITTAL, INDIAN DOUBLE TAXATION AGREEMENTS & TAX LAWS (7th ed. 2014).
8) Dr. G.K. KAPOOR, COMPANY LAW AND PRACTICE (ed. 21st 2016).
9) JUSTICE G.P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION (ed. 13th 2012).
10) JUSTICE S.B. MALIK, COMMENTARY ON THE ARBITRATION AND CONCILIATION ACT 181,
(ed. 7TH 2015).
11) KANGA & PALKHIWALA, THE LAW AND PRACTICE OF INCOME TAX (Arvind P Datar eds.
ed. 10th 2014).
12) N S BINDRA, INTERPRETATION OF STATUTES (LexisNexis, ed. 10th).

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13) SIR DINSHAH FARDUNJI MULLA, THE SALE OF GOODS ACT AND THE INDIAN PARTNERSHIP
ACT, (ed.10th 2012).
ARTICLES
1. V.S. Datey,Bitter taste ends with sweet exemptions; 64 taxmann.com 302, (2015).
2. Dr. K.R. Chandatre,‘Related party’ UNDER Co. A., 2013 [2015] 53 taxmann.com 57.
3. Vinod Kothari, FINALLY, SOME EXEMPTIONS TO PVT. COMPANIES,

[2016] 65 taxmann.com 167.
4. Sharad Moudgal, 100% FDI Permitted in B2C E-Commerce Marketplaces (2016) PL
(CL) May 71.
5. H. Padamchand Khincha, Interpretation of tax treaties vis-à-vis Judicial Precedents,

[2016] 75 taxmann.com 19.

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THE LIST OF ABBREVIATIONS
& And
¶ Paragraph
¶¶ Paragraphs
§ Section
₹ Rupees
A.A.R. Authority of Advance Ruling
ACIT. Assistant Commissioner of Income Tax
Addl. Additional
A.I.R. All India Reporter
All. Allahabad
Anr. Another
A.P. Andhra Pradesh
Art. Article
Assn. Association
A.Y. Assessment year
BOD’s Board of Directors
Bom. Bombay
B/w Between
Cal. Calcutta
C.B.D.T. Central Board of Direct Taxes
CEGAT Customs Excise & Gold Appellate Tribunal
C.I.T. Commissioner of Income Tax.
C.L.B. Company Law Board.
Co. Company
Co. A. Companies Act
Corpn. Corporation
C.S.T. Central Sales Tax
C.S.T.A. Central Sales Tax Act
C.T.O. Commercial Tax Officer
C.T.R. Current Tax Report
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D.C.I.T. Deputy Commissioner of Income Tax.
Del. Delhi
D.I.T. Director of Income Tax
D.T.A.A. Double Taxation Avoidance Agreement
Dy. Deputy
ed. Edition
eds. Editor
H.C. High Court
Hon’ble Honourable
Hyd. Hydrabad
I.A.A. Indian Arbitration Act.
Id. IBID
In re. In the matter of
I.T. Income Tax
I.T.A. Income Tax Act
I.T.A.T. Income Tax Appellate Tribunal
I.T.O. Income Tax Officer
I.T.R. Income Tax Reporter
J.C.I.T. Joint Commissioner of Income Tax
Kar. Karnataka
KVAT Karnataka Value Added Tax
KVATA Karnataka Value Added Tax Act
Ltd. Limited
L. Rev. Law Review
M/s Messer’s
Mad. Madras
Mag. Magazine
Manu. Manupatra.
MH. Maharashtra
Mum. Mumbai
Mys. Mysore.
NCLT National Company Law Tribunal
NCLAT National Company Law Appellate Tribunal
no. Number
OECD Organization for Economic Cooperation and
Development
Ori. Orissa
Ors. Others.
(P.) Private
Pvt. Private
P&H. Punjab & Haryana
Pg. Page
RBI Reserve Bank of India
Rev. Revised

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RPT Related Party Transaction
SBI State Bank of India
S.C. Supreme Court
S.C.C. Supreme Court Cases
S.C.L. SEBI and Corporate Laws
S.O.T. Selected order of Tribunals
S.T.C. Sales Tax Cases
TD’s Tax Departments
TDS Tax deducted at source
Trib. Tribunal
u/s Under Section
w.e.f. With effect from
v. Versus
VAT Value Added Tax
VCLT Vienna Convention on Law of Treaties
W.L.R. Weekly Law Report
THE STATEMENT OF JURISDICTION
Petitioners have humbly approached the National Company Law Tribunal, Bengaluru under
section 439(1)(d)1 of Companies Act 1956.
The application for being impleaded as petitioners are filed by Shareholders of Stalwart Pvt.
Ltd., Additional Commissioner of Income Tax and Deputy Commissioner of Commercial Tax
1439. (1) An application to the [Tribunal] for the winding up of a company shall be by petition presented, subject to
the provisions of this section,—
(a) by the company; or

(b) by any creditor or creditors, including any contingent or prospective creditor or creditors; or
(c) by any contributory or contributories; or
(d) by all or any of the parties specified in clauses (a), (b) and (c), whether together or separately

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under Order 1 Rule 102 of The Civil Procedure Code 1908 read with section 446(2)3 of
Companies Act 1956.
THE STATEMENT OF FACTS
HISTORY: Global Pvt. Ltd. a company registered under Companies Act, 1956 and KVAT, having
registered office in Bangaluru. Stalwart registered under Companies Act, 2013 has registered
office in Bengaluru and corporate office in Chennai. It facilitates buying and selling of goods
online. It is a successful company and has 40% market share in marketplace model and 20% in
inventory model. Global readily entered into sales and service agreement with Stalwart. If any
default Stalwart will have to pay 24% S.I. and 20 lakhs fine per month. There was also an
arbitration clause in the contract if any dispute arises.
2Court may strike out or add parties—The court may at any stage of the proceedings, either upon or without the
application of either party, and on such terms as may appear to the court to be just, order that the name of any party
improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to
have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to
enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be
added.
3 446(2): The [Tribunal] shall, notwithstanding anything contained in any other law for the time being in force, have
jurisdiction to entertain, or dispose of —
(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company (including claims by or against any of its branches in India);
(c) any application made under section 391 by or in respect of the company;
(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to
or arise in course of the winding up of the company;
Whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or
such application has been made or is made before or after the order for the winding up of the company, or before or
after the commencement of the Companies (Amendment) Act, 1960.

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WINDING UP: Global supplied inferior quality goods to Stalwart’s customers. Which decreased
their sale and total accumulated default was ₹ 19.32 Cr. out of which ₹ 6 Cr. were given by
Stalwart as and when they made profits. Galileo even after the default voluntarily supplied goods
to Stalwart but later started asking for the payment. With respect to the disputes Global filed a
summary suit. Later, Galileo filed a winding up petition to recover debts. Stalwart’s BOD passed
a loan to Galileo Investors Pte. Ltd. who held 24% stake in Stalwart against which 26% of
shareholders claimed that this loan advancement to be RPT and filed impleading petition in
NCLT to wind up. Galileo filed a winding up petition in NCLT to settle the dues of Global.
INCOME TAX: On filing of Return of income the ITD issued a notice claiming the amount
advanced as dividend income in the hands of Galileo on which TDS should have been deducted.
Since, it was not done ITD treated Stalwart as an assessee in default.
SALES TAX: KVAT authorities also issued notice to Stalwart for not registering as a dealer and
not discharging sales tax liabilities for the sales made under the marketplace model. Both ITD
and KSTD filed impleading petitions along with the winding up petition for recovery of the tax
due from Stalwart. NCLT will adjudicate on all issues and decide the case on merit.
THE STATEMENT OF ISSUES
The following questions have been raised before this Tribunal to consider:
-ISSUE I-
WHETHER THE WINDING UP PETITION & IMPLEADING PETITION ARE ADMISSIBLE IN NATIONAL
COMPANY LAW TRIBUNAL?
-ISSUE II-
WHETHER STALWART IS LIABLE TO WIND UP UNDER 433(E) & 433(F) OF THE COMPANIES ACT,
1956?

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-ISSUE III-
WHETHER IMPLEADING PETITIONS FILED BY INCOME TAX DEPARTMENT & SALES TAX
DEPARTMENT RESPECTIVELY ARE MAINTAINABLE?
-ISSUE IV-
WHETHER STALWART CAN BE CONSIDERED TO BE AN ASSESSEE IN DEFAULT?
-ISSUE V-
WHETHER STALWART IS LIABLE TO PAY SALES TAX IN KARNATAKA?
THE SUMMARY OF ARGUMENTS
ISSUE I: It is submitted that the main winding up petition and the impleading petition filed under
section 433(e) and 433(f) respectively are not maintainable as the petitioner has no substantial
grounds to wind up the company as the debt of the company is disputed and both the petitioners
have not exhausted their alternate remedies.
ISSUE II: It is submitted that the company is a running company and has made already made the
interim payment. Moreover, the delay in payment is due to the bad services provided by Galileo

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and also due to force majure event i.e. change in FDI policies. The loan advancement also does
not under the ambit of related parties i.e. u/s 2(76) and section 188.
ISSUE III: It is humbly submitted that firstly the tax departments are neither necessary nor proper
party to the winding up petition as their presence is not necessary for an effective decree.
Secondly, the tax claims cannot be paid first at par with other secured creditors.
ISSUE IV: It is humbly submitted that Stalwart is not an assessee in default because firstly, the
provisions of the Income Tax Act will not be applicable in the present case & secondly, the said
advancement is not a dividend under DTAA.
ISSUE V: It is humbly submitted that Stalwart is not liable to pay sales tax in Karnataka because
firstly, it is rendering service as a facilitator in connecting the buyer with the seller and has been
discharging service tax liability for the same & secondly, the situs of sale is at Chennai and not
Karnataka.

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SURANA & SURANA NATIONAL CORPORATE MOOT COURT COMPETITION,
2017
THE ARGUMENTS ADVANCED
I. THE WINDING UP PETITION AND THE IMPLEADING PETITION ARE NOT
ADMISSIBLE IN THE NATIONAL CO. LAW TRIBUNAL (NCLT).
[¶1] The respondent humbly pleads that the winding up petition is not maintainable when the
creditors have malafide intentions to recover the debt which is disputed4. The Trib. cannot wind
up the Co. u/s 433(f) just because there is lack of confidence among the shareholders.5
A.THE WINDING UP PETITIONS ARE NOT ADMISSIBLE
[¶2] It is humbly pleaded that, the respondent Co. received a statutory notice that Global has filed
a winding up petition6 u/s 433(e) of the C. A., 1956 in NCLT. The petition as to winding up is the
remedy of last resort.7 Therefore, winding up cannot be sought as a means of recovery of debt. 8
The mere fact that the Co. is unable to pay its debt doesn’t entitle the court to order winding up
under §433(e) of the C. A., 1956.9
[a] Petition filed u/s 433(e) should be dismissed
[¶3] It is contended that Stalwart has already paid its part of Rs, 6 crores. Stalwart is unable to
pay the remaining amount because their earnings are reduced due to inferior quality of goods and
services provided by Global, to which they agreed.10
4 CR DATTA,THE CO. LAW 5944 (6th ed. 2008).
5 Bhaskar Stoneware Pipes Pvt. Ltd. v. Rajinder Nath Bhasker,(1988) 63 Comp. Cas. 184 (Del.) (DB.) ¶30.
6 Moot Compromis ¶14
7 Kirti D. Shah and Others v. Deluxe Roadlines P. Ltd. 2011 SCC OnLine Kar. 3946. ¶12.
8 Cotton Corporation Of India Limited V. United Industrial Bank Limited And Others (1983) 4 SCC 625. ¶22.
9 T.M. Mohandas v. Nectar Laboratories Ltd. [2007] 140 Comp. Cas. 257 (A.P.) ¶ 9.
10 Moot Compromis ¶9

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[¶4] A creditor is entitled to an order of winding up only if claims are valid and undisputed by the
Co.11 It is well settled that if the debt is bonafide disputed and where the debt is not just, the Trib.
should refer the case to the competent Civil Court 12 and dismiss the petition.13 A petition for
winding up will be dismissed if the Co. is commercially solvent, financially sound and the
suffering of loss or inability to pay debts are no grounds for the winding up of the Co. 14 A
petition will not be admitted if it is made to coerce the respondent Co. to pay the debt. 15 Hence,
the petition should be dismissed by the Trib. as the motive of filing this petition is malafide.
[b] Petition filed u/s 433(f) should be Dismissed.
[¶5] It is humbly pleaded that, the shareholders cannot plead for winding up of the Co. by the
mere act of oppression by the Co. Moreover, the Co. is not liable for RPTs under the C. A., 2013.
It is a settled proposition of law16 that parties cannot be added for the introduction of a new cause
of action.17 It is not imperative for the court to make a winding up order even if it forms the
opinion that it was just and equitable to do so. 18 When a shareholder files a petition u/s 433(f)
due to lack of confidence the Trib. has to consider all such cases short of winding up and the
petitioner can be given any other remedy if possible”. 19 As per the notification dated 05-06-2015,
11 Rhein Chemie Rheinau GmbH v. Standard Oil Additive Pvt. Ltd. 2005 S.C.C. OnLine Kar. 326. ¶4.
12T. Srinivasa v. Flemming (India) Apotheke Pvt. Ltd.,(1990) 68 Comp. Cas. 506 (Kar.) ¶ 4.
13 Steel Equipment and Construction Co. Pvt. Ltd. 1966 S.C.C. OnLine Cal 44 ¶19.
14 Cinco Labratories Pvt. Ltd., In re,(1973) 43 Comp. Cas. 550 (Pat.) ¶ 5.
15 Punjab Ceramics Ltd. v. Punjab State Industrial Development Corporation Ltd.,(1991) 70 Comp.Cas. 415.
(P&H.) (DB.) ¶ 12; K. Appa Roa v. Sarkar Chemicas Pvt. Ltd., (1995) 84 Comp. Cas. 670 (A.P.) ¶17,18.
16 Smt. P. Sridevi v. Cherishma Housing (P.) Ltd. [2009] 147 COMP CASE 130 (A.P.).
17 2, MULLA, THE CODE OF CIVIL PROCEDURE, 85 (B.M. PRASAD. 17th ed. 2007);
18Smt. P. Sridevi v. Cherishma Housing (P.) Ltd. [2009] 147 COMP CASE 130 (A.P.) ¶ 3.
19 Bhaskar Stoneware Pipes Pvt. Ltd. v. Rajinder Nath Bhasker, (1988) 63 Comp. Cas.184 (Del.)(DB.) ¶ 24.

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Pvt. Co.’s are given exemptions to perform RPT with its holding, subsidiary or associate Co. or
subsidiary of its holding Co.”. 20 Oppression is no ground to wind up the co.
[¶6] The impleading petition should be dismissed on the grounds that Stalwart and Galileo are
not related party u/s 2(76) read with § 188 of the C. A., 2013 hence not liable to wind up u/s
433(f).
B.ALTERNATE REMEDIES ARE NOT EXHAUSTED.
[¶7] It is humbly pleaded that Stalwart and the remaining 26% of shareholders have not used all
the alternate remedies available before approaching NCLT. The Trib. has framed their own rules
of limiting the exercise of powers to selective situations , even when the remedy of arbitration
was introduced by Stalwart in the contract.21
[a] Pendency of Civil Suit
[¶8] It is respectfully submitted that, Summary Suit under order XXXVII of C.P.C., 1908 is
already pending22 hence; the petition for winding up cannot be admitted. The law provides a
clear position that in view of the pendency of Civil Suit, the winding up cannot be ordered 23. A
creditor is only entitled to an order of winding up if the claims are valid and undisputed by the
Co.24. It is unreasonable to file petition for winding up in order to recover alleged debts to
20 V.S. Datey,Bitter taste ends with sweet exemptions; 64 taxmann.com 302, (2015).
21 Moot Compromis ¶5.
22 Moot Compromis ¶14.
23 J. R. Srinivasa v. Sree Gururaja Enterprises (P.) Ltd. [2016] 72 taxmann.com 152 (Kar.) ¶6.
24 3 C.R DATTA ,The CO. LAW, Page. 5938, ¶4.

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25
pressurize the respondent Co. . The proceedings of winding up are not to settle financial matters,
therefore winding up is not a substitute of Civil Suit26.
[¶9] It is well established that the Trib. will not entertain any winding up petition if there is a
bonafide dispute on debt. The Trib. will leave the parties to resolve the dispute in appropriate
proceedings27. Moreover, when the petitioner has alternate remedies available of their own and
has already filed the proceeding to ventilate the grievances against the respondent, the winding
up petition is liable to be dismissed u/s 443(2) of the Act 28. Hence, when the remedy of summary
suit is not exhausted and debt is disputed, the winding up petition cannot be filed directly.
[b] The matter is to be adjudicated in arbitration.
[¶10] It is submitted that the contract itself explicitly provides the provision that all the disputes
will be solved through an arbitrator29. Hence, the petitioner has no locus standi to directly
approach the Trib. Arbitration and winding up are different proceedings. Arbitration is sought
when there is dispute of debt or any other dispute b/w parties30.
[¶11] The Trib. should adjourn the petition when arbitration is pending for deciding disputed
debt31. The claim pertaining to specific relief is arbitrable, even discretionary reliefs which are
granted by the courts could be referred to arbitration as arbitrator has same powers as the court 32.
25 Bennet, Coleman and Co. Ltd. v. RSA Fox Advertising Pvt. Ltd., (2001) 107 Comp. Cas. 766 (P&H.) ¶5.
26 Kamadenu Enterprises v. Vivek Textile Mills P. Ltd.,(1984) 55 Comp. Cas. 68 (Kar.) ¶ 3.
27 Ofu Lynx Ltd. v. Simon Carves India Ltd., (1971) 41 Comp. Cas. 174 (Cal.). ¶9.
28 Smt. Saraswathi Gopalakrishnan v. Surana Textile Mills Ltd. [2004] 119 Comp.Cas. 917 (Mad.) ¶ 11.
29 Moot Compromis, ¶5.
30 In re. Shree Gauri Shanker Jute Mills Ltd.,(1982) 2 Comp. LJ 607 (Cal.).
31Gurcharan Singh v. Raghbir Cycles Pvt., Ltd.,(1995) 82 Comp. Cas. 203 (P&H.) ¶ 52.
32 Compact Griha Nirman v. Kusum Alloys ltd. 2007 S.C.C.Online Kar. 180 ¶14.. ; JUSTICE S.B.
MALIK,COMMENTARY ON THE ARBITRATION AND CONCILIATION ACT 181, (7TH ed. 2015).

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The Trib. will not make a winding up order u/s 433(e) unless proved that there is no alternate
remedy left33.
[c] The 26% shareholders approached the Tribunal directly.
[¶12] The shareholders can invoke § 237, 39734 for misconduct or intent of fraud in a Co. Where
alternate remedy is available the court will not order for winding up 35. An arbitrator should be
approached in deciding the dispute regarding the quality of goods or a civil court can also be
approached under Sales of Goods Act, 1930. Therefore, the winding up petition filed u/s 433(e)
and 433(f) should be dismissed.
II: STALWART IS LIABLE TO WOUND UP UNDER 433(e) AND UNDER 433(f) OF THE COMPANIES
ACT, 1956.
[¶13] It is humbly submitted that the petitioner is also the creditor of Stalwart has filed a winding
up petition36 u/s 433(e) C. A., 1956 and the remaining 26% shareholders have filed the petition 37
u/s 433(f) of the C. A., 1956. The petitioner is not entitled ex debito justitiae to an order of
winding up of Co.38 Stalwart is not liable to be wound up u/s 433(e) and u/s 433(f) of the C. A.,
1956. Instead, the co. should be allowed to function.
A.THE COMPANY IS NOT LIABLE TO BE WOUND UP UNDER SECTION 433(E)
33 Kiritbhai R. Patel v. Lavina Contruction and Finance Pvt. Ltd.(2000) 99 Comp. Cas 75 (Guj.) ¶ 6.
34 Companies Act 1956,No. 18,Acts of Parliament,1956 (India).
35 Rameshbhai Ramanlal Patel v. Shree Bansidhar P. Ltd., (2005) 58 S.C.L. 396. (India) ¶ 9.
38Reliance Infocomm Ltd. and Another v. Sheetal Refineries P. Ltd. 2007 S.C.C. OnLine A.P. 935 ¶ 46.

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[¶14] It is respectfully pleaded that Stalwart is not liable to wind up u/s 433(e) because Stalwart
has made interim payments39 as and when the co. made profits. Thus, cannot be termed as
‘inability to pay debts’. Invoices of such payment were raised but they were wrongly adjusted
towards the pending amount.
[¶15] The court enjoys the discretion to try to save the interest of the co. 40 and avoid winding
up41. The principles on which the court acts are a) the defence of the co. is in good faith and one
of substance; b) the defence is likely to succeed in point of law; c) the co. adduces prima facie
proof of the facts on which the defence depends42.
[¶ 16] Stalwart’s default is due to force majeure event i.e. a contractual term by which one (or
both) of the parties are excused from performance of the contract 43, in whole or in part, can claim
an extension of time for performance, on the happening of a specified event beyond control 44.
The doctrine of frustration of contract is a part of law of discharge of contract due to supervening
impossibility of the act agreed to be done and comes within the purview of § 56 45. Stalwart had
to bear losses due to change in FDI regulations and also due to competition in the market.
Even in those cases where the co. is closed, the court should welcome revival rather than affirm
the death of the co. It is wrong to say that creditors can insist on winding up of the co. 46 Inability
40 Paramjit Lal Badhwar v. Prem Spg. & Wvg. Mills. Co. Ltd., (1986) 60 Com Cas. 420 (All.) ¶ 22.
41 Shrabony Dey Howrah Motor Co. Ltd., (2004) 122 Com Cases 597, (India) ¶ 39.
42 Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd., (1971) 3 SCC 632 ¶¶ 20,21; Allahabad
Bank v. Kothari Petrochemicals Ltd.; 2003 SCC OnLine Mad 899 ¶ 13.
43 1,SWEET &MAXWELL, CHITTI ON CONTRACT,1227-28 (32nd ed. 2015).
44 Krishna Kilaru v. Maytas Properties Ltd. [2013] 36 taxmann.com 24 (A. P.) ¶ 58.
45The Indian Contract Act,1872,No.9,Acts of Parliament,1872.
46In re, Rishi Enterprises, [1992] 73 Comp Cas 271 (Guj). ¶ 3; Allahabad Bank v. Kothari Petrochemicals Ltd.’2003
SCC OnLine Mad. 899 ¶ 14.

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to pay its debts in commercial sense means that the co. was unable to meet the current
demand47. If it is able to meet its current demands then the existing probable asset suffice to meet
the future demands48.
[¶17] If the portion of debt is paid even during the pendency of petition then it cannot be alleged
that the company is unable to pay debts 49. The disputes related to interest levied on the principle
amount should be adjudicated by the competent court 50. If the amount of debt is indefinite
and bonafide dispute or a dispute of the quantity or quality of supply is raised, then the Trib.
cannot order winding up51.
[¶18] The Trib. is under obligation to see that no running co. be pushed into winding up due to
one or two defaults. The Trib. has power to refuse the winding up order 52. The co. shouldn’t be
wound up because of the following reasons a) the winding up petition is filled with malafide
intentions; b) the debt is bonafidely disputed; c) default in payment due to force majeure event;
d) Stalwart made interim payments therefore it cannot be termed ‘unable to pay debts’.
B. THE COMPANY IS NOT LIABLE TO WOUND UP UNDER SECTION 433(f)
[¶19] It is submitted that Stalwart is not liable to wind up u/s 433(f) i.e. winding up on just and
equitable grounds. A heavy burden lies on the shareholders to clearly show how they consider
that the Co. has lost its substratum. 53 The petitioner has to satisfy the requirements of § 439(4)(b)
47Pradeshiya Industrial & Inv. Corpn. of U.P. v. North India Petro Chemicals [1994] 79 Comp. Cas. 835 (SC) ¶22.
48Ranbaxy Laboratories Ltd. vs M.S. Shoes East (I) Ltd. 1998 93 Comp.Cas. 296 (Del.) ¶ 11.
49Hindustan Sanitary and Hardware Store v. J.C.T. Electronics ltd., (1990) 67 Comp. Cas. 585 (P&H.) ¶ 6.
50Gangeshwar Ltd. v. India Coal Traders, (2007) 139 Comp. Cas. 138 (All.) (DB.)(India) ¶ 9.
51 Vijay Industries v. NATL Technologies Ltd. [2009] 89 SCL 205 (S.C.)(India) ¶ 33.
52§ 443(2) of the Co. A., 1956; 3,CR DATTA,THE CO. LAW,5951(6th ed. 2008); Jagdamba Polymers Ltd. v. Neo
Stock Ltd. (2006) 129 Comp. Cas. 160 (M.P.) ¶ 6.
53 Malabar Industrial Co. Ltd. v. A Join Anthrapper , (1985) 57 Com. Cas. 717 (Ker.—DB.) ¶ 1.

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54
in order to file a petition for winding up. The bifurcation of a cause of action is impermissible.55
The Court should consider two ground rules for ordering winding up presented by a shareholder
u/s 433(f): i) the court is unwilling to interfere with shareholders in the management of their own
affairs; ii) whether the jurisdiction of winding up is supported by majority of shareholders.56
[¶20] If the majority shows confidence in the continuance of the business of the Co., the Court
will not interfere.57 Events of oppression have to be consecutive and not in isolation to constitute
‘oppressive’ conduct of the majority. 58 Thus, participation in the management of Co. would not
constitute an act of oppression of minority shareholders by majority shareholders.59
Moreover, § 2(76) of the C. A., 2013 states that a ‘company’, on the other hand, Galileo
Investors is not a Co. but a ‘body corporate’ i.e. they are not registered under any C. A. and are
incorporated outside India60. The definition clause in any statute uses the word “means”,
intending to speak restrictively.61 Hence Galileo and Sam are not a Related Parties.62
The requirement in case of RPTs is that the resolution in General Meeting has to be approved by
a vote of the unrelated parties only. This provision has been taken off in case of Pvt. companies. 63
54 Vasant Holiday Homes P. Ltd. v. Madan V. Prabhu, (2003) 116 Com. Cas. 172 ¶ 24.
55 Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 S.C.C. 531¶ 16.
56 In Re, Standard Aluminium and Brass Works Ltd., A.I.R. 1929 Bom 8 ¶ 12.
57 Cine Industries & Recording Co., A.I.R. 1942 Bom. 231 ¶ 17; Etisalat Mauritius Ltd. v. Etisalat DB Telecom Pvt.
Ltd 2015 S.C.C. OnLine Bom. 3613.
58 Shanti Prasad Jain v. Kalinga Tubes Ltd., AIR 1965 SC 1535 : (1965) 35 Comp Cas 351¶ 14.
59 Somashekara Rao v. Canara Land Investment Ltd. [2011] 16 taxmann.com 264 (Kar.) ¶ 36.
60 2(11) of the C. A., 2016
61 Executive Engineer and another v. Shri Sitaram Rice Mills. 2011 Indlaw S.C. 822. ¶32.
62 K.R. Chandratre,‘Related party’ UNDER C. A., 2013 [2015] 53 taxmann.com 57 (Article)
63 Vinod Kothari ,Finally some exemptions to pvt. companies, [2016] 65 taxmann.com 167 (Article)

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Advancing a loan to any shareholder does not come under RPT according to § 188 of the C. A.,
2013. Therefore, the petitioner has no ground to seek remedy under this section.
III: THE IMPLEAING PETITIONS FILED BY THE TDS ARE NOT MAINTAINABLE
[¶21] It is humbly submitted before the Trib. that the impleading petitions filed by the TDs are
not maintainable. Firstly, the TDs are neither necessary nor proper party. Secondly, the claims of
the TDs cannot be paid at par with other secured creditors.
A. THE TDS ARE NEITHER NECESSARY NOR PROPER PARTY
[¶22] The SC in Ramesh Hirachand Kundanmal v. Municipal Corpn. of Greater Bombay & Ors
has held that the question of impleadment of a party has to be decided on the touchstone of Order
1 Rule 10 which provides that only a necessary or proper party may be added.64
A necessary party is one without whom no order can be made effectively whereas a proper party
is one in whose absence an effective order can be made but whose presence is necessary for a
complete and final decision on the question involved in the proceeding. 65 A necessary party is
one in whose absence no decree can be passed where as a proper party is one whose presence
enables the court to adjudicate the dispute effectively and completely. 66
64 Ramesh Hirachand Kundanmal v. Minicipal Corpn. of greater Bombay & Ors. (1992) 2 SCC 524 ¶6.
65 Udit Narain Singh Malpaharia v. Additional Member Board of Revenue, Bihar and another, AIR 1963 SC 786 ¶7.
66 Canara Bank v. Metallica Industries Ltd..,1997 SCCOnline Bom. 136 ¶6.

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[¶23] In the present case both the TDs are neither necessary nor proper party as their presence is
not essential for an effective or complete & final67 determination of the issues involved.68
Questions vis-à-vis issues involved in a suit refers to the issued involved b/w parties to a suit. 69 In
the present case the issues involved in the suit is the winding up of the company for inability to
pay its debt. It is humbly submitted that the court can effectively adjudicate upon the issue of
winding up irrespective of the presence of the TDs in the proceedings because the scrutiny of the
tax claims is not connected to the subject matter70 of the petition.
B.TAX CLAIMS CANNOT BE PAID AT PAR WITH THAT OF SECURED CREDITORS
[¶24] The section of ‘Overriding preferential payments’ was added to the companies act in
amendment of 1985 which contained a non obstante clause while §178 ITA, 1961 despite of
having a non obstante clause would not override §529A of the Companies act as that of 529A
would prevail being coming into existence later in time.71 The claim of a secured creditor would
prevail over the tax authorities.72 The priority of government dues can only be enforceable as
between unsecured creditors and not above secured creditors.73
[¶25]Thus it is humbly submitted at the instant that as the non obstante clause of §178 & that of
§17 of ITA & CSTA respectively would not prevail thus the claims of the government cannot be
realized on a pari passu basis with those of secured creditors.
67 State of Assam v. UOI & Ors., (2010) 10 SCC 408 ¶16.
68 Thompson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., (2013) 5 SCC 397 ¶31.
69 Motiram Roshanlal Coal Co v. District Committee, Dhanbad AIR 1962 Pat 357; B Somaiah v. Amina Begum
AIR 1976 AP 182.
70 Kaka Singh v. Rohi Singh AIR 1978 P&H 30; Narayan Chandra v. Matri Bhandar AIR 1974 Cal 358.
71 Syndicate Bank v. Official Liquodator, AIR 1999 Bom. 243. Pg. 247.
72 ICICI Bank Ltd. v. Official Liquidator, MANU/TN/0013/2005.
73 ITO v. KA Govindaswamy, [1978] 113 ITR 593 (Mad.).

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IV: STALWART CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT.
It is humbly submitted before the Trib. that Stalwart cannot be considered as an assessee in
default because firstly¸ the provisions of the ITA will not be applicable & secondly, loan
advancement cannot be considered as dividend income under DTAA.
[A] THE PROVISIONS OF ITA WILL NOT BE APPLICABLE IN THE PRESENT CASE
Following the principle of generalia specialibus non derogant the provision of DTAA being
special laws74 will prevail over that of ITA.75 The SC in UOI v. Azadi Bachao Andolan76 held that
the provisions of the DTAA will apply even if they are inconsistent with the provisions of the
ITA77 otherwise there is no point in entering into a DTAA. 78 The provision of DTAA would
prevail79 over that of ITA in case of a conflict of provision and can be used either to reduce or
avoid tax liability.80 The definition of ‘dividend’ is restrictive in the DTAA whereas in the ITA it
is broader in its content and is less beneficial 81. Therefore the definition of ‘dividend’ in DTAA
will be applicable by virtue of §90 of ITA.82 Thus Art. 10 will prevail over §2(22)(e).83
74 D.P. MITTAL, INDIAN DOUBLE TAXATION ARGEEMENTS & TAX LAWS 150 (7th ed. 2014).
75 UOI v. India Fisheries (P.) Ltd., [1965] 57 ITR 331 (SC) ¶7.
76 UOI v. Azadi Bachao Andolan, [2003] 263 ITR 706 (SC); CIT v. Muthaiah, [1993] 202 ITR 508 (Kar.) ¶8.
77 CIT v. Visakhapatnam Port Trust, [1983] 144 ITR 146 (AP) ¶38.
78 CIT v. Davy Ashmore India Ltd., [1991] 190 ITR 626 (Cal.) ¶8.
79 Circular No. 333, CBDT, dated 2-4-1982.
80 CIT v. P.V.A.L Kulandagan Chettiar, [2004] 137 Taxman 460 (SC) ¶5.
81 CIT v. Estienne Andre, [2000] 242 ITR. 422 (Bom.) ¶3; Arabian Express Line Newspaper Ltd. of UK v. UOI,
[1995] 212 ITR. 31 (Guj.) ¶7.
82 CIT v. Samsung Electronics Co. Ltd., [2012] 345 ITR. 494 (Kar.) ¶16.
83 Shri. Rajiv Makhija v. Dy. Director of Income Tax.,ITA No.3148/Del/2008 ¶ 4.

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[B] THE LOAN ADVANCEMENT IS NOT A DIVIDEND UNDER ART. 10 OF THE DTAA
The words employed in the treaty are to be given a general meaning. 84 For interpretation of tax
treaties the ordinary meaning of the words should be looked into coupled with the object &
purpose.85 Dividend under DTAA means86 firstly, income from shares & secondly, income from
other corporate rights.
[a] The loan advancement is not income from shares or other corporate rights
The notion of dividends basically concerns with participation on the distribution of profits to the
shareholder87 decided by annual general meetings of the shareholders.88 Dividends are income
from capital which they have made available to the company as shareholders.89
Income from other rights provides that dividends broadly and flexibly cover all the arrangements
that yield a return on equity investment90 and participation in the distribution of profits is the
basic requirement, whatever nomenclature assigned.91
On the contrary a loan is coupled with an act of lending, payment of interest 92 and an obligation
of repayment93 and thus is not a return on the equity investment or income from capital invested
by the shareholder.
84 CIT v. Boston Consulting Group Pte. Ltd., [2005] 94 ITD 31 (Mum.).
85 New Skies Satellites N.V. v. Asstt. DIT, [2009] 121 ITD 1 (Del.) (SB) ¶207.
86 Executive Engineer & Anr. v. Shri Seetaram Rice Mills, 2011 Indlaw SC 822, ¶32.
87 OECD, Commentary on Model Tax Convention, 2014, Art. 10, ¶26.
88 Supra note 11 at 705.
89 Supra note 24 at ¶2.
91 Supra note 11 at 702.
92 Uco Bank v. Service Tax, 2014 SCC OnLine CESTAT 3770 ¶ 12.
93 Commissioner of Income Tax v. Raj Kumar [2009] 181 Taxmann 155 (Del.) ¶ 10.5.

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Nowhere deemed dividend has been brought into tax net under Art. 10 and the amount of loan
paid cannot be treated as a dividend paid as defined in Art. 10 of the treaty.94
The Apex Court has held that the assessee is bound to deduct TAS for income chargeable in the
hands of the non-resident.95 By the authoritative judgment of the court, the said loan
advancement not being a dividend income in the hands of Galielo is not subject to TDS by
Stalwart and hence cannot be treated as an assessee in default for the same.
V: STALWART IS NOT LIABLE TO PAY VAT & CST IN KARNATAKA
[¶33] It is humbly submitted that Stalwart is not liable to discharge sales tax liabilities in
Karnataka. Firstly, they are only service provider and not dealer. Secondly, the situs of sale for
the sales made under the marketplace model is at Tamil Nadu & not Karnataka.
A.STALWART IS ONLY A SERVICE PROVIDER AND NOT A DEALER
[¶34] Dealer is a person who is involved in the business of selling, supplying and distributing of
goods.96 Service means any activity carried out by a person for another except transfer in the title
of goods, delivery & supply or deemed sale within Article 366(29-A) of the Constitution.97
[a] Stalwart is not involved in selling, supplying or distributing goods
95 G.E. Technology Centre (P.) Ltd. v. CIT, [2010] 327 ITR 456 (SC) ¶ 7.
96 §2(12), KVATA, 2003, No. 32 of 2004.
97 §65B(44), Finance Act 1994,No. 32 of 1994.

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[¶35] Delivery means voluntary transfer of possession from one person to another.98 Supply is the
delivery of the goods as delivered by the seller or notification that they are available for delivery
if they are to be collected by the buyer.99
It is humbly submitted that Stalwart never had possession or control100 of the goods as they were
delivered by the suppliers upon the receiving the orders from the customers.
[b] Stalwart is not liable to pay sales tax for the services rendered
[¶36] A person canvassing orders for another dealer and causing sale of goods directly to third
parties does not become 'seller' himself and cannot be made liable to sales-tax. 101 Where an
assessee was acting as a selling platform where sellers were bringing goods and buyers were
buying goods was considered to be a service provider. 102 If a person merely acts as an agent and
the property in the goods do not pass onto him then that person shall not be liable to pay sales
tax.103 A person involved in collection of payment from the customers is not a dealer since he is
not involved in sale of goods, but is merely providing service.104
A registered dealer or a dealer liable to be registered is liable to pay tax. 105 Stalwart was a mere
facilitator in the marketplace model.106
98 §2(22), Sale of goods Act, 1930.
99 Rees v. Munday (1974) 3 All ER 506, 509.
100 Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya, (1972) 4 SCC 600 ¶ 6.
101 CCT v. N.K. Poduval & Co., [2014] 42 taxmann.com 49 (Ker.) ¶ 3.
102 CCE v. Salem Starch [2013] 39 taxmann.com 69 (Mad.) ¶ 16.
103 Pench Valley v. State of MP, (1973) 31 S.T.C. 64 (M.P.).
104 CTO v. Coal & Coke Supplies Corpn., (2007) 8 VST 699.
105 §4, KVATA,2003, No. 32 of 2004.
106 Sharad Moudgal, 100% FDI Permitted in B2C E-Commerce Marketplaces (2016) PL (CL) May 71.

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[¶37] The primary liability to pay the sales tax so far as the State is concerned is on the seller 107.
The assessment of sales tax must be on the sale of goods. 108 In the present case Stalwart is
working as a mere facilitator and only providing a service for which Stalwart is discharging
service tax and not liable to pay VAT and CST.
B.THE IMPUGNED SALES TAX WILL NOT BE PAYABLE IN KARNATAKA
[¶38] The location or delivery of goods within the state cannot be made basis for levy of tax on
sales of goods merely because the goods are located or delivery of which had been effected
within the state would not be situs of sale or deemed sale if the transfer of right to use has taken
place in another state109 and the right to use of goods will be transferred when the parties enter
into a formal contract irrespective of place where the goods are located or delivered110.
The contract for sale was entered into by the actual seller and actual buyer through the online
portal situated in chennai. Hence even if there is sales tax chargeable it is in Chennai and not in
Karnataka.
107 Tata Iron and Steel co. v. State of Bihar, AIR 1958 S.C. 452.¶ 17
108 Haleema Zubair v. State of Kerala, (2008) 16 S.C.C. 504 ¶ 9.
109 Sandan Vikas (India) ltd. v. State of Haryana [2013] 40 taxmann.com 672 (P & H.).
110 20th Century Finance Corpn. Ltd. v. State of Maharashtra, (2000) 6 S.C.C. 12 ¶ 25.

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PRAYER<
Wherefore, in the light of the facts presented, issues raised, argument advanced and authorities
cited, it is most humbly prayed before the learned Tribunal that it may be pleased to adjudge and
declare that:
1. The main winding up petition and all the impleading petitions are not maintainable before
NCLT.
2. The Company Stalwart is not liable to wind up under section 433(e) and also 433(f).
3. The said loan advancement is not an income thus Stalwart is not an assessee in default.
4. Stalwart is not a dealer and thus is not liable to pay sales tax in Karnataka.
The Hon’ble Court may be pleased to pass any other order as it deems fit in the interest of
Justice, Equity and Good Conscience.
For this act of Kindness, the Petitioner shall duty bound forever pray.
Place: Bangaluru, Karnataka Sd/-
Dated: 31st December, 2016 (Counsel for the Petitioner)

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I

15TH SURANA & SURANA NATIONAL CORPORATE MOOT COURT COMPETITION,

THE NATIONAL COMPANY LAW TRIBUNAL, BANGALURU

Company Application (CA) 1 of 2017

Company Application (CA) 2 of 2017

Company Application (CA) 3 of 2017

Company Petition (CP) 10 of 2017

IN THE CASE CONCERNING WINDING UP PETITION

GLOBAL OFFICE SUPPLIERS PVT. LTD, BENGALURU (PETITIONER)

SHAREHOLDERS OF STALWART ONLINE STORES PVT LTD (PETITIONER)

ADDITIONAL COMMISSIONER OF INCOME-TAX, BENGALURU (PETITIONER)

DEPUTY COMMISSIONER OF COMMERCIAL TAX, BENGALURU (PETITIONER)

STALWART ONLINE STORES PVT LTD, BENGALURU (RESPONDENT)

MEMORIAL FROM THE SIDE OF RESPONDENT

[ISSUE I] THE WINDING UP PETITION AND IMPLEADING PETITION ARE NOT

ADMISSIBLE IN NATIONAL COMPANY LAW

A. The winding up petition is not admissible.

[a] Petition filed u/s 433(e) should be dismissed.

[b] Petition filed u/s 433(f) should be dismissed.

B. Alternate remedies are not exhausted.

[a] Pendency of civil suit.

[b] The matter is to be adjudicated in arbitration.

[c] The 26% Shareholders Approached the Tribunal Directly.

THE COMPANIES ACT,

A. The Company is not liable to be wound up under section 433(e).

B. The Company is not liable to be wound up under section 433(f).

MEMORIAL ON BEHALF OF RESPONDENT

A. The TD’s are neither necessary nor proper party.

B. Tax claims cannot be paid at par with secured creditors.

[ISSUE IV] STALWART CANNOT BE CONSIDERED AN ASSESSEE IN DEFAULT.

A. The provisions of ITA will not be applicable in the present case.

[ISSUE V] Stalwart is not liable to pay sales tax in Karnataka.

A. Stalwart is only a service provider and not a dealer.

[a] Stalwart is not involved in selling, supplying or distributing goods.

B. The impugned sales tax will not be payable in Karnataka

MEMORIAL ON BEHALF OF RESPONDENT

THE INDEX OF AUTHORITIES

SUPREME COURT CASES

NO. CAUSE TITLE REF.

MEMORIAL ON BEHALF OF RESPONDENT

HIGH COURT AND TRIBUNALS

21 Allahabad Bank v. Kothari Petrochemicals Ltd.; 2003 SCC OnLine

MEMORIAL ON BEHALF OF RESPONDENT

MEMORIAL ON BEHALF OF RESPONDENT

1) Arbitration and Conciliation Act, No. 26 of 1996.

2) Finance Act, No. 32 of 1994.

MEMORIAL ON BEHALF OF RESPONDENT

4) Income Tax Act, No. 43 of 1961.

5) Indian Contract Act, No. 9 of 1872.

6) Karnataka Value Added Tax Act, 2003, No. 32 of 2004.

7) The Central Sales Tax Act, No. 74 of 1956.

8) The Companies Act, No. 18 of 2013.

9) The Companies Act, No. 1 of 1956.

10) The Civil Procedure Code, No. 5 of 1908.

TREATIES AND CONVENTIONS

MEMORIAL ON BEHALF OF RESPONDENT

3. Vinod Kothari, FINALLY, SOME EXEMPTIONS TO PVT. COMPANIES,