TaxTMI 
TaxTMI 
1988 (9) TMI 362
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....uch outstanding as may remain unpaid. These documents were renewed on 29th June, 1985. At the time of renewal, the petitioner Bank bad executed on 29th June, 1985, confirmation letter acknowledging and admitting the balance as on 29th June, 1985, for a sum of Rs. 9,07,843.18 in favour of the petitioner Bank. By this letter, the respondent Mills also admitted as having given by way of hypothecation securities in respect of the properties as mentioned in Schedule A, to the said letter. There was also a letter of hypothecation by which the non-petitioner Mills agreed to hypothecate the goods and the movable property mentioned in the Schedule for the purpose of securing payment of any outstanding that may remain due and payable by it in favour of the petitioner Bank in the cash credit account. It is further stated by the Bank that as per the account books a debit balance of Rs. 6,19,854.34 remained outstanding against the respondent Company as on 1st January, 1986. Apart from the cash credit account, which the non-petitioner Company opened at Bhilwara Branch, it also applied for establishing letters of credit account at Singapore with one M/s Ringler PTE Limited, Suit 15D, Stamford Hou....
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.... Company, thus became entitled to receive the delivery from the shipping company at Bombay Port of the imported material. The case of the petitioner Bank is that it became entitled to receive the payment on the expiry of 180 days of the bill of exchange It is contended by the petitioner in the petition that this amount has not been paid to it. and on calculation in the Indian currency, the amount payable to the Bank as on 8th October, 1985, came to Rs. 4,91,900/-, excluding interest The petitioner Bank has further contended that the non-petitioner Company further requested for opening another letter of credit account with Ringler PTE (for short Ringler) as beneficiary. Respondents Nos. 2 and 3, who are Managing Director and Director of the respondent Company, respectively renewed their personal guarantee on 29th June, 1985, whereby they agreed and undertook to save the Bank harmless and keep it indemnified from and against all claims, demands, damages, losses, etc. It is further pleaded by the petitioner Bank that the non-petitioner Company and its directors played serious fraud on the petitioner Bank by not intimating the Bank of non-receipt of the goods covered by the said letter....
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....e non-petitioner Company. On the basis of the indemnity bond and the surety bond the non-petitioner Company managed to get delivery orders from the Shipping Company without production of the documents relating to the goods covered by the second letter of credit. It is also pleaded by the petitioner Bank that there was complicity of the Shipping Company and the non-petitioner Co. as the Shipping Company did not take any steps for ensuring deliveries as the obvious intention appears to be to mislead and to cheat the petitioner Bank. It is, thus, submitted by the petitioner Bank that the petitioner Bank is entitled to recover from the non-petitioner Company a sum of Rs. 16,19,155/-along with other sums and interest etc. The petitioner Bank has also mentioned that the Shipping Company has filed a suit against the petitioner Bank on the basis of the guarantees given by the Bank for a sum of Rs. 14,27,152.55 The petitioner Bank has served notice on the non-petitioner Company on 3rd January, 1986, demanding the payment as mentioned above and summarised as follows: (1) In cash credit account ....
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.... on 18th March, 1985. The drafts for payment of 85,476 Singapore Dollars were accepted by the non-petitioner because the documents were seemingly in order and the same had been negotiated. It is further pleaded that the normal period of ship coming from Singapore to Bombay is 15 days and the schedule of arrival of Thaistar was given as 8th April, 1985. The non-petitioner Company was in constant touch with the Crystel Shipping Company, Bombay and despite all efforts, it could not locate the vessel Thaistar. It was in these circumstances, it had categorically instructed the petitioner Bank that no payment will be made to Ringler against the L.C. No. 8/85. Despite this notice, dated 2nd August, 1985, which was received by the petitioner on 12th August, 1985, the payment was made even before the acceptance of bills, the due date of which was 14th September, 1985. It is also asserted by the petitioner Bank that the Branch of the UCO Bank at Singapore committed breach of the conditions of letter of credit and the petitioner is only trying to protect the wrong action of its branch at Singapore. It was, therefore, despite the injunction order of the High Court at Singapore, the UCO Bank at....
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....inancial assistance to M/s Jagatia Paper Mills Pvt. Ltd. and its outstanding claim comes to Rs. 59,70,326/- Non-petitioner No. 5 has opposed the winding up petition and has asserted that the petitioner Bank can recover its debt through movable assets given in security as also from the guarantors of their loan by filing a regular suit against them. Non-petitioner No. 6 has also opposed the winding-tip petition. Non-petitioner No. 6 has also taken the same defence as has been taken up by non-petitioner No. 5 by contending that non-petitioner No. 6 has jointly with non-petitioner No 5 guaranteed secured financial assistance to the non-petitioner Company and the dues against the non-petitioner No. 6 as on 1st April, 1986 was of Rs. 49,61,45/-. Non-petitioner No. 5 has also pointed out that as secured creditors with non-petitioner No. 5, they are entitled to realise their dues by selling the assets of the Company forming security of their loans independent of the winding up proceeding in terms of Section 529 of the Companies Act, 1956 7. On behalf of non-petitioner No. 4, Shri B. P. Agrawal appeared and on 29th August, 1988, he raised an objection that respondent No. 4 has wrongly be....
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....oods against payment and, Shri Garg appearing on behalf of the petitioner submitted that the petitioner Bank has delivered the entire goods which were in its possession. This dispute continued between the parties. Ultimately, arguments were heard on 29th April, 1988, 6th May, 1988 and 19th August, 1988 and on that day after conclusion of the arguments, order was reserved. 8. Shri C.K. Garg, appearing on behalf of the petitioner Bank, has submitted that on account of various liabilities pointed out in the winding up petition, it is evident that the non-petitioner Company has failed to make the payment and substantial amount is outstanding against the non-petitioner Company which had failed to make payment inspite of statutory notice under Section 434 of the Companies Act, 1956 and, thus, the Company is commercially insolvent and is liable to be wound up. In order to support his contention, Shri Garg has placed reliance on Syndicate Bank v. Southern Oils and Extractors Ltd 1985, 57 Comp. Case 8; Paramount Enterprises v. In Re. (1985) 57 Comp Case 200; Universal Glass Ltd. v. Meerut Bottlers Pvt. Ltd (1985) 58 Comp Case 68. Anil Vasudev Salgaonkar v. Kermeen Foods P. Ltd. (1985) 58....
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....p petition, I am required to consider whether the debt is bonafide disputed by the non-petitioner Company and that the defence raised by it is of a substantial character. It is not disputed in this case, that the Company is a running concern and the secured creditors are not opposing the winding up petition. It is also clear from the record that the non-petitioner Company is trying its best to liquidate the claim as would be evident from the fact that various FDR's have been put at the disposal of the Bank for encashing the same and the Company has clearly expressed that the goods pledged/hypothecated be sold and the money realised may be adjusted against any liability outstanding against the Company. Thus, in respect of claim No. 1 i.e. cash credit account. I am of the view that the petitioner Bank is in a position to liquidate the debt which it claims against the non-petitioner Company and the defence, thus, raised in this regard cannot be said to be malafide. rather, I am of the opinion that the defence is bonafide and is of a substantial character. 10. As regards claim under two letters of credit, I am of the opinion that the defence raised by the non-petitioner Company ....