GKW LIMITED Vs. NEPC INDIA LIMITED

JUDGEMENT

(1.) THIS appeal had arisen out of the order in C.P. No. 372 of 1997 on the file of the original side of this Court. The appellant is the petitioner in C.P. No. 372 of 1997, which was filed under Section 433(e) and (f) and 434 of the Companies Act 1956, to wind up the the respondent -company NEPC India Limited, 36, Wallaja Road, Chennai.

(2.) ACCORDING to the appellant/petitioner the share capital of the respondent is Rs. 20 crores divided into 2 crores equity shares of Rs. 10/ - each and the issued share capital of the respondent is Rs. 16,19,37,000/ - divided into 1,61,93,700 equity shares of Rs. 10/ - each. The objects of the respondent are to generate, accumulate, distribute, supply electricity and other power for the purpose of light, heat, motive power and for all other purposes for which electricity and other energy can be employed. As per the purchase order dated 18.02.1994, the respondent placed an order upon the petitioner for certain quantities of fasteners. Between the period February 1994 and February 1996, the petitioner supplied the fasteners as ordered by the respondent and raised invoices in respect thereof, aggregating to Rs. 1,30,95,769.21. The said fasteners were delivered to the respondent in good condition and they have also received the same, but have paid a sum of Rs. 59,78,080.72 leaving a balance of Rs. 71,17,688.49. The said balance amount has been acknowledged by the respondent through their letter dated 13.08.1996. Inspite of repeated letters, the respondents were delaying the payments to clear the outstanding. After a long delay, the respondents issued two cheques bearing No. 953877 and No. 953878 drawn on Canara Bank dated 29.5.1996 for Rs. 5,00,000/ - each. Both the cheques, on presentation were dishonoured by the Bank on 5.6.1996 with an endorsement 'insufficient funds', and debiting an amount of Rs. 1,300/ - from the petitioner's account towards Bank charges. As a gesture of goodwill the petitioner had handed over the above said two dishonoured cheques to the respondent -company, without resorting to criminal action under Section 138 of the Negotiable Instruments Act. The petitioner had once again raminded through various letters informing the respondent -company to discharge the outstanding debt of Rs. 71,17,688.49. Petitioner issued notice dated 26.07.1997 calling upon the respondent to pay a sum of Rs. 71,17,688.49 along with interest at the rate of 24% pa. The said notice was statutory notice contemplated under Section 433 and 434 of the Companies Act, 1956. In their letter dated 13.8.1997, the respondent has admitted its liability and informed that it was facing a liquidity crisis and undertook to clear off the debts within a period of one month. Even thereafter, the respondent has failed to discharge the admitted debt with interest. Hence, the petitioner submits that the respondent is unable to pay its debts and is deemed to be unable to pay its debts within the meaning of Section 434 of the Companies Act, 1956 and the respondent company is liable to be wound up. The respondent -company is commercially insolvent and unable to pay its debts and on that ground also it is just and equitable that the respondent -company is liable to be wound up. The petitioner has also prayed for an interim order of injunction against the respondent restraining him from disposing of, alienating, encumbering, parting with possession of or creating any third party rights on or its assets and properties. Hence, the petition to wind up the respondent -company under the Companies Act and also to appoint a Liquidator to take charge of the assets, affairs, books of accounts, records, documents, papers, vouchers, bills, etc., and also for interim injunction.

(3.) THE petitioner has filed a reply statement denying the contention of the respondent in the counter.