Ruma Pal, J. - (1.) -This is an application for winding up M/s. Associated Forest Product (P) Ltd. (referred to as the Company) on the ground that the company is commercially insolvent.
(2.) The undisputed facts are: The petitioning Creditor (which is a company carrying on business in Singapore) entered into an agreement with the company on 12th August, 1986 by which the petitioning creditor agreed to supply and the company agreed to purchase Sawn Timber Balau (referred to as the goods) from Malayasia at the agreed price of U.S. $ 94,875.47. On 2nd October 1986 the goods arrived at Calcutta from Malayasia by ship and were taken delivery of by the company. Three bills were raised in respect of the goods by the petitioning creditor on the company. At the request of the company the petitioning creditor agreed to give a discount on the price for the goods so that the total amount payable by the company to the petitioning creditor was U.S. $ 87,503.37. The company however, did not make any payment of any amount in respect of the goods to the petitioning creditor. Upon a demand being made on the company, the company sent a telex on 7th January 1988 stating that there had been discussions with the petitioning creditor that the bills would be paid by installments upon receipt of permission from the Reserve Bank of India. It was also stated that the company had applied to the Reserve Bank of India for the required approval, but till the date of the sending of the telex no such permission had been given. It was further stated that the local laws did not permit the bank to credit a foreigner's account and as such the money could not be deposited in the bank to the credit of the petitioning creditor without the permission of the Reserve Bank of India. It was also stated that the bills were due for over 15 months, but that it was beyond the company's control. It was also proposed by the company that the petitioning creditor should accept payments by installments and should authorise the bank to accept and remit payment of the bills in part/installments subject to the Reserve Bank of India's approval. It was also stated that there would not be any obligation on the part of the Bank to remit the amount unless the necessary Reserve Bank of India's approval was received. It was noted that for period the money was so held by the Bank, no interest would be paid. Therefore, to safeguard the interest of the petitioning creditor, the company was also applying to the Reserve Bank of India to pay the interest on the amount payable. It was finally stated that a photocopy of the letter would be forwarded to the petitioning creditor by post.
(3.) On 23rd June, 1988 a memorandum of understanding was entered into between the, company and the petitioning creditor. The company was represented by P. Saraf. Director and the petitioning creditor by its General Manager/Director. The terms and conditions of the document dated 23rd June, 1988 read as follows (the petitioning creditor being referred to as 'KTS' and the company being referred to as 'AFP'):- "(1) that AFP will settle the total outstanding amount of US $ 87,503.37 by progressive monthly installments before 31st December, 1988. (2) ABP has already made the first installment of Indian Rupees 1,00,000/- on 16th June 1988 and Canara Bank will get the approval from the Reserve Bank of India to remit the same to K.T.S. (3) AFP shall, without fail, effect the installments to Canara Bank regardless approval from the Reserve Bank of India has been granted or not, for account of K.T.S. (4) K.T.S. will instruct Standard Chartered Bank, Singapore to instruct Canara Bank to accept the installments from A.F.P.";