- (1.) THIS is an application for winding up 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 August 12, 1986, by which the petitioning creditor agreed to supply and the company agreed to purchase sawn timber balau referred to as ("the goods") from Malaysia at the agreed price of U.S. dollars 94,875.47. On October 2, 1986, the goods arrived at Calcutta from Malaysia 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. dollars 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 January 7, 1988, stating that there had been discussions with the petitioning creditor that the bills would be paid by instalments 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 instalments and should authorise the bank to accept and remit payment of the bills in part/instalments '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 the 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 June 25, 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 June 23, 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 dollars 87,503.37 by progressive monthly instalments before December 31, 1988. (2) AFP has already made the first instalment of Indian Rupees 1,00,000 on June 16,1988, and the Canara Bank will get the approval from the Reserve Bank of India to remit the same to KTS. (3) AFP shall, without fail, effect the instalments to the Canara Bank regardless of whether approval from the Reserve Bank of India has been granted or not, for the account of KTS. (4) KTS will instruct Standard Chartered Bank, Singapore, to instruct Canara Bank to accept the instalments from AFP." No payment was, however, made pursuant to the memorandum of understanding by the company to the petitioning creditor.;