- (1.) THIS company appeal is directed against the judgment dated May 6, 1988, of the company judge who had ordered the winding up of the appellant company.
(2.) TOWARDS the end of 1975, the Punjab State Industrial Development Corporation (hereinafter referred to as "the PSIDC") got a letter of intent from the Government of India for establishing a project in the State of Punjab for manufacturing 5,500 M. T. per annum of high tension porcelain insulators. For implementation and operation of this project, it approached the Continental Construction (Pvt) Ltd. (hereinafter called "the CCL" ). For this purpose, the parties entered into an agreement on June 6, 1977, whereby they agreed to incorporate a new company for carrying out this business. The share capital of the company was to be one crore rupees, divided into 8 lakhs equity shares of Rs. 10 each and twenty thousand preference shares of Rs. 100 each. The holding of PSIDC was to be 26 per cent, and that of CCL 25 per cent, of the total issued equity share so that the voting powers between the parties and others should be : PSIDC not less than 26 per cent. ; CCL not more than 25 per cent, and public including financial institutions 49 per cent. The balance capital requirement of the company was to be arranged by the board of directors of the company through loans. It was further agreed that the board of the company shall consist of not less than three and not more than twelve directors including ex officio directors and debenture directors, if any. The PSIDC was given the right to nominate the chairman of the company so long as it held not less than 26 per cent, of the subscribed equity capital of the company and this nomination had to be out of the directors of the company nominated by it. Clause 13 of the agreement is pertinently relevant which reads : "the parties hereto undertake to accept and abide by the conditions, if any, that may be imposed by the Central/state financial institutions and/or bank (s) while providing/agreeing to provide medium and/or long term finance to the COMPANY for the implementation of the PROJECT and SUCH conditions shall be deemed to form an integral part of this agreement and shall bind the parties as though herein specifically embodied. "
(3.) SUBSEQUENTLY, the company approached various financial institutions for financial assistance including the Industrial Finance Corporation of India (hereinafter called "the IFCI" ). By its letter dated May 14, 1979, IFCI informed that it is agreeable, in principle, to provide loan facilities subject to special terms and conditions besides its usual terms and conditions applicable to grant of financial assistance. Para 1 sets out TERMS AND CONDITIONS COMMON TO ALL FACILITIES. Sub-para A sets out "special conditions" while sub-para B sets out the other common conditions, clause 6 of which reads "psidc and CCL to give certain undertakings" which reads : "psidc and CCL shall give an undertaking to the IFCI for making arrangements satisfactory to the IFCI for meeting the shortfall, if any, in the resources of the PCL for completing the project and/or for working capital. The funds brought in to meet the shortfall in the resources of the PCL shall be in such form and manner and on such terms as may be required by the IFCI and shall not involve any charge or lien on or other interest in the assets of the PCL. ";