P.C.JAIN, J. - (1.) THIS is a petition for winding up of the non -petitioner Company -M/s Jagatia Paper Mills Pvt. Ltd, filed by the UCO Bank.
(2.) BRIEFLY stated, the facts of the case are that the petitioner - -UCO Bank is a nationalised Bank and the non -petitioner Jagatia Paper Mills Pvt. Ltd., is a Company incorporated under the provisions of the Companies Act, 1956 (here in after referred to as the non -petitioner Company). The non -petitioner Company entered into a banking transaction with the Branches of the petitioner Bank at Bhilwara, Jauhari Bazar, Jaipur and Singapore and the Divisional Office at Jaipur. The non -petitioner Company requested the petitioner Bank for giving cash credit facility to it at Bhilwara Branch in the year 1983. This facility was sanctioned in the sum of Rs. 6 lacs. The non -petitioner accordingly executed necessary documents by way of security and collateral security for the purpose of payment of such 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 House; 39, Stamford Road, Singapore 0617, as beneficiaries for the purpose of importing waste paper from Singapore with Ringler PTE Limited as Exporter Two letters of credit were established on the applications having been moved by the non -petitioner Company. One such application was moved by the non -petitioner Company on 22nd February, 1985, by which the non -petitioner Company requested the Bhilwara Beanch to arrange for establishing the letter of credit account, inter alia, with the following conditions: 8.1 Valid for final settlement March 31, 1985, 8.2 Negotiation until April 15, 1985, 8.3 Available by draft at 180 days from the date of Bill of Landing/ sight drawn at the said Mills for 100 percent of Invoice cost, which was supposed to be accompanied by certain documents including the bill of lading. The Bhilwara Branch forwarded the request vide letter dated 22nd February, 1985, to Jauhari Bazar Branch requesting for a letter of credit to be opened in favour of M/s Ringler PTE Limited, Singapore in the sum of Singapore Dollers 87,000. After receving the intimation the from Jauhari Bazar Jaipur Branch, the petitioner Bank at Bhilwara established a letter of credit a Singapore No. RPER/8/85 dated 26th February, 1985 for 85,500 Singapore Dollars (C&R; Bombay). The respondent Company submitted certain documents including the bill of lading and bill of exchange and invoice along with certain other documents, the details of which have been given in the petition and are marked as Annexures 9 to 14. These documents were encashed by the Singapore Branch on or about 26th March 1985 It is further the case of the petitioner Bank that the said documents were strictly in terms of credit. The said documents were there after forwarded to the Jauhari Bazar Branch. After receipt of the documents with the bill of exchange the respondent Company notified its acceptance on the face of the bill on 6th April, 1985. The acceptance was made by one Shri Gulab Chand Jagatia Managing Director of the respondent Company, on behalf of the respondent Company. By this acceptance, the amount as mentioned in the bill of exchange, namely 85,476 Singapore Dollars, were to be paid on the expiry of 180 days from the date of the bill of lading by the respondent company in the Indian currency at the exchange rate prevailing on that date along with charges and interest. The non -petitioner 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 of credit for which bill of exchange (Annx. 9) bill of lading (Annx. 10) and invoice (Annx. 11) had been received by the Jauhari Bazar Branch and which had been made over to the respondent Company and the respondent Company had given its acceptance by signing on the face of the bill of exchange (Annx. 9). The claim of non -arrival was absolutely based either on a conspiracy hatched between the respondent Company and the Ringler without informing about the non delivery or non -arrival of the goods. Another letter of credit was obtained in the sum of Singapore Dollar 1,97,100 requesting another letter of credit was made by the non -petitioner Company on 19th March, 1985 and in pursuance thereof, the letter of credit was established on 4th June, 1985, with Ringler as beneficiary. The non -petitioner Company failed to make payment of bill of exchange on the expiry of 180 days from the date of bill of lading, which was due on 14fh September, 1985 and the petitioner Bank, thus, claims a Rs. 4.91.900/ -. It may further be mentioned here that the petitioner Bank has also pleaded that under the second letter of credit, the non -petitioner Company wrote a letter on 18th July, 1985 informing the Bhilwara Branch of the petitioner Bank that the goods relating to the second letter of Credit are likely to reach Bombay on 10th July, 1985. The respondent Company also informed the Bhilwara Branch that the documents had not been received by the Jauhari Bazar Branch till the date of writing the letter dated 18th July, 1985 and therefore, in order to save demurrage of Rs. 15,000/ - per day, a Bank guarantee be given by the Bhilwara Branch in order to facilitate the delivery of the imported goods covered by the second letter of credit from the Shipping Company. Along with the letter the respondent Company produced a number of documents, which included invoice, packing list etc. A letter from respondent No 4 Samarth Shipping and Marine Company (Private) Ltd., Bombay was also enclosed, whereby respondent No. 4 informed the respondent Company that the goods were likely to arrive by 10th July, 1985. All these led the Manager, Bhilwara Branch to believe that the request of the non -petitioner Company was genuine and, therefore, on the basis of a counter -guarantee given by the non -petitioner Company on 18th July, 1985, executed a deed of surety on the back of the Indemnity Bond executed by the 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 Rs. 6,19,854.34/ -(2) In First letter of Credit A/c Rs. 5,13,325.11/ -(3) In 2nd Letter of Credit A/c Rs. 16,19,155 00/ -____________________Rs. 27,52,334.45/ -
(3.) IT is, thus, submitted by the Bank that the non -petitioner Company is unable to pay its debt within the meaning of Section 434 of the Companies Act and, therefore, it is liable to be wound up. The petitioner Bank has also stated that the non -petitioner Company has lost complete substratum of its business and, there fore, also it is liable to be wound up.;