YEHUDHA SILBERBERG LTD Vs. PREMIER POLY WEAVES LTD

JUDGEMENT

(1.) The Appellant's petition for winding up under Section 433(1) of the Companies Act was dismissed and therefore, this appeal has been filed.

(2.) The Appellant is a Company incorporated in Israel and dealing interalia in home textiles. The Respondent is a Company registered under the Companies Act and deals interalia in cotton fabrics. In the year 2001, there was a transaction between the Appellant and the Respondent. The Respondent instituted legal proceedings against the Appellant for amounts due on supply of goods. The Appellant filed a counter-claim for damages for supplying defective fabrics.

(3.) By a judgment dated 04-05-2005, the Magistrate Court in Israel allowed the counterclaim of the Appellant and rejected the claim of the Respondent. This amount awarded by the Israel Court works out to approximately US$ 342, 623.11 as on 18-07-2006(Rs. 1,38,76,235/-). The Appellant issued a notice dated 18-07-2006 under Section 433(2) read with Section 434 of the Companies Act. The Respondent denied its liability to pay, questioning the demand made based on the Israelie Court's adjudication. Since there was no postive response to this notice, the Appellant filed a petition for winding up alleging that the Respondent is unable to discharge it debts because of mismanagement and defalcation and since it is unable to meet its admitted liabilities it must be insolvent. The Respondent in its counter specifically denied the allegation regarding mismanagement and according to them, the company's financial position is very healthy. They denied that they had supplied defective quality fabrics. If the Appellant had been genuinely dissatisfied they would have made the claim earlier. The counter claim was filed only to resist the claim of the Respondent and as a counter blast. According to the Respondent, Israel is not a reciprocating country and the provisions of Section 13 and Section 44(A) of Code of Code of Civil Procedure must be complied with. According to them, the Appellant cannot straightaway file a petition for winding up based on the Israeli judgment. The learned Single Judge accepted the ground raised by the Respondent with reference to Section 13(1)(c) and Section 44A and further was of the opinion that on a perusal of the balance sheet of the Respondent it was clear that the Respondent was a going company and there was no justification for ordering winding up.