KITTI STEELS LIMITED Vs. SANGHI INDUSTRIES LIMITED

JUDGEMENT

(1.) IN this petition filed under Section 433 (e), 434 (1) (a) and 439 (1) (b) of the Companies Act, 1956, ('the Act', for brevity) M/s. Kitty Steels Limited, petitioner herein, seeks an order to wind up respondent company. This court ordered notice on 27. 08. 2008. After receiving notice, respondent entered appearance. Counter affidavit is filed opposing publication of petition under rule 99 of the Companies (Court) Rules, 1959, ('the Rules', for brevity ).

(2.) PETITIONER is engaged in business of constructors, fabricators, engineers, consultants and manufacturing of heavy machinery. Respondent is a company incorporated under the Act on 14. 06. 1995, with main objectives of manufacturing and marketing clinker and cement products, marketed in India and outside. Authorized share capital of respondent is Rs. 550,00,00,000/- (Rupees five hundred and fifty crore only ). It is the case of petitioner that respondent placed a purchase order dated 19. 04. 1995 with petitioner for supply of four ship loaders for bagged and bulk material of value of Rs. 11,00,00,000/- (Rupees eleven crores only ). Respondent had drawn a Hundi dated 25. 12. 1996 for an amount of Rs. 1,78,08,795/- (Rupees one crore seventy eight lakh eight thousand seven hundred and ninety five only), being 70% value of material imported by petitioner for manufacturing ship loaders. Petitioner furnishing bank guarantee for an amount of Rs. 1,10,00,000/- (Rupees one crore ten lakhs only) in favour of respondent. In February 1996, respondent invoked bank guarantee, as petitioner allegedly failed to perform the contract. Therefore, petitioner instituted suit being O. S. No. 1177 of 1997 on the file of the Court of XI Senior Civil judge, City Civil Court, Hyderabad for recovery of a sum of Rs. 2,17,82,129/- (Rupees two crore seventeen lakh eighty two thousand one hundred and twenty nine only) with interest at the rate of 12% per annum till the date of delivery and 6% per annum from the date of judgment till realization. Suit was decreed on 27. 04. 2006. As the decree was not satisfied, petitioner got issued notice under section 434 (1), calling upon respondent to pay a sum of Rs. 4,80,55,623/- (Rupees four crore eighty lakh fifty five thousand six hundred and twenty three only)which includes subsequent interest. Notice was served on respondent. They did not give reply. Petitioner alleges that as respondent failed to pay the amounts after receiving notice, it requires to be wound up. It is also mentioned that respondent preferred appeal against judgment of lower Court, but they did not obtain any stay.

(3.) RESPONDENT, in their counter, made following allegations and averments. The Company Petition is based on decree granted by the Civil Court, against which, respondent preferred appeal in C. C. C. A. No. 223 of 2006 and therefore, company Petition for winding up is not maintainable. Legal enforceability of debt and of decree cannot be determined simultaneously in Company Petition in order to avoid conflict of findings that may be recorded in appeal. The allegation that respondent did not give reply to petitioner's notice is denied stating that reply was given thereto. It is further alleged that petitioner is aware of pendency of appeal, being C. C. C. A. No. 223 of 2006. Respondent's paid up capital is Rs. 304. 82 crores and its turn over, as per its 21st Annual Report for 2007 - 2008 and fixed assets, are valued at Rs. 931. 08 crores and 1,674. 53 crores respectively. Therefore, for non-payment of disputed debt of 2. 17 crore, company cannot be wound up.