TATA DAVY LTD Vs. STEEL STRIPS LTD

JUDGEMENT

(1.) This is a creditor's petition filed under Sections 433, 434 and 439 of the Companies Act, 1956 (hereinafter called 'the Act') for the winding up of Steel Strips Limited, a public limited company incorporated under the provisions of the Act with its registered and head office at SCO 49-50, Sector 26, Madhya Marg, Chandigarh (for short, 'the Company') on the ground that it is unable to pay its debts.

(2.) The Company gave two contracts to Davy Ashmore India Limited which was taken over by the petitioner herein, for detailed engineering and consultancy services and also for the supply of equipments and initial spare parts for the project of Bar and Section Rolling Mill Complex at village Rampur Banjaran, District Sirmour (HP). The first order that was placed on the petitioner on 3/03/1987 was for detailed engineering and consultancy services for the project of Bar and Section Rolling Mill Complex valuing Rs. 45 lacs (hereinafter called 'the first contract'). Another order was placed on 4/03/1987 for the supply of equipment and initial spare parts for the Bar and Section Mill valuing Rs. 2,93,50,000/(referred to hereinafter as 'the second contract'). Rs.284,5 lacs was the contract price and the spare parts to be supplied were worth Rs. 9 lacs. The scope of work under the first contract was to cover (a) rendering detailed engineering and consultancy services for the aforesaid project as per the details mentioned in the order and (b) supervision of erection and commissioning at site of the mechanical equipment for the Bar and Section Mill Project. It may be mentioned that a mini steel plant was being set up by the company at its works in village Ram Banjaran District Sirmour (HP). The time schedule for the completion of the project was to be furnished by the petitioner within two months from the date of the order and that was to extend over a period of 18 months from the date of the order and all possible efforts were to be made to commission the project by 30/09/1988. Under the second contract the petitioner was to supply mechanical and other equipment as per the details mentioned therein. The complete equipment was required to be delivered progressively within 15 months from the date of the order and the company was entitled to recover liquidated damages from the petitioner for failure to deliver the goods within the above said period or within such extensions subsequently agreed to. In clause 7 of the second contract liquidated damages were ascertained to be 0.25% of the contract price for each completed week of delay subject to a maximum of 7.5% of the contract value. As per the terms and conditions of the contract, the company was to release stagewise payments as per the work carried out by the petitioner. It is not in dispute that the work at site was finally completed in September, 1989 though according to the Company it was not as per the specifications agreed to between the parties and undertaken by the petitioner.

(3.) According to the averments made in the petition, the petitioner claimed an extra sum of Rs. 6.71 lacs on account of the over stay of its engineers in terms of clause 15 of the first contract and, therefore, the total amount payable to the petitioner under the first contract came to Rs. 45 lacs + Rs. 6.71 lacs = Rs. 51.71 lacs. It is admitted by the petitioner that a sum of Rs. 40.5 lacs was paid to it under this contract. Thus, according to the petitioner a sum of Rs. 11.21 lacs still remains to be paid under the first contract. It is alleged that under the second contract total goods supplied by the petitioner to the company were worth Rs. 2,96,06,690.00 whereas it has received only an amount of Rupees 2,54,47,276.45 ps. The petitioner claims that a sum of Rs. 41,59,413.00 is due to it under the second contract which represents about 15% of the total price of the goods supplied, It is further stated in the petition that after the work was completed in September, 1989 the petitioner made several requests to the company for the release of its pending payments the details of which have been mentioned by the petitioner in para 7 of the petition. According to the petitioner the company failed to release the balance payment due to it and consequently a statutory notice under Sections 433 and 434 of the Act was sent to the Company for the release of the pending amounts. Despite the notice the Company failed and neglected to make the payment and it is alleged that the company raised frivolous counter claims against the petitioner which were never brought to the notice of the petitioner during the execution of the contracts. The total amount claimed by the petitioner from the company under both the contracts comes to Rs. 52,80,413.00. Hence, the present petition for the winding up of the company on the ground that it has failed / neglected to meet its admitted liability.