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Issues Involved:
1. Whether the non-petitioner company is unable to pay its debts under Section 434 of the Companies Act, 1956. 2. Whether the debt claimed by the petitioner bank is bona fide disputed. 3. Whether the petition for winding up is vexatious and intended to exert undue pressure on the non-petitioner company. 4. The status and implications of pending suits in Singapore and Bombay High Courts. Detailed Analysis: Issue 1: Whether the non-petitioner company is unable to pay its debts under Section 434 of the Companies Act, 1956. The petitioner bank argued that the non-petitioner company had failed to make payments amounting to Rs. 27,52,334.45 despite statutory notice under Section 434 of the Companies Act, 1956, rendering the company commercially insolvent and liable to be wound up. The bank cited several cases to support their contention that a company should be wound up if it fails to pay its debts despite notice of demand. Issue 2: Whether the debt claimed by the petitioner bank is bona fide disputed. The non-petitioner company disputed the debt, arguing that the cash credit amount was secured with goods of higher value than the claimed amount. For the first letter of credit, the company contended that the liability was disputed and required adjudication, as the goods were not received, and the payment was allegedly made in breach of the letter of credit conditions. Regarding the second letter of credit, the company argued that the liability was contingent and prospective, given the pending suit filed by the shipping company against the bank. Issue 3: Whether the petition for winding up is vexatious and intended to exert undue pressure on the non-petitioner company. The non-petitioner company argued that the winding up petition was vexatious and intended to exert undue pressure for the recovery of disputed amounts. The company had offered to liquidate the debt by encashing fixed deposits and selling pledged/hypothecated goods, indicating a bona fide intention to settle the claims. Issue 4: The status and implications of pending suits in Singapore and Bombay High Courts. The non-petitioner company highlighted the pending suits in the Singapore and Bombay High Courts, which involved allegations of breach of contract and disputes over the terms of the letters of credit. The court noted that these suits indicated substantial and bona fide disputes regarding the liabilities, which had not been adjudicated. Conclusion: The court concluded that the debts claimed by the petitioner bank were bona fide disputed and that the non-petitioner company had raised substantial defenses. The court also noted that the company was a running concern, and the secured creditors were not opposing the winding up petition. Given the pending suits and the company's efforts to liquidate the debt, the court found no merit in the winding up petition and dismissed it with no order as to costs. Consequently, the related Company Petition No. 27 of 1987 and other miscellaneous applications were also dismissed.
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