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TMI Blog2008 (8) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent-company for the supply of certain fabrics of the quality mentioned therein. The contract specified the type of fabric, the weaving method, density of the weave, resistance to tearing and absence of unusual fibres. The letter of credit indicated the minimum standards for reach of the criteria. 3. The case of the petitioner was that during the year 2001, the respondent supplied fabrics, which were found to be defective and in spite of repeated requests and reminders, it failed to replace the same with proper fabrics. The defective supply resulted in the cancellation of the contract that the petitioner had with its overseas buyers. This according to the petitioner, resulted in a loss of profit to the petitioner. In respect of unpaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court. 4. Learned senior counsel appearing for the petitioner referred to the decision of the court in Israel as to the certificate issued regarding the defective character of the goods supplied leading to the cancellation of the contract that the petitioner had with the overseas buyers, thus leading to a loss of profit. He pointed out that the learned judge of the court in Israel pointed out that this is a case of a contributory negligence whereby the petitioner shall bear 40 per cent of the amount and 60 per cent payable by the respondent herein. It also quantified the loss of profit. 5. Referring to the efficacy of foreign court decision, learned senior counsel pointed out that the respondent sought the assistance of the Israel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company petition be ordered. 7. Per contra, learned senior counsel appearing for the respondent made a detailed reference to Sections 13(c) and 44A of the Code of Civil Procedure to submit that Israel is not a reciprocal State to have the binding effect of the foreign decree, the proper course for the petitioner would be to go before the Indian court to establish its right under the Indian law. He submits that the decree obtained under the foreign judgment, hence, would not come under debt by reason of Section 13(c) and the provision of Section 44A of the Code of Civil Procedure read along with Article 101 of the Limitation Act, 1963, for the petitioner to proceed under the provisions of the Companies Act, 1956. When the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the defence is bona fide, this Court may not exercise its discretionary jurisdiction under the Companies Act, 1956. Learned senior counsel submits that in the light of the various decisions relied on, the petition filed merited to be rejected both on the question of law as well as on points of fact. Referring to the balance sheet and the CRISIL ratings, he placed reliance on the decision reported in (Narsey Brothers v. Nithyalakshmi Textiles Mills P. Ltd.), and prayed for rejection of the company petition. 9. Heard learned senior counsel on either side. 10. I agree with the submissions of learned senior counsel for the respondent. The remedy sought for by the petitioner in the form of a winding up petition contemplates a situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the plea holding that the mere fact that the liabilities of the company exceeded its assets is not a ground for ordering winding up. Guided by the principles of the apex court formulated and summarised in the decision reported in (2000)2GLR1594 (Tata Iron and Steel Co. v. Micro Forge (India) Ltd.) and in the decision of this Court reported in [2008] 144 Comp Cas 446 : [2008] 3 LW 719 (Narsey Brothers v. Nithyalakshmi Textiles Mills P. Ltd.), on a mere look of the balance-sheet and the fact that the company is a going company, I reject the plea of the petitioner to order winding up in this case. 12. There are other reasons to reject this petition, namely, bona fides of the defence. As rightly pointed out by learned senior counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a substantial defence taken by the respondent. Admittedly, Israel is not one of those reciprocating States recognised in terms of Section 44A of the Civil Procedure Code. 13. Considering the defence made, which cannot be rejected as lacking in bona fides, the criteria for ordering winding up not thus satisfied, I do not find any justification in ordering winding up of the respondent-company. It is open to the parties herein to have their contentions as regards the binding character to the Israel judgment considered in an appropriate forum, if and when they choose to exercise their rights. 14. In the circumstances, for the purpose of considering the winding up petition, it is not necessary for this Court to get into the binding nature ..... X X X X Extracts X X X X X X X X Extracts X X X X
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