R. V. RAVEENDRAN, J.

(1) The respondent herein filed company petition No. 96 of 1992 under Section 433 (e) and (f) of the Companies Act, 1956 ('act' for short), seeking an order to wind up the first appellant-company. The learned company judge, after notice to appellants and hearing both parties, passed an order dated 13-2-1997 admitting the company petition. Feeling aggrieved the respondents in the company petition have filed this appeal under Section 483 of the act. For convenience, first appellant will be referred to as 'the company' and the respondent will be referred to as the board'.

(2) The company was registered as a coffee exporter with the board, in March 1987. The board used to hold export auctions of coffee periodically, subject to the "terms and conditions for sale of coffee in the course of export". According to the board, the company participated in the auctions held by the board between 21-6-1989 and 20-12-1989 and purchased 654. 6 metric tonnes of coffee, but failed to make payment and take delivery of the said coffee within the time stipulated for payment, or within the time extended by the board at the request of the company. The board contends that the company committed breach by failing to make payment and take delivery and as a consequence, the board resold 593. 4 mt. Of coffee in the auctions held in april/may 1991 and incurred a loss. As a result of such alleged breach, the board claimed the following amounts from the company:

3. The Company had furnished Bank guarantees aggregating to Rs. 7,50,000,00 for due performance of its obligations in regard to the purchases in the export auctions. When the Company failed to pay for the coffee purchased and take delivery, the Board enforced the said Bank guarantees by letter dated 12-4-1991 and received the sum of Rs. 7,50,000.00 on 24-4-1991 and adjusted the same towards its dues leaving a balance of Rs. 48,96,805.03. The Board issued a notice dated 28-12-1991 through Counsel demanding payment of the said amount and informed the Company that if the payment is not made, a petition for winding up will be filed. The Company sent a reply dated 8-1-1992 seeking time to send a detailed reply, but neither made any payment nor sent any reply. Therefore, the Board filed a petition for winding up against the Company on 25-4-1992 contending that the Company was unable to pay its debts to an extent of Rs. 48,96,805.03 and was therefore liable to be wound up under Section 433(e) and (f) of the Act.

4. The Company Court issued a notice to appellants to show cause why the petition should not be admitted. The respondent filed its statement of objections denying the liability. It contended that the coffee sold in export auctions by the Board could be used by the buyers only for export and could not be sold in domestic market; that Chief Marketing Officer of the Board could however permit sale of such coffee in the internal market in special circumstances; that it purchased in all 1,827.70 Metric tonnes and had paid for and took delivery of the major part of the coffee purchased; that 654.6 Metric tonnes of coffee which was represented to conform to the specifications for sale in the international market (for which export auctions were held) was in fact inferior in quality and discoloured and did not conform to samples/specifications; that it produced documents [Annexure-R3(a) to 3(e)] to show that it had sent samples to the foreign buyers who rejected the coffee as being of inferior quality; that therefore, it requested the Board by telex dated 11-3-1991 for permission to div