Winding up of the company due to failure in discharge of its liabilities.

The case of the petitioner is briefly stated hereunder: The respondent- company was incorporated on 9.9.1960 under the Companies Act, 1956. The nominal capital of the company is Rs.24,00,000 comprising of 2,40,000 equity shares of Rs.10 each. The amount of paid-up capital is Rs.9,00,000. The main objects for which the company was set up are to carry on the business of sugar boilers, manufacturers, and refiners and dealers in sugar of all varieties and kinds and its by-products, distillers and spirit-merchants and other connected business combined with the abovesaid objects. The petitioners are SEBI-registered ccategory-1 Merchant Bankers, who have adequate experience and experties to advise parties on investments, takeovers, mergers, spinoffs and other related activities. When the respondent herein had the requirements of such advice, they had sought the petitioner’s services in 1996, in the matter of evolving a restricting proposal for the respondent- company. The respondent and petitioner had entered into an agreement, vide their letters dated 11.10.1996 and 25.3.1997, in respect of the quantum of fees payable. This agreement also provided for an abortion fee, i.e., a fee payable upon the deal evolved by the petitioner not going through. The respondent engaged the petitioner’s service for the sale of the respondent’s controlling stake in Aruna Sugar Finance Limited, the Sugar and Distillery Division of the respondent, and the Hotel Division of the respondent. In pursuance of the aforesaid mandate given by the respondent to the petitioner on 25.3.1997, the petitioner evolved a restructuring proposal for the respondent. Presentations were prepared and made to be given to lending institutions, banks for the reschedulement and one-time settlement of the respondent’s due. Legal advice on various issues related to the restructuring and spin-off was obtained from legal practitioners. After several negotiations and at the efforts of the petitioner, on 30.8.1997, a final offer was received from Nagarjuna Group for the said purchase at Rs.90 crores. The respondent seemed to agree to the same and accordingly wrote to the lending and financial institutions, indicating its intention to sell the said divisions for Rs.90 crores, without mentioning the name of the buyer. Thus, all the hard work had been done by the petitioner, and all that remained to be done was the completion of the sale formalities. At this stage, the respondent mysteriously backed out of the negotiations without offering any reason therefore. Thus, the entire deal arranged by the petitioner, between the respondent and Thiru Arooran Sugars Limited, at one end, and Nagarjuna Group, at the other, fell through, for no fault of the petitioner. Thus, the petitioner having done all the work as agreed between the parties, and having brought the entire matter to the stage of competition, called upon the respondent to make payment of its professional charges. The petitioner became entitled to claim the abortion fees of Rs.35 lakhs from the respondent, in respect of which there was an agreement in terms of the respondent’s letter dated 25.3.1997. This was claimed by the petitioner, by letter dated 14.7.1998 and finally it was downardly revised by the petitioner, to Rs.30 lakhs. Pursuant to the meeting held on 29.12.1998, the petitioner and respondent arrived at a settlement, whereby the petitioner agreed to waive over half their entitlement to their professional fees, by agreeing to receive a sum of Rs.17 lakhs in full quit, on the condition that such payment be made as per the agreed schedule. In the event of the respondent’s failure to adhere to the payment schedule, the petitioner would become ipso facto, entitled to receive full payment of the original fee of Rs.30 lakhs before 31st March, 1999 together with interest at the rate of 20 per cent with effect from 1st April, 1988. The respondent failed to honour their commitment. The respondent sent a registered notice thr