1982 (10) TMI 164 - HC - Companies Law

Summary

Issues:
- Whether the company petition for winding up is maintainable without re-issuing a statutory notice as per section 434(1)(a) of the Companies Act, 1956?
- Whether the company is unable to pay its debts as per section 434(1)(c) of the Act based on the evidence presented?

Analysis:
The petitioner filed a company petition under section 433(a) of the Companies Act, 1956, seeking winding up of the respondent company due to an outstanding debt of Rs. 89,118.59 with interest. A statutory notice was initially issued on December 27, 1981, but was later withdrawn on April 20, 1982, at the request of the managing director of the company. The petitioner claimed that despite the withdrawal, the debt remained unpaid, leading to the company petition.

The respondent raised a preliminary objection, arguing that a fresh statutory notice must be issued as per section 434(1)(a) for the company petition to be maintainable. The petitioner contended that the withdrawal of the notice was accompanied by a letter requesting payment, thus keeping the claim subsistent. The petitioner relied on the judgment in Pandam Tea Co. Ltd. v. Darjeeling Commercial Co. Ltd. [1977] 47 Comp. Cas. 15 (Cal.) to support this argument.

The court examined the statutory provisions of section 434 of the Companies Act, particularly clauses (a) and (c), which define circumstances where a company is deemed unable to pay its debts. The withdrawal letter from the petitioner indicated a willingness to reconcile accounts and measurements before seeking payment, which contradicted the second letter allegedly enclosed with the withdrawal. The court found it implausible that immediate payment was requested when reconciliation was pending, casting doubt on the existence of the second letter.

Regarding the company's inability to pay debts under section 434(1)(c), the petitioner cited instances such as machinery sale by the State Financial Corporation and a lawsuit in the High Court of Tamil Nadu, Madras, as evidence. However, the court deemed these instances insufficient to establish the company's inability to pay debts. The court also rejected the claim of multiple letters sent by the petitioner being unanswered, as the company denied receiving them.

The court concluded that the petitioner failed to prove the company's inability to pay its debts satisfactorily. As a result, the company petition was dismissed for not meeting the requirements of section 434(1)(a) or (c) of the Act. The petitioner was allowed to file a new petition after fulfilling the necessary formalities, emphasizing the importance of meeting statutory obligations for maintaining a company petition.