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Issues:
Challenge to rejection of company petitions based on non-payment of dues, time-barred claim, adjustment of dues against company losses, and legal validity of arrangement between outgoing and new directors. Analysis: The appeals challenged the rejection of company petitions due to non-payment of dues by the respondent-company despite a statutory notice. The appellants claimed the company was liable to be wound up under section 433, read with section 434 of the Companies Act, 1956. The company contended that financial difficulties arose in 1992 under the previous management, leading to an arrangement where new directors would only be liable for specific dues. The company argued that the appellants failed to prove the amounts were given as loans and that the claim was time-barred. The balance-sheet as of 31-3-1997 showed the company as profitable, not unable to pay its dues. In response, the appellants disputed the validity of the arrangement for adjusting dues, pointing out that the outgoing director did not sign the document and that the amounts were shown as unsecured loans in the balance-sheet. They argued that the company had a heavy burden to prove the basis for adjusting the amounts against company losses, emphasizing that the arrangement was not binding on them. The company elaborated its defense in sur-rejoinder, stating that after clearing GSFC dues, the appellants' credit balances were adjusted against company losses with the agreement of all concerned. The learned company judge noted the long delay in taking action on the dues, the dismissal of a previous petition for default, and the lack of attempts to revive it. The judge found no reason to infer the company was unable to pay its debts and rejected the petitions. The appellants argued that the balance-sheet of 31-3-1995 acknowledged their liability as unsecured loans, making the claim not time-barred. They contended that the arrangement for adjusting dues against losses was not legally binding and should not be relied upon by the company. The Court emphasized that the dues of third parties cannot be adjusted towards company losses without their consent. The judge's reliance on the company's arrangement version was deemed incorrect as the appellants' concurrence was necessary for adjusting their dues. Considering various aspects from the pleadings, the Court set aside the impugned order and remitted the matters for fresh consideration by the company judge after reviewing all material and hearing both parties. The appeals were allowed with no order as to costs.
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