2002 (12) TMI 498 - HC - Companies Law

Summary

Issues Involved:
1. Service of statutory notice.
2. Validity of the winding-up petition.
3. Company's inability to pay its debt.
4. Bona fide dispute regarding the debt.

Detailed Analysis:

1. Service of Statutory Notice:
The appellant-company disputed the service of the statutory notice, which is a prerequisite for winding-up proceedings under the Companies Act. The notice sent to the registered office was returned unserved with the endorsements "not known" and "left." The court held that for the notice to be considered served, it must be delivered at the registered office of the company. The court found no evidence that the registered office had been moved from Calcutta to Purnea, Bihar, as claimed by the appellant. The court concluded that the notice was not properly served, as the petitioning creditor failed to prove that the notice was tendered at the registered office.

2. Validity of the Winding-Up Petition:
Despite the improper service of the statutory notice, the court examined whether the winding-up petition could still be maintained. It was argued that the failure to serve the statutory notice only prevents the presumption of the company's inability to pay its debts but does not bar the creditor from proving the company's inability to pay its debts through other evidence. The court referenced previous judgments to support the position that a creditor could still maintain a winding-up petition by proving the company's inability to pay its debts independently of the statutory notice.

3. Company's Inability to Pay Its Debt:
The petitioning creditor claimed that the company owed Rs. 6,20,000, including the principal and interest. The company, however, denied the liability and argued that the money was advanced in lieu of goods supplied to a third party, which defaulted on payment. The court noted that the trial judge did not properly consider whether the company was factually unable to pay its debts. The trial judge's decision was based on the presumption under sections 434(1)(a) and 434(1)(b) of the Companies Act without adequately examining the factual inability of the company to pay its debts.

4. Bona Fide Dispute Regarding the Debt:
The appellant-company contended that there was a bona fide and serious dispute regarding the debt, which should be adjudicated in a civil suit rather than in summary winding-up proceedings. The court observed that the trial judge failed to properly assess whether the dispute raised by the company was bona fide. The trial judge's conclusion that there was no semblance of dispute was not supported by a thorough examination of the facts and the company's defenses.

Conclusion:
The appeals were allowed, and the impugned judgment and orders of the trial judge were set aside. The matter was remanded to the trial court for fresh consideration of the winding-up petitions on merit. The trial court was directed to examine whether the petitioning creditor could prove that the company was unable to pay its debts and whether the dispute raised by the company was bona fide, even in the absence of proper service of the statutory notice. There was no order as to costs.