2003 (5) TMI 424 - HC - Companies Law

Summary

Issues:
- Winding up petition under section 433 read with section 434 of the Companies Act, 1956.
- Proof of inability to pay debts by the respondent company.
- Requirement of statutory notice under section 434 of the Act, 1956 for winding up petition.

Analysis:
1. The petitioner filed a winding up petition against the respondent company under section 433 read with section 434 of the Companies Act, 1956, seeking payment of outstanding debts. The respondent company had purchased soda ash from the petitioner and made partial payments, indicating a running concern. The last payment was made on October 30, 2001. The court noted that after this date, no payments were made, suggesting a possible dispute or reason for non-payment. The court emphasized that a winding up petition should not be entertained when other remedies like filing a summary suit are available, especially in long-standing business relationships.

2. The court highlighted the legal requirements for winding up a company under section 433 and 434 of the Act, 1956. Section 433 allows winding up if a company is unable to pay its debts. The petitioner alleged the respondent company's inability to pay debts as the grounds for the petition. Section 434 specifies the conditions for deeming a company unable to pay its debts, including serving a demand notice to the company. The petitioner claimed to have sent a statutory notice under section 434 to the respondent company on June 26, 2002, but failed to provide evidence of sending the notice by registered post AD, a crucial requirement for the petition's maintainability.

3. The petitioner's failure to produce evidence of sending the statutory notice by registered post AD raised doubts about the notice's validity and service to the respondent company. The court emphasized the importance of fulfilling the statutory requirements for maintaining a winding up petition under section 433 of the Act, 1956. Without proper evidence of serving the statutory notice, the petition lacked a fundamental basis for consideration. Thus, the court dismissed the petition due to the petitioner's inability to prove the service of the statutory notice, a prerequisite for initiating a winding up proceeding.