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Issues: Petition for winding up under Companies Act, 1956 based on inability to pay debts and prejudicial management.
The judgment pertains to a petition for the winding up of a company under section 439(1)(b) read with section 433(e) and (f) of the Companies Act, 1956, by three creditors who are also shareholders. The petitioners claim amounts with interest, alleging non-payment by the company despite statutory notices, leading to the presumption of the company's inability to pay debts under section 434(1) of the Act. The petitioners further assert prejudicial management by an individual seizing control of the company. The company and its directors oppose the petition, contending bona fide disputes with the petitioners' claims, citing valid counterclaims that negate the liabilities. The judgment emphasizes the requirement to show the company's non-payment without reasonable excuse to raise the presumption of inability to pay debts under section 434(1), highlighting the significance of valid and bona fide counterclaims in this determination. Regarding the first petitioner, the company claims rent for premises occupied by the petitioner without payment, supported by documentary evidence of past rent payments by the petitioner. The court finds a bona fide counter-claim for rent against the first petitioner, justifying non-payment until the premises are vacated. Concerning the second petitioner, allegations of misappropriation during the petitioner's tenure as a director and manager are raised, with prima facie evidence supporting a counterclaim that could nullify the debt. The company offers security for potential liabilities pending resolution of disputes. The third petitioner's loan account is debited for calls in arrears, with a dispute over ownership of shares used as security. The court concludes that the company's valid counterclaims create bona fide disputes regarding debt liability, providing reasonable excuses for non-payment and negating the presumption of inability to pay debts under section 434(1). The judgment dismisses the petition, stating that the petitioners' allegations do not warrant winding up, especially when the company is solvent and thriving. It suggests alternative remedies for grievances against the management, emphasizing that winding up is not appropriate in the current scenario. The petition is therefore rejected with costs, highlighting the importance of valid counterclaims and reasonable excuses in challenging winding-up petitions under the Companies Act, 1956.
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