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Issues Involved:
1. Application for winding up under section 433(e) read with section 439 of the Companies Act. 2. Financial condition of the company as disclosed in balance-sheets. 3. Satisfaction of creditors regarding the company's financial position. 4. Legal grounds for winding up based on the company's inability to pay debts. Issue-wise Detailed Analysis: 1. Application for Winding Up: The Registrar of Companies, Punjab and Himachal Pradesh, filed an application under clause (e) of section 433 read with section 439 of the Companies Act for winding up the Rohtak Hissar Transport Company (Private) Ltd. The ground for this application was that the company was unable to pay its debts as disclosed in its balance-sheet ending 30th June 1962. The application was resisted by the company on the basis that its financial position had improved, particularly after the demise of its previous managing director, and that the creditors were satisfied with the current operations. 2. Financial Condition of the Company: The company provided a list of its creditors and their respective debts as directed by the court. The total debts due to secured creditors amounted to Rs. 2,70,000, with Messrs. Anand Finance (Private) Ltd. being the largest creditor. Testimonies from secured creditors indicated that they were satisfied with the company's financial dealings. The balance-sheets as on 30th June 1964 and 30th June 1965 showed improvements, with the company making profits of Rs. 44,000 and Rs. 51,000 respectively. The company also increased its capital and acquired additional route permits, indicating a better financial outlook. 3. Satisfaction of Creditors: Evidence showed that the secured creditors, including Anand Finance and Ganesh Finance Corporation, were satisfied with the company's financial health. Affidavits from unsecured and sundry creditors also indicated satisfaction. The total debt due to unsecured creditors had significantly reduced from Rs. 1,27,000 in 1964 to Rs. 62,000 in 1965, showcasing the company's ability to pay back its debts. The company's accountant testified to the improved financial condition and the company's ability to meet its liabilities. 4. Legal Grounds for Winding Up: Section 434 of the Companies Act outlines circumstances under which a company is presumed unable to pay its debts. None of these circumstances were present in this case. The Registrar's argument was based solely on the balance-sheets indicating that the company's assets were less than its liabilities. However, the court noted that the company was commercially solvent, meaning it could meet its liabilities as they arose. The court referenced previous judgments, emphasizing that a company's liabilities exceeding its assets does not necessarily mean it is unable to pay its debts. Conclusion: The court concluded that no case had been made out for winding up the company. The evidence showed that the company was functioning well, making profits, and satisfying its creditors. The test for commercial solvency was met, as the company could meet its liabilities as they arose. Consequently, the petition for winding up was dismissed. The court acknowledged that the Registrar had good reasons to file the petition based on the 1962 balance-sheet but found no justification to continue pressing the petition after the 1964 and 1965 balance-sheets were presented. Therefore, no costs were awarded to the Registrar except for the stamp duty paid on the petition. Judgment: The petition for winding up the company was dismissed, with the Registrar awarded costs only to the extent of Rs. 260 for the stamp duty paid.
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