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- Winding up petition based on company's failure to pay debt - Dispute over creditor's claim - Substitution of petitioning creditors - Company's inability to pay debts under section 433 of the Companies Act, 1956 The judgment delivered by Kantawala, J. of the High Court of Bombay pertains to a winding-up petition filed by Gulamhussein Ahmedalli and Company against Canhag Private Ltd. The petition was based on the company's failure to pay the debt owed to the petitioners, alleging commercial insolvency. Initially, Fatehi Brothers, a partnership firm, supported the winding-up order. However, a dispute arose regarding whether the debt was payable by the company or another entity, leading to the substitution of Fatehi Brothers as petitioning creditors. The amended petition by Fatehi Brothers claimed that the company owed them Rs. 24,000, and despite statutory notice, the debt remained unpaid. The judgment analyzed the provisions of the Companies Act, 1956, specifically section 433, which allows winding up if a company is unable to pay its debts. Section 434(1) outlines the criteria for deeming a company unable to pay its debts, including a creditor's demand remaining unpaid for three weeks. The substituted petitioners had a prior agreement with the company, depositing Rs. 24,000, which the company failed to refund upon termination of the agreement. Despite statutory notices and demands, the company did not repay the debt, leading to the conclusion that it was unable to pay its debts. The court found that the correspondence and evidence presented established the company's debt to the substituted petitioners, meeting the criteria for deeming the company unable to pay its debts under the Companies Act. The judgment emphasized that the company's failure to pay the due amount, even after statutory notice, clearly indicated its inability to meet its financial obligations. Consequently, the court ordered the winding up of Canhag Private Ltd., appointing the official liquidator to oversee the process and granting necessary powers under the Act. Additionally, the judgment addressed the costs incurred by Fatehi Brothers and the substituted petitioning creditors, stating that these costs would be covered from the company's assets. The order for winding up was directed to be advertised in specified newspapers, ensuring compliance with procedural requirements. Overall, the judgment decisively resolved the issue of the company's inability to pay its debts, leading to the winding up of Canhag Private Ltd.
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