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Issues Involved:
1. Failure and neglect to pay the sum of Rs. 40,000 and interest due under 16 hundis. 2. The company's financial inability to pay its debts due to large liabilities. 3. The authority of the director to execute the hundis. 4. The bona fide dispute regarding the debt and the company's commercial solvency. Summary: Issue 1: Failure and Neglect to Pay the Sum of Rs. 40,000 and Interest Due Under 16 Hundis The petitioners claimed that the company failed to pay Rs. 40,000 and interest under 16 hundis executed by a director, Manilal Keshavji Thakkar, and guaranteed by another director, Mavji Keshavji Thakkar. Statutory notices u/s 434(1)(a) were served, and the company neglected to pay or secure the amount, leading to the presumption of the company's inability to pay its debts u/s 433(e). Issue 2: The Company's Financial Inability to Pay Its Debts Due to Large Liabilities The petitioners argued that the company had large liabilities and made a loss of Rs. 96,369 as of June 30, 1974, making it unable to pay its debts. However, the company contended that its assets exceeded liabilities, with significant fixed assets, stock, and book debts, and had made a net profit of Rs. 1,50,000 for the year ending June 1975. Issue 3: The Authority of the Director to Execute the Hundis The company denied that Manilal K. Thakkar had the authority to execute the hundis, arguing that no board resolution u/s 292 authorized such borrowing. The petitioners relied on a resolution from 1963, which required any two directors to sign the hundis. The hundis in question were signed by only one director, raising a bona fide dispute about the validity of the execution. Issue 4: The Bona Fide Dispute Regarding the Debt and the Company's Commercial Solvency The court emphasized that a winding-up petition is not a legitimate means to enforce a debt that is bona fide disputed. The company raised substantial and bona fide disputes regarding the execution of the hundis and the receipt of consideration. The court found that the company was commercially solvent, with assets exceeding liabilities and ongoing business operations. Conclusion: The court concluded that the disputes raised by the company were bona fide and substantial, and the company was commercially solvent. Therefore, the petition for winding up the company was rejected.
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