1979 (11) TMI 209 - HC - Companies Law

Company when deemed unable to pay its debts, Winding up Application for, Powers of tribunal on hearing petition

Summary

Issues:
- Jurisdiction of City Civil Court in Companies Act matters
- Validity of the winding-up petition by heirs of deceased creditor
- Company's attempt to avoid payment and raise disputes
- Relevance of succession certificate in winding-up petition

Jurisdiction of City Civil Court in Companies Act matters:
The judgment addresses the issue of the City Civil Court's jurisdiction in matters related to the Companies Act. The deceased creditor's heirs filed a winding-up petition against the company. The company had previously obtained an ex parte injunction from the City Civil Court to prevent the deceased creditor from filing a winding-up petition. The judgment rules that the City Civil Court lacks jurisdiction in Companies Act matters. The injunction obtained by the company is deemed null and void, as it was beyond the City Civil Court's jurisdiction.

Validity of the winding-up petition by heirs of deceased creditor:
The petitioning creditors, heirs of the deceased creditor, filed a winding-up petition against the company for unpaid loans. The company admitted the loans but disputed their purpose, claiming they were for acquiring film rights. The judgment finds the company's defense to be without merit, as it attempted to avoid payment by raising unfounded disputes. The court holds that the winding-up petition is maintainable, as the company failed to pay the debt, and the heirs have the right to pursue the petition.

Company's attempt to avoid payment and raise disputes:
The judgment criticizes the company for its dishonest behavior and attempts to evade payment to the deceased creditor's heirs. The company's actions, including filing a suit in the City Civil Court and disputing the loan purpose, are deemed dishonest and against commercial morality. The court concludes that the company's defenses lack substance and are not bona fide, leading to the admission of the winding-up petition against the company.

Relevance of succession certificate in winding-up petition:
The judgment clarifies that, in this case, there is no requirement for a succession certificate for presenting the winding-up petition by the deceased creditor's heirs. The court emphasizes that the petitioning creditor's right to present a winding-up petition is a statutory one and not dependent on a succession certificate. As the company failed to pay the debt and raised unfounded disputes, the winding-up petition by the heirs is deemed valid without the need for a succession certificate.

The court ultimately admits the winding-up petition, orders its advertisement in specified publications, and sets a future hearing date for further proceedings.