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TMI Blog1948 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant, the Governor-General in Council was substituted in the place of the Income-tax Officer as petitioner. The debts on which the petition was founded were due in respect of income-tax and excess profits tax for the years, 1941-42 and 1942-43. With a penalty of Rs. 3,200 the total amount due exceeded Rs. 30,000. There appears to have been a slight reduction in the amount payable on account of a subsequent decision of the Appellate Tribunal but it is not disputed that a very large sum is lawfully due and payable as and for the taxes above-mentioned. The only ground on which the petitioner sought a winding-up order, at the trial, was that the company was unable to pay its debts [ vide section 162, clause ( v ), of the Indian Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself prevent the Government from recovering the amount assessed and admittedly the company is not in a position to pay it. There can be no doubt that the petition did allege the inability of the company to pay its debts and the learned Judge was justified in finding that the allegation had been proved. In In re Gold Hill Mines [1883] 23 Ch. D. 210 , the only basis for the allegation that the company was unable to pay its debts was an ordinary statutory affidavit. In Doraiswamy v. Coimbatore E.S. Nidhi [1929] AIR 1929 Mad. 265 , there was a vague statement made in the petition but it was not supported by figures or facts and the only fact relied on was the failure to comply with the statutory demand. These decisions cannot have any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petition was filed with the object of bringing pressure to bear upon the company in order to make it pay cheaply and expeditiously a heavy debt which it desired to dispute in the Civil Courts. The learned Judges say: "The law is perfectly clear that petitions for winding up which are put in order to obtain an unfair advantage over other creditors at a time when the company is not known to be insolvent amount to an abuse of the process of the Court and should be dismissed." They point out that there was no reason why the appellant, if the amount was due, should not get her remedy in the usual course by obtaining a decree in the suit instituted by her. It was a case where the creditor, without resorting to the ordinary remedy of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, if I am satisfied that a petition is not presented in good faith and for the legitimate purpose of obtaining a winding-up order, but for other purposes, such as putting pressure on the company, I ought to stop it if its continuance is likely to cause damage to the company." In Tulsidas Lallnbhai v. Bharat Khand Cotton Mill Company Ltd [1915] ILR 39 Bom. 47 , the petitioner, who was an assignee of certain debts due by the defendant company to its late secretary and manager, demanded payment from the company ; but the company refused to pay on the ground that it believed the claim was fraudulent and unsustainable. The petitioner thereupon applied to the Court to compulsorily wind up the affair of the company. It was not shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the petition for winding up was ordered to stand over on the company undertaking to file a bill to impeach the judgment on which the petition was based. The facts of the case however reveal that this procedure was adopted because of certain special circumstances which are absent in the present case. Their Lordships were prima facie not satisfied with the genuineness or validity of the debt on which the petition for winding up was based. Lord Cranworth said : "But here I must confess I cannot say that this debt is so clearly made out to my mind as being a valid debt at law and in equity that I think the Court was bound to direct the winding-up, if there was any mode by which the validity of the debt could be better established b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure might be adopted and that the company may be permitted to give security on its assets. This suggestion was not accepted by the respondent because according to him the assets were nil and the appellant's counsel was not in a position to deny this fact. We indicated that if the company was willing to furnish security to the satisfaction of the Court for the amount of the taxes due we might be disposed even now to postpone the operation of the winding-up order till the validity of the assessments was finally determined. But Dr. John intimated to us that the company found it impossible to furnish any such security. We do not find any ground on which we could postpone the winding-up proceedings. We agree with the learned Judge in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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