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TMI Blog1976 (1) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... tor served a statutory notice of demand under section 434 of the Companies Act, 1956, dated the 26th of March, 1975, on the company for payment of the said decretal amount of Rs. 6,060 with interest and costs. In reply to the said statutory notice the company raised the question of the decree being obtained by fraud and collusion by its advocate's letter dated the 24th of April, 1975, and the petitioning-creditor's advocate by his letter dated the 30th of May, 1975, denied such allegations. And, thereafter, on the 19th of November, 1975, the present winding-up petition was presented. The company filed an affidavit through one Sudarsan Kumar Arya, a director of the company, and alleged that there is a bona fide dispute as to the claim of the petitioning-creditor. The company admitted that the goods were delivered by the petitioning-creditor for carriage at the company's godown at Jorhat, Assam, to Baroda and alleged that it was to be carried entirely at the owner's risk. It is alleged that after coming to know of the said decree passed by the Baroda court in favour of the petitioning-creditor, the respondent-company instituted a suit in the City Civil Court being Title Suit No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a decree against a company, can the petitioning-creditor serve a notice under section 434(1)( a )of the Companies Act, 1956, and the company can be deemed to be unable to pay its debt if the decretal amount is not paid. I have held that it is not necessary that the decree has to be executed, as the petitioning creditor had the option either to execute the decree and, thereafter, come under section 434(1)( b ) or serve a notice under section 434(1)( a ) for payment of the decretal amount. Relying on the said decision Mr. Seth submitted that in the present case also it must be held that the petitioning-creditor is entitled to present this winding-up application on the basis of the decretal amount which has not been paid in spite of the statutory notice being served. Mr. Shyamal Sen, appearing for the company, firstly, submitted that the decree has been obtained by fraud and the company has already filed a suit in the city civil court for setting aside the said ex parte decree obtained by fraud and an application for injunction is pending in that court. Further, Mr. Sen submitted that the claim is disputed on bona fide ground and there is substantial defence to the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollusion. The allegation must be pleaded with such particulars as will not only amount to a proper averment in law, of fraud, but also show a prima facie case of fraud requiring investigation. Even if the petition for winding up is allowed to stand over, the company should undertake and bring an action to set aside the decree on which the debt is claimed by the petitioning-creditor. But on the facts of that case the court was satisfied that the company was unable to pay its debt after the statutory notice was served and the winding-up order was passed in that case. The next decision cited by Mr. Sen is an Allahabad decision in W.T. Henley's Telegraph Works Co. Ltd. v. Gorakhpur Electric Supply Co. Ltd., AIR 1936 All. 840, where the court merely referred to the well-known principles to be followed by a winding-up court and considered whether a debt is bona fide disputed and whether a company is said to be unable to pay its debt and on the facts of that case the court passed a winding-up order. The last decision cited by Mr. Sen was that in Aluminium Corporation of India Ltd. v. Lakshmi Rattan Cotton Mills Company Ltd. [1970] 40 Comp. Cas.259 (All.), where M.H. Beg J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioning-creditor. The Calcutta decisions cited by Mr. Sen which I have mentioned above are all cases where notice under section 434(1)( a ) has been served on the basis of a decretal debt and as such the contention which was sought to be raised by Mr. Sen that unless the decree is put into execution and it remains unsatisfied, then and then only the petitioning-creditor can make an application for winding up and the deeming provisions under section 434(1)( b ) can be invoked cannot be accepted. I have already held in the unreported decision (see p 599 supra) cited by Mr. Seth that the petitioning-creditor has an option either to execute the decree and then come under the deeming provisions of section 434(1)( b ) or can serve a notice on the decretal debtor under section 434(1)( a ) at any stage after the decree is obtained whether the decree is put into execution and remains unsatisfied or without putting the decree in execution or at any intermediate stage. Now, the next question is whether on the facts of this case can it be said that a bona fide dispute has been raised to the claim made by the petitioning-creditor, being the decretal debts due against the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... August, 1975, the company instituted the suit for the declaration that the said decree passed by Second Joint Civil (Junior Division) Court at Baroda, being Suit No. 606 of 1971, is null and void and was obtained by fraud and collusion which is not only an after-thought but wholly a mala fide , vexatious and frivolous suit and filed with the sole intention of raising some sort of disputes, if possible, in this application relying on certain observations in the decisions cited by Mr. Sen from the bar. But I am satisfied that on the facts the company has no defence and neither the dispute has been raised bona fide nor is there any possibility of the company's defence being substantiated in law or fact. In my view, the tests laid down in the Supreme Court decision in Madhu Woollen Industries case [1972] 42 Comp. Cas.125 (SC) are fully satisfied in this case. The court should entertain a winding-up application when the defence is not raised in good faith and there is no likelihood of the contentions of the company being substantiated in law or in fact. In my view, the contention of the company appears to me to be dishonest and prima facie untenable. In that view of the matter, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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