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TMI Blog1978 (8) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... laced by or on behalf of the company, the petitioner from time to time supplied diverse motors/engines to the company for sale in the State of Bihar. The company made payments from time to time to the petitioner in respect of the said supplies. The petitioner alleges that the accounts by and between it and the company in respect of the aforesaid transactions was maintained on the basis of a running and continuous and/or mutual open and current account, according to the English calendar year. After giving due credits for all payments made by the company, the company owed a sum of Rs. 9,67,284.13 to the petitioner on the 27th of December, 1973. A statement showing the dues, which was prepared by the petitioner and submitted to the company is annexure A to the application. The petitioner alleges that on or about 19th June, 1975, at a meeting held between it and the company, the company duly admitted that the aforesaid sum was due and owing from it to the petitioner and after making diverse adjustments, the company admitted further that a sum of Rs. 3,22,295.53 and a further sum of Rs. 4,43,582.02 were due and owing from the company to the petitioner. Accounts were gone into and/or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imary importance. A prima facie case has to be made out before the court can take any action in the matter. Even admission of a petition which will lead to advertisement of the winding-up proceedings is likely to cause immense injury to the company if ultimately the application has to be dismissed. The interest of the applicant alone is not of predominant consideration. The interests of the shareholders of the company as a whole apart from those of other interests have to be kept in mind at the time of consideration as to whether the application should be admitted on the allegations mentioned in the petition." The company, therefore, filed reply to the petition in which it denied that any sum was due against it in favour of the petitioner. It admitted that a sum of Rs.16,762.04, was found due against the company. The company approached the local office of the petitioner to accept the same which the local office was not prepared to do for one reason or the other. The company, therefore, remitted the aforesaid amount to the petitioner on 25th May, 1977, through cheque No. PTN/2355-45 drawn on the Central Bank of India, Patna. The company stated in reply that part of the alleged due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexure B-2 to the supplementary affidavit of the petitioner. The petitioner relies heavily on this letter in proof of the debt due to it against the company. The learned Advocate-General who appeared on behalf of the petitioner made particular reference to paragraph 8 of this letter, which is as follows: "8. We accept the liability of the outstanding in our books of account of Kirloskar dealers amounting to Rs. 3,22,297.53. But this amount will be paid by us on realisation of the dues from those from whom these amounts are due. We shall of course be filing necessary suits against these parties for which we hope your co-operation regarding information that may be required in connection thereof will be forthcoming from you. We, however, undertake to settle all the dues on this account, irrespective of the decision of the courts, within December, 1977. In the meantime if you could please assist us in obtaining the payments due to us from Messrs. Agro Trading Corporation, Messrs. Chandralok Cycle Stores, Messrs. Kanhaiya Lal Co., and Messrs. Mahavir Machinery Stores, who, we understand, are your distributors, this amount can be credited to your account immediately we receive the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. [1962] Ch 406; [1962] 32 Comp. Cas. 795 (Ch D)]. The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and, thirdly, the company adduces prima facie proof of the facts on which the defence depends." The company disputes the debt outstanding against the dealers by alleging that it was the petitioner who was required to realise the same from the dealers, and the company had no liability to realise the same from them and to pay the same to the petitioner. As regards the balance amount, the company asserts that no adjustment has been allowed in respect of the credit notes issued by the petitioner in favour of the company to the tune of rupees three lakhs sixty-one thousand and odd. It also alleges that no adjustment has been allowed with regard to the security deposit of Rs.15,000 made by it on behalf of the petitioner to the State of Bihar and the payment of a sum of Rs. 50,000 made to the petitioner by the company. Now, at this stage, the petitioner has only to make out a prima facie case as pointed out by the Supreme Court in the case of Hind Overseas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but you will make all attempts to liquidate this outstanding earlier." There can be no doubt, therefore, that this sum of Rs. 3,22,297.53 was-payable latest by December, 1977. Now, the notice under section 434 of the Act is dated 20th October, 1976, when the aforesaid amount had not become payable. Could it be said that if the company had failed to pay the debt within three weeks of the service of the notice dated 20th October, 1976, it had neglected to pay the debt when in view of the arrangement between the parties the payment of this debt had been postponed till December, 1977? I have no doubt that the company cannot be said to have neglected to pay this part of the debt in terms of section 434 of the Act. It is true that this does not represent the entire debt, but it certainly represents a substantial portion of the same. The winding up of a company cannot be allowed if the company has neglected to pay only a part of the debt. The learned Advocate-General contended that the balance amount of the debt was payable in monthly instalments of Rs. 25,000, and the entire amount under this head was payable by February, 1976. When the company had defaulted to pay this part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner agreed to receive the dues even long after the expiry of three weeks from the date of service of the notice of demand (annexure D), in my opinion, it does amount to the waiver of the notice (annexure D). If the company had paid rupees seven lakhs and odd as claimed in the letter (annexure F) within the time allowed in that letter, there could be no doubt that it would have been entitled to get a complete discharge from the debt, owing from it to the petitioner. The notice (annexure D) was obviously superseded by the demand made in the letter (annexure F). The learned Advocate-General tried to contend that, in any view of the matter, the letter (annexure F) could be treated as a notice of demand under section 434 of the Act. I am unable to agree with this submission. Firstly, the present petition is based on the notice of demand (annexure D) said to have been made expressly in terms of section 434 of the Act. Not only no reference has been made in annexure F to any proceeding which could be taken under the Companies Act, but only a fortnight's time was allowed to the company to pay the dues in this letter which is against the statutory period allowed to a debtor-company to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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