9911796707
TMI Blog1979 (6) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory notice on the respondents dated April 20, 1978, and thereafter filed the present petition. The respondents have opposed the admission of this petition. The dispute between the petitioners and the respondents centers around certain contracts placed by the Directorate-General of Supplies and Disposal for the construction of a number of boats some time in the year 1971-72. The contracts were placed by the Directorate with the petitioners who in turn placed the contracts with the respondents-company. To enable the respondents to carry out the contracts, the petitioners from time to time advanced various amounts to the respondents. Thereafter, an agreement was arrived at between the petitioners and the respondents dated September 3, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lternative a prospective liability and hence the petition should not be admitted. This submission does not appear to be correct. Under section 434(1)( c ) of the Companies Act, the company is liable to be wound up if it is proved to the satisfaction of the court that the company is unable to pay its debts and in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company. Hence, it is open to the court to take into account the claim of the petitioners assuming that it is a prospective claim in considering whether the company is able to pay its debts or not. In considering this question, one has to first look at the latest balance-sheet and the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , i.e., the payment that the company would get after it completes these contracts in respect of the 24 boats should also be taken into account in considering the financial position of the company. But, in the present case, admittedly, the company is not in a position to complete these contracts since it has no finances to do so. If the company wants its prospective recoveries to be included, then one would also have to include the debts which the company will have to incur in order to complete the contracts and receive the payments on completion of these contracts. Hence, this aspect cannot be taken into account. Mr. Chinoy has disputed the debt of the company on the ground that the petitioners are not entitled to recover any amount fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay its debts under section 434(1)( a ) and is sought to be wound up only on that ground. Under section 434(1)( a ), the company is deemed unable to pay its debts if a creditor by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor. Here, apart from non-compliance with the statutory notice, even under sub-section (1)( c ), the company is liable to be wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld survive, apparently because the company is engaged in the activity of constructing boats for the Navy. The company seems to be under the impression that its existence is so vital that the Government institutions, banks, etc., must advance to it large amounts of money to enable it to survive. In my view, it would be totally contrary to public interest to allow such a company to survive. The company is in grave financial difficulties. Its capital base is extremely small. It has, therefore, incurred heavy debts for which there are no prospects of recovery at all. In a case like this, the court has no alternative but to admit the petition for winding up. Mr. Chinoy has lastly urged that the petitioners have filed this petition mala fide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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