9911796707
TMI Blog1993 (2) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... everal depositors who deposited amounts in the company and some of the depositors were due for refund on maturity. But, the company has failed to pay the same to the depositors. The petition was filed by two different petitioners. The petition further states that several cheques issued by the company pertaining to refund of deposits were not encashed, because the company had no requisite funds in the bank. The petition also points out that there are more than 3,500 unsecured creditors who have deposited their hard earned money in the company and that the company had borrowed more than Rs. 4.50 crores. Along with the company petition, a few documents were filed including the proceedings of the company's board meeting held on February 28,1992. In these proceedings itself, there is a statement that the financial position of the company is in a very bad condition and that the company could not realise good prices by sale of the properties and the company was not able to collect loans rent by the company and, therefore, the board resolved to move the High Court for winding up the company. There is also no dispute that one of the directors filed Company Petition No. 31 of 1992 seeking wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case did not justify making such an order in the instant case. Learned counsel further contended that at least the learned company judge should have granted some time and postponed the advertisement in spite of the fact that the case calls for an advertisement of the petition. Mr. Raghavan referred to the decision of the Supreme Court in Vasudeo Vishwanath Saraf v. New Education Institute, AIR 1986 SC 2105, wherein the Supreme Court pointed out the need to make a speaking order when the said order is liable to be tested in appeal. We have no doubt about the need to have a speaking order as and when an order is likely to be appealed from. But the nature of the order to be made depends upon the admitted facts before the court. An order directing advertisement admittedly is liable to be appealed from to a Division Bench of this court and, therefore, the requirement of a speaking order as contended by Mr. Raghavan certainly exists,' But, we are not impressed by the contention of the learned counsel that the order is liable to be set at naught only on the ground that the above order does not satisfy the test of a speaking order having regard to the admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42 Comp. Cas. 125 at paragraphs 21 and 22, it is observed thus (at pages 131-32 of 42 Comp. Cas.) : "Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt (see A Company, In re [1894] 94 SJ 369 ; [1894] 2 Ch 349 (Ch D)). Where, however, there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely (see Tweeds Garages Ltd., In re [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. Another rule which the court follows is that if there is opposition to the making of the winding up order by the creditors the court will consider their wishes and may decline to make the winding up order. Under section 557 of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on March 5, 1959, the position was even worse. We are of the opinion that the learned judge was right in taking into account the position as on October 31, 1957, and that the reasoning on which he ordered the winding up is correct. The essence of the reasoning is that the debts of the company could not be paid without selling its machinery and building and, if the machinery and the building were to be sold the mills could not run and the company would necessarily have to be wound up. The correctness of this reasoning cannot be questioned and has not been questioned before us by Sri V. Balasubrahmanyan, learned counsel for the appellant." Advertisement of a petition for winding up no doubt, is not ordered as a matter of course, because, its effect is drastic on the company's business, reputation and the interest of the shareholders. But, when a prima facie case is made out to attract the principle governing the winding up at the instance of a creditor under section 433( e ), refusal of such an order would be denying the statutory remedy provided to the creditors of the company. Therefore, the court affords adequate opportunity to the company of being heard, before co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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