9911796707
TMI Blog1995 (2) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... application are essentially as follows: The company was incorporated on May 22, 1962 (wrongly described in the petition as "in the month of 22nd May, 1962") under the Companies Act, 1956 (in short, "the Act"), as a public (private) company, limited by shares. The company is indebted to the petitioner in a sum of Rs. 18,000 for, and interest admissible from the date of delay, till final payment. The amount is payable for professional services rendered and the details are given in annexure "A" to the petition. The petitioner asked the company for payment of his dues, by his notice of demand duly signed, which was served on the company at its registered office on April 23, 1987. But the company failed to pay the sum or any part thereof. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed balance of Rs. 18,000 and interest admissible from the date of delay till payment is made. The stand of the company is that on October 12, 1988, by letter No. 9634 the Financial Advisor and Chief Accounts Officer of the company intimated the firm that a consolidated remuneration of Rs. 42,000 inclusive of all expenses and costs was stipulated to be paid on satisfactory completion of audit and submission of report in respect of all projects. However, on receipt of the report, a sum of Rs. 24,000 was released in three instalments, and the balance was withheld as several deficiencies in conducting the internal audit were noticed. These were brought to the notice of the firm on February 16, 1987, and April 30, 1987, to which a satisfactory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter. Since the petitioner had ceased to be a partner of M/s. G.C. Panda and Co., without a proper undertaking being given by the other partners that payment to the petitioner would be payment to the firm, there is no scope for making payment. In fact the firm was advised by letter dated December 11, 1990, to send an authorisation letter in favour of the petitioner, authorising him to receive Rs. 10,000. Thereafter, no action has been taken either by the petitioner or by the firm to comply with the requirement of letter dated November 10, 1990, a copy of which is annexed as annexure "E" to the counter-affidavit filed. To begin with, it is noticed that the petition itself is very confusing. The petitioner, who is a chartered account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his juncture, it is necessary to take note of section 434 of the Act, which deals with situations when a company is deemed to be unable to pay its debt. Clause ( a ) of sub-section (1) of section 434 is relevant. It provides that a company shall be deemed to be unable to pay its debt 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. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within section 434(1)( a ) of the Act. If there is no neglect, the deeming provision does not come into play, and the ground of winding up, namely, that the company is unable to pay its debt is not substantiated. On a combined reading of what has been stated in paragraph 7 of the petition and statement made in annexure "A", it appears that, according to the petitioner, Legal Aid and Advice Board's letter dated April 23, 1987, constituted the demand. The said Board cannot be said to be an agent or legal adviser of the petitioner. Therefore, there was no demand in the eye of law. Additionally, in view of the facts situation as indicated above, there can be no manner of doubt that there was a bona fide dispute regarding the claim. Two ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de dispute. The expression " bona fide " in common English parlance means genuine, good faith. A bona fide dispute is a dispute based on a substantial ground. If there is a dispute about the debt, the court has to consider all the facts placed before it, and arrive at a decision whether the dispute is genuine and has been raised bona fide . An order under clause ( e ) of section 433 of the Act, being discretionary is, as a general rule, made only when it is shown that the company is commercially insolvent. The court has to decide whether it would be in the interest of justice to wind up the company. The expression "neglects to pay the sum demanded" in section 434(1)( a ) of the Act is not equivalent to the word "omitted". Neglect to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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