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TMI Blog1997 (5) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... fecting delivery of the goods to them. 50 per cent of the charges are paid at the time of placing orders and the balance 50 per cent is paid on delivery of the goods after executing the work. As per the agreement between parties, cloth pieces on which embroidery work is to be done is delivered to the factory of the petitioners at Tirupur and taken delivery of from their factory at Tirupur. The goods will be either sent by professional couriers who are engaged for the purpose by the company or through their own boys who come and collect the finished materials from the petitioners' factories. When the company places an order with the petitioners, they send cut pieces on which embroidery work is to be carried out. The petitioners have been carrying out embroidery work for the Company for a few years. After finishing the work, they had raised different bills, but the amount covered by the bills has not been paid. It is further alleged in the petitions that the cheque issued by them was dishonoured and that the company even failed to pay the charges of the professional couriers. The various correspon- dence between parties also did not yield any result. So, a lawyers' notice was issued, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions, it is clear that the petitioners are relying on section 433( e ) which says that a company may be wound up by the court as it is unable to pay its debts. The circumstances under which it could be said that a company is unable to pay its debts is dealt within section 434(1) which is quoted hereunder: "Company when deemed unable to pay its debts. - (1) A company shall be deemed to be unable to pay its debts ( a )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; ( b )if execution or other process issued on a decree or order of any Court in favour of a creditor of the company is returned unsatisfied in whole or in part; or ( c )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 una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corpn.of U.P.'s case ( supra ) , Pawan Om Parkash Kejriwal v. Partap Steel Rolling Mills [1935] Ltd. [1994] 81 Comp. Cas. 916, (Punj. Har.), Rainbow Enterprises v. India Brewery Distillery Ltd [1995] 82 Comp.Cas.74 (Kar.) and Vinodvray Amarchand Parekh v. Satish Solvent Extractions Ltd. [1995] 82 Comp. Cas. 362 (Bom.). 9. In the decision in Madhusudan Gordhandas Co.'s case ( supra ) , it is held that where the petition for the winding up of a company is based on the ground of the inability of the company to pay its debts, it is well settled that if the debt is bona fide disputed and the defence is a substantial one, the court will not order winding up. The principles on which the court acts are: ( i ) that the defence of the company is in good faith and one of substance; ( ii ) that the defence is likely to succeed in point of law, and ( iii ) that the company adduces prima facie proof of the facts on which the defence depends. It is further stated therein that 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. Relying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters on which the respondent-company placed reliance were held to be fabricated subsequently. The counsel also relied on the decision in Pradeshiya Industrial Investment Corpn. of U.P. s case ( supra ) wherein the Court observed that 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. 12. The main thrust of the argument of the counsel for the respondent is that the company cannot be said to be in a financially unsound position and that it is unable to pay the debts as its credit worthiness is very high. Reliance was placed by the counsel on Annexures XVI and XVII. Going by Annexure XVI, which is the balance sheet and profit and loss account of the company and its sister concerns for the year ending 31-3-1995, it is seen that the net profit for the year is Rs. 1,79,73,658.50 and the net current assets is Rs. 7,64,04,318.11. Annexure XVII is the balance sheet and profit and loss account of the company and its sister concerns for the year ending 31-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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