9911796707
TMI Blog2004 (10) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... take custody of its assets. 2. The petitioner, which is a Government of India enterprise, is a leading research organization in the country. The petitioner states that the respondent approached them for "know-how" to manufacture submerged Arc Welding Flux, and to grant them permission to use the invention with an assurance that they would pay premium and royalty. Accordingly, an agreement was entered into by the petitioner with the respondent on 1-3-1984 whereunder the respondent agreed to pay royalty of Rs. l5,000 and licence fee for a period of ten years and 2.5 per cent of the proceeds on net ex-factory sale price. 3. The petitioner further states that as per the agreement, they developed "know-how" for the manufacture of submerg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner provided "know-how" for manufacture of submerged Arc Welding Flux to the respondent, and though in terms of the agreement entered into for providing the "know-how", the respondent agreed to pay royalty on the sale of the products, the respondent did not pay any royalty. Therefore, in terms of the arbitration clause in the agreement, the matter was referred to arbitration, and the sole Arbitrator, passed an award for Rs. 2,40,912, which ultimately was made rule of the Court. Thereafter, though, the petitioner got issued legal notice dated 8-5-2002 calling upon the respondent to pay, the amount under the award, the respondent having received the notice, failed to pay the amount, which amounts to not satisfying the award, which bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a private company, below two; ( e )if the company is unable to pay its debts; ( f )if the Court is of opinion that it is just and equitable that the company should be wound up." 9. Section 434 of the Companies Act deals with when a company can be deemed unable to pay its debts. The said section reads thus : "434. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s become commercially insolvent. It is not the case of the petitioner that in spite of initiation of execution proceedings, the respon- dent failed to satisfy the award either in whole or in part, and therefore, it should be deemed to have become commercially insolvent. The petitioner, admittedly, did not avail the execution proceedings, which is an effective alternative remedy available to them under Order XXI of the Code of Civil Procedure, 1908, for recovering the money under the award. Merely because the respondent has not paid the amount under the award in spite of receipt of demand notices, it cannot be said that the company has become commercially insolvent, warranting exercise of discretionary power by this Court. Inasmuch as the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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