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TMI Blog2008 (11) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... t herein has chosen not to file any such appeal. It will also be required to be noticed, at this stage, that the petitioner instead of taking steps for execution of the aforesaid decree has chosen to file this company petition for winding up. 2. It will be necessary to recollect that the advertisement of the company petition was sought to be resisted by the respondent company by contending that as the petitioner had not taken steps for execution of the decree, the present company petition for winding up is an attempt to recover the money under the decree and, therefore, is not maintainable. The Respondent company had also contended that the U.S. court had no jurisdiction to pass the decree in question and further that the decree was an ex parte decree and had not been passed on consideration of the merits of the case. It was further contended that compensation has been awarded for damages which are remote and not contemplated by section 73 of the Indian Contract Act, 1872. The aforesaid objections were dealt with by the Court in its order dated 18-11-2003 by recording findings, necessarily prima facie in nature, that the objections raised did not merit the closure of the company p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing therefrom is for a definite sum of money payable by the respondent to the petitioner. Relying on two decisions of the Apex Court in Pradeshiya Industrial & Investment Corpn. of U.P. v. North India Petrochemicals Ltd. [1994] 3 SCC 348 and in Mediquip Systems (P.) Ltd. v. Proxima Medical System GmbH [2005] 59 SCL 255 (SC), Sri Choudhury has argued that the dispute raised by the respondent-company in the present case is neither a bona fide dispute nor can be said to have raised a substantial defence to enable the Company Court to act on the basis of the stand taken by the respondent. Sri Choudhury has further submitted that the objections to the decree as raised by the Respondent-company are wholly untenable in law. According to Sri Choudhury, a reading of the order of the US Court would go to show that the said court had assumed jurisdiction after recording the existence of certain facts which, according to Sri Choudhury, gave rise to a cause of action, even though partial, within the jurisdiction of the U.S. court. It is further argued that the decree was passed not merely on the failure of the respondent-company to contest the proceedings but the same was recorded after due con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, learned counsel has argued that the deeming provisions contained in sub-clauses (a) and (b) are not in the alternative in the absence of the word 'or' as in the case of the deeming provisions contained in sub-clauses (b) and (c ). Therefore, according to the learned counsel, the deeming provisions contained in section 434(1)(b) will operate in case of a debt due under a decree only once the decree is put to execution. In the present case the decree dated 12-4-2001 not having been put to execution the deeming provision cannot operate to give rise to a situation where the respondent can be said to be unable to pay its debts. 7. The rival submissions advanced on behalf of the contesting parties have been duly considered. The maintainability of the company petition on the ground that the petitioner had not taken steps for execution of the decree as well as the fact that the amount covered by a decree would be a debt under section 433(e), perhaps, would require no further consideration or elaboration in view of the settled position in law. The only question that will, therefore, survive for consideration is whether the defences offered by the respondent-company can be said to gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions to the legality of the decree cannot be considered by the Company Court by going behind the decree as such a course of action may have the effect of converting the Company Court as an appellate forum against the decree. Such objections, therefore, must appear on the face of the decree and the same must go to the root of the matter and vitiate the decree. In the present case a reading of the order of the U.S. Court amply discloses that facts have been recorded which according to the U.S. Court clothed it with necessary jurisdiction to entertain the matter. The respondent-company in the additional affidavit dated 5-2-2008 has placed contrary materials to show that the contract was concluded in Kolkota and no part of the cause of action arose within the jurisdiction of the U.S. Court. Furthermore, it is contended in the said additional affidavit that the primary facts on the basis of which jurisdiction was assumed by the U.S. Court, i.e. visit of Sri Banka and Sri Gupta to U.S.A., were in connection with some other business and not with regard to the business giving rise to the claim and the decree. The facts pointed out in the additional affidavit of the respondent-company would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a decree has to be addressed. The punctuations contained in section 434(1), particularly after each sub-clauses i.e. (a), (b ) and (c) and the use of a semicolon at the end of sub-clause (a) and before beginning of sub-clause (b), in the considered view of the Court, would, sufficiently indicate that all the three sub-clauses i.e. (a ), (b) and (c) are in the alternative and upon existence of any one of the same, a company can be deemed to be unable to pay its debts. Sub-clause (b) of section 434(1), therefore, contemplates a situation of an unsuccessful attempt at execution of a decree. However, the said sub-clause (b) cannot be understood to be indicative of any mandatory requirement to put the decree to execution before a company can be deemed to be unable to pay its debts arising from such a decree. 14. For the aforesaid reasons this company petition has to succeed. It is, therefore, allowed. However, having regard to the stand taken that the respondent-company is a going concern and is presently engaged in business, the Court is of the view that the order for winding up of the respondent-company should follow only after its failure to pay the amount due to the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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