9911796707
TMI Blog1962 (5) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2 years. For both these two payments, the petitioning creditor holds receipts in writing copies whereof are to be found at pages 69 and 70 of the paper book. It is admitted that in the year ending 30th June, 1957, the company suffered a loss of ₹ 30550.15 nP. In the year ending 30th June, 1958 there was a loss of ₹ 175182.71 nP. On the 18th June, 1958 the petitioning creditor wrote a letter to the managing Agents of the company, a copy whereof is included in Ex. A annexed to the affidavit-in-opposition, at page 30 of the paper book. In that letter he stated that the negotiations for the marriage of his daughter were well advanced and arrangement should be made for the payment of his deposit money. This letter was not replied to. On the 22nd November, 1958, a sum of ₹ 1000/- was paid to the petitioning creditor and on the 5th December, 1958 another sum of ₹ 1000/- was paid to him. On the 5th June, 1959 the petitioning creditor wrote a letter to the Managing Agents, a copy whereof is included in the said Ex. A at page 31 of the paper book. In this letter, the petitioning creditor tendered his resignation and asked for repayment of the deposit amount to meet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me very soon. I have arranged with maternal uncle so that you get your money. He has said that he will pay the money. Immediately you come I hope, I will be able to cause the payment. You will get me if you come during office hours. Please accept my Pranam. Finish Rabi" 2. On the 17th September, 1960 the petitioning creditor received another letter or note from Sushil Chandra Roy, the Manager and Principal Officer of the company in the following terms: "My dear Kali Babu, There had been talks with Bara Babu about you. He has said that he will definitely pay your money. Please see at office as soon as possible. I hope you have received Rabi Babu's letter. Accept my Namaskar. Finish Rabi" 3. No money was, however, paid and on the 15th November, 1960 the solicitor for the petitioning creditor received a reply to the notice under section 434 issued on the 9th August, 1960, a copy of this letter is included in Annexure "A" to the affidavit of Shyamapada Choudhury, and appears at page 17 of the paper book. In that letter, it was pointed out that on the 31st July, 1958 the then directors of Chaudhuri Commercial Corporation Private Limited who were the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies by the Court. Section 433 deals with the circumstances in which a company may be wound up by the Court. We are only concerned with Sub-section (e), which provides that the company may be wound up by the Court if it is "unable to pay its debts". These word's have not been explained or defined in the section itself. But Section 434 provides that under certain circumstances a company should be presumed to be unable to pay its debts. We are concerned with Clause (a) of Sub-section (1) which provides that if a creditor to whom a company is indebted in a sum exceeding ₹ 500/- then due, has served on the company a demand for payment thereof and the company has for three weeks thereafter been unable to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, then a presumption will arise that the company is unable to pay its debts. The position is as follows: Under the provisions of Section 433(e), a company may be wound up if it is unable to pay its debts. The object of liquidation of the company is that the assets of the company should be realised and the debts paid in accordance with law and as expeditiously as possible. But bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial of the dispute is neither bona fide nor reasonable, then the Court does not lose its power of granting relief by passing a winding up order. The position in law With regard to disputed debts is, by no means, an easy one. It has however been admirably summed up in Palmer's "Companies Precedence" 17th Edn. Part II at page 27. It is stated as follows: "The mere omission of a company to comply with a notice requiring payment of a debt, served pursuant to the above para, is not 'neglect' within the meaning of that paragraph if there is reasonable cause for the omission, and the fact that the debt in question is bona fide disputed is a reasonable cause. It is now well settled that a petition for winding up with a view to enforcing payment of a disputed debt is an abuse of the process of the court, and should be dismissed with costs. But, of course, if it is shown that the alleged dispute is not a bona fide one, the objection to the petition fails. Thus, it is not uncommon for a company, after again and again begging for time for payment of a debt, to spring on the petitioner, at the last moment, the assertion that the debt is a disputed one. Such a defenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that for the reasons mentioned above, we find that the disputes that have been raised by the company are not at all bona fide disputes but consist of certain unmarshalled conglomeration of facts which have been put forward to take the semblance of a dispute, but which on close scrutiny amount to nothing. The fact is that the company has been putting off the payment of the claim of the petitioning creditor from time to time and having agreed to make the payment, has suddenly gone back upon it, simply to delay payment, not being in a position to do so. 9. Apart from these facts, we have had placed before us the balance-sheet and the Profit and Loss account of the company for the year ending 30th June, 1957-58 and 1959. It is obvious from these balance-sheets and Profit and Loss accounts, that the company is not commercially solvent but that it is unable to pay its debts in every sense of the term. (His Lordship after considering the Balance Sheet concluded.) 10. For these various reasons, we think that the court below was correct in coming to the conclusion that the application should be dismissed with costs, and we see no reason to interfere with this finding. The result is th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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