TMI Blog1984 (12) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... up was sought on the ground that the company was unable to pay its debts and also on the ground that it would be just and equitable that the company be wound up, grounds falling within section 433 ( e ) and ( f ) of the Companies Act, 1956. The Companies (Court) Rules, 1959, provide for the form in which a petition for winding up has to be filed and the procedure to be adopted thereupon. Rule 96 in Part III of the Companies (Court) Rules, 1959, provides for admission of petition and that rule reads: "96. Admission of petition and directions as to advertisement. Upon the filing of the petition, it shall be posted before the Judge in Chambers for admission of the petition and fixing a date for the hearing thereof and for directions as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found, negativing the contention of the respondent company, that the petitioner, as a guarantor, had locus standi to file the petition. The petitioner's case is that in 1977, the petitioner, at the request of Shri V. V. Keshkamat, the chairman and the managing director of the respondent company, gave certain guarantees to the Central Bank of India, the State Bank of India and the Gujarat State Financial Corporation, on behalf of the respondent company, in connection with certain advances made by these institutions and as a result of this the petitioner has committed himself to a contingent liability of about Rs. 50 lakhs. It is said that the company has ceased to function by or about the year 1979. The respondent company had been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner is able to show that the subsequent conduct of the creditor has prejudiced the guarantor with the consequence that the guarantee stands discharged. The petitioner may or may not succeed in such a contention and in the event the petitioner does not succeed, the petitioner will necessarily have to answer the respondent's liability. Under these circumstances, what could be said is that the petitioner's liability is contingent. As a contingent creditor he can move a petition under section 439. The real controversy, as presented by the appellant's counsel, concerns the correctness of the finding of the learned judge that since, at the moment, the petitioner is not answerable for any debt of the company, it could not be said that the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company. The averment in this regard is absolutely vague. It is not as if there is any specific mention of any person or any company having come forward with a helping hand by way of collaboration and financial assistance. It is not as if there is any material for the court to be convinced that the prospect of a resuscitation of the company is real. Even now it is not as if the company could present to us any picture which could even indicate the remote possibility of the company resuming its normal operations. The question would primarily be one of finance. Even assuming that the creditors keep away for some time without pressing for their claims to enable recommencing of the functioning, considerable working capital would be called f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuance of the company would be commercially viable. The court will have to take into account the financial condition of the company, its resources, the working capital requirement to start the functioning of the company if it has ceased to function, the possible sources for such working capital, other investments which may be required to restart the company, the preparedness of new creditors to advance funds which, to a great extent, will depend upon the degree of solvency of the company and similar matters. The assessment of these factors would be directly relevant to the determination whether the company will be to pay its debts, given a little breathing time. If the circumstances do not indicate that there is any reasonable prospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sarily be relegated to the final stage. As it is, we feel that the order of the learned company judge has to be vacated. Even so, we are not directing that the petition should be admitted since that calls for fresh consideration for the reason we will presently indicate. Though the question has not been raised before the learned company judge and in fact even here, we notice that the petitioner has not moved for leave of the court under rule 97 of the Companies (Court) Rules, 1959. Such leave is to be sought for when the motion is made by a prospective or contingent creditor. That the petitioner is. Therefore, such a motion should have been made under section 439(8) of the Companies Act read with rule 97 of the Companies (Court) Rules. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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