TMI Blog2001 (3) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... inding up to be listed for admission. The appellant and respondent herein will also be referred to as Company and Creditor respectively in this order. 2. The respondent herein filed the said petition (Co. P. No. 168/1998) under section 439 read with section 433( e ) of the Companies Act, 1956 ( the Act ) alleged that Rs. 34,45,136.32 was due as on 31-5-1997 from the company in regard to goods supplied by it from time to time; that inspite of service of a notice dated 3-3-1998 issued by it through its counsel under section 434(1)( a ) of the Act demanding payment the company did not make the payment, that the Company should, therefore, be deemed to be unable to pay its debt under section 434(1)( a ) and section 433( e ) of the Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative Office of the company and not to the Registered Office of the company. He, however, held by the order under appeal dated 26-3-1999/1-4-1999 [reported in 1999 (98) Comp. Cas. 755 : 2000 CLC 981] that on the facts and circumstances of the case, service of notice on the Administrative Office of the company was sufficient compliance with under section 434(1)( a ). Feeling aggrieved, the appellant has filed this appeal. 6. Section 434(1)( a ) provides that a company shall be deemed to be unable to pay its debts, on fulfilment of the following three conditions : ( i )The company should be indebted to the creditor in a sum exceeding Rs. 500; ( ii )The creditor should serve on the company, a demand under his hand requiring the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered office as meaning delivery at the administrative office , it is not possible to hold that service of notice at an office other than Registered Office as sufficient compliance with section 434(1)( a ) requiring service at registered office. 8. It is well settled that a legal fiction can be raised as provided under a statute, only when the conditions stipulated for raising such legal fiction are strictly and fully complied with. Where the specific requirements are not complied with, no legal fiction will arise. A legal fiction cannot be raised, when the conditions specified do not exist, on the ground that there is substantial compliance or implied or inferred compliance of the requirements to be fulfilled for raising the legal fic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under the rules shall not be deemed to be invalid by reason of any defect provided the Court is satisfied that such service is in other respects sufficient. On appeal, a Division Bench reversed the decision of the single Judge holding that rule 33 applied only to service under the rules and not to service under statutory provisions like section 434(1)( a ). The Division Bench pointed out that section 434(1)( a ) contains a legal fiction which is available even against a company otherwise solvent when it does not respond to a notice of demand made by a creditor. It was held that in order to raise the legal fiction under section 434(1)( a ), that the company is unable to pay its debts, the requirements of section 434(1)( a ) has to be stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address for correspondence, the notice should still be addressed to the registered office and not to the correspondence address. 10. The learned company (Judge) having considered the matter, started on the correct note, if we may say so with respect, by observing that "where the law postulates a specific procedure, non-observance of that procedure would ipso facto vitiate the proceeding and if that is the position, the litigation would be still born and non-est and incapable of being cured, rectified or revived". But then he proceeded to hold that where the notice is served in good faith on an office that is sufficiently large and sufficiently important and where administrative functions are carried out and from where the notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be served on the registered office of the company. The order under appeal cannot, therefore, be sustained. 12. But we do not agree with the appellant that the winding up petition should be dismissed in limine . The averments in the petition disclose that the petition for winding up is based not only on section 434(1)( a ) but also on section 434(1)( c ). Therefore, even if the legal fiction is under section 434(1)( a ) is not available, the petition requires consideration under section 434(1)( c ). It is now well settled that where the notice of demand issued under section 434(1)( a ) is defective the creditor can still prove that the company is unable to pay its debts under section 434(1)( c ). Reference may be made to the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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