TMI Blog2008 (9) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... . - This appeal challenges order dated 11-12-2006 made in Company Petition No. 240 of 2004 whereby the petition filed by respondent herein (original petitioner) has been admitted against the appellant herein (original respondent) and an order made for publication of advertisement. Hereinafter, for sake of convenience, the parties shall be referred to as per their respective description in the petition. 2. The petitioner preferred Company Petition No. 240 of 2004 claiming that an amount of Rs. 11,04,332, comprised of principal sum of Rs. 7,62,500 plus interest to the tune of Rs. 3,41,820 was due and payable by the respondent company to the petitioner. A further sum of Rs. 6,61,100 was also claimed as being recoverable towards C form liabilities. The petitioner made the claim on the basis of invoices available at page Nos. 12 to 46 of the Company Petition. According to the petitioner, on 3-3-2004 the petitioner had confirmed the accounts and hence there was no question of any dispute on this count. 3. It was further submitted on behalf of the petitioner that despite statutory notice the respondent company had failed to make payment within the prescribed period of 21 days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made in paragraph Nos. 15, 16 and 17 of the said judgment. The next judgment which was cited was Ashok Fashions Ltd. v. Meghdoot Acid Chemicals [1998] 91 Comp. Cas. 655 (Guj.) followed by case of Wimco Ltd. v. Sidvink Properties (P.) Ltd. [1996] 86 Comp. Cas. 610 (Delhi) and the last decision that was cited was in case of Rishi Enterprises In re. 1991 (2) GLR 1213. On the basis of the aforesaid case law, it was contended that whether a company should be wound up or not, had to be determined on facts and circumstances of each case and the concept of inability to pay debts had to be considered in context of the fact that any order of winding up would result in economic death of the company. It was submitted that the statutory presumption which is available under section 434(1)( a ) of the Act was a rebuttable presumption and once the respondent company had raised various disputes, pointed out financial soundness of the company, the Company Court ought to have come to the conclusion that the presumption was rebutted and in exercise of discretion vested in the Company Court ought not to have entertained the petition. It was therefore submitted that merely because statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its debts if the company does not comply with the requirements stipulated in clause ( a ) of sub-section (1) within the statutory period. That in such an eventuality capability of the company to pay had no role to play and even if a company was financially sound, if there was statutory default envisaged by provisions of section 434(1)( a ) of the Act, the Company Court in exercise of its discretion could always proceed ahead in a winding up petition and there was no prohibition in law. That in such a case winding up petition was a mode of recovery. In support of submissions made reliance has been placed on following two decisions: (1) Hari Nagar Sugar Mills Co. Ltd. v. M.W. Pradhan AIR 1966 SC 1707 (now G.V. Dalvi) Court Receiver. (2) Enernorth Industries Inc. v. VBC Ferro Alloys Ltd. [2006] 133 Comp. Cas. 130 (AP) wherein the Apex Court decision in case of Madhusudan Gordhandas Co. v. Madhu Woollen Industries (P.) Ltd. [1972] 42 Comp. Cas. 125 has been extracted at page Nos. 143 and 144 of the said reports. Inviting attention to averments made in paragraph Nos. 13, 15 and 16 of the petition it was submitted that even the requirement prescribed by Rules and statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption stands rebutted or not one can take clue from clause ( c ) of sub-section (1) of section 434 of the Act, which indicates that for determining whether a company is unable to pay its debts or not, the Company Court shall take into account the contingent and prospective liabilities of the company. In the facts of the present case, even if one accepts the averments made in the affidavit-in-reply and the further affidavit-in-reply to be correct, there is nothing on record to show as to what were the contingent and prospective liabilities of the respondent company, apart from the existing liabilities. Therefore, prima facie, it is not possible to accept the submission on behalf of the respondent company that the company is in a sound financial position and is in a position to discharge its existing liabilities. Merely from the figures of turnover, various expenses incurred by the company, the amount of income-tax refund received by the company, it is not possible to ascertain the financial health of the company in absence of any corroborative evidence in this regard. The submission that the same is not disputed cannot be considered for the simple reason that the financial soundne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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