Kanpur Exports Private Limited vs Sudhir Kumar Parasrampuria

Prakash Krishna, J.—This is creditors winding up petition filed under Clauses (e) and (g) of Section 438 and 434 of the Companies Act, 1956.

M/s. Kanpur Exports Private Limited, a company incorporated on 19th June, 1979 under the Indian Companies Act, 1956 having its registered office at 7/169, Swaroop Nagar, Kanpur is being sought to be wound up, by means of the present petition. Its Director Smt. Pushpa Saraf and Sri Mohan Lal Saraf in their capacity as Directors of the Company aforesaid, on 12th June, 1986 executed an agreement to sell in respect of a piece of land in favour of Jai Narain Parasrampuria (since deceased) for a total consideration of Rs. 11 Lakhs out of which Rs. 10 Lakhs was paid, in advance. It was agreed upon that the remaining amount of Rs. 1 Lakh was to be paid at the time of execution and registration of the sale deed.

On failure of the Respondent Company to execute the sale deed, a suit for specific performance of contract to sell being suit No. 537 of 1984 was filed in Civil Court, Kanpur. As found therein, during the pendency of the above suit, the plaintiff took forcible possession of the land in question and also demolished the existing building thereon. The suit was decreed by the trial court by its judgment and decree dated 22nd of October, 1992 which was set aside in first appeal No. 681 of 1992 at the instance of the Directors of Respondent Company (hereinafter referred to as Sarafs), the matter ultimately travelled to the Apex Court at the instance of the present petitioner, his wife and son as in the meantime Sri Jai Narain Parasrampuria in whose favour the agreement to sell was executed has died. They have been referred as Parasrampurias. The Apex Court examined the matter in detail and has held that conduct of both the parties is blameworthy. The value of the property is now said to be a Crore. The appellant has deposited a sum of Rs. 10 Lakhs as far as back on 12.6.1984. Appeal was allowed to the extent mentioned therein and besides other things, passed a decree against the Sarafs to refund the amount of advance of Rs. 10,00,000/- with interest at the rate of 12% per annum and furthermore pay compensation to the extent of Rs. 50,00,000/-.

The judgment of the Apex Court is reported in Jai Narain Parasrampuria (Dead) and Others Vs. Pushpa Devi Saraf and Others,

The decree of Apex Court has been put to execution by all the three decree holders namely the petitioner herein, his wife and son who were substituted in place of late Sri Jai Narain Parasrampuria., who died during the pendency of appeal before the Apex Court. It is said that the execution has been registered as Execution Case No. 5 of 2007 and is said to be pending in the Court of Fifth Additional District Judge, Kanpur Nagar.

The present winding up petition has been filed on the ground that in the light of the judgment of the Apex Court, the applicant gave a notice dated 19th of February, 2007 to the Company and its Directors calling upon them to pay the decretal amount, as fixed by the Apex Court within three weeks of the receipt of the notice. The said notice has been received and has been replied by the Company through its letter dated 22nd of March, 2007 on incorrect pleas. In reply, the Company has sought to set off its claim for illegal demolition of the constructions which were standing on the land in question, as compensation. The Company having failed to pay the debts as per the terms of the order of Supreme Court is liable to be wound up.

By way of amendment, in the petition paragraphs 10.1, 10.2 and 10.3 have been incorporated wherein it has been stated that the Respondent Company has not filed any balance sheet or profit and loss account with the Registrar of Companies for the year 1992 onwards. The Respondent Company''s name has been included in the list of defaulting company for not filing the return and as such the Respondent Company be ordered to be wound up, u/s 433(c) and 433(g) of the Companies Act, 1956.

Before admitting the petition, objections were invited from the Respondent Company as to why the petition for winding up may not be admitted and advertised. In response thereof, a counter affidavit has been filed taking a number of pleas. The pith and substance of the defence taken by the Respondent Company is that as certain amount of the Company is outstanding against the petitioner and the said amount according to the Respondent Company is more than the amount found to be due to the petitioner, there being a bonafide defence, the Company should not be ordered to be wound up. It is pleaded that during the pendency of the Civil Suit No. 537 of 1984 Parasrampurias initiated another Civil Suit No. 237 of 1989 to cover up their illegal action of taking possession of the disputed land and illegal demolition of the bungalow standing thereon. The conduct of Parasrampurias was subject matter of adjudication in the Civil Suit No. 537 of 1984 by the High Court and the Apex Court as well. Their conduct has been found to be blameworthy by the two Courts. It has been found as a fact that Parasrampurias were instrumental in getting the building demolished in a high handedness manner and as such the Respondent Company is entitled to recover the compensation amount for the illegal demolition of the building. In this regard, an application termed by them as "restitution application", has been filed in Execution Case which is already pending and the same has been registered as Misc. Case No. 12/74 of 2007, Smt. Pushpa Devi Saraf and Ors. v. Shashank Parasrampuria and Ors.

Further allegation has been made that a C.B.I inquiry was instituted against Parasrampurias for their high handedness and they were prosecuted by Criminal Court in Case No. 665 of 1995 under Sections 120B read with 420, 427, 380 and 451 I.P.C. The Court by its order dated 31st of March, 2009 has awarded sentence to the accused persons. A copy of the said judgment has been filed as Annexure -1 to the third Supplementary Affidavit. Even otherwise also, the petition is liable to be dismissed as it is not maintainable for the reason that the statutory notice dated 19th of February, 2007 given u/s 433(e) read with Section 434(1-A) of the Companies Act is invalid as it has been given by one Sudhir Kumar Poddar who is not known to the Company and that the present petition has been filed only on behalf of one out of three creditors. All the three creditors have jointly filed the execution application which is pending before the Executing Court, the present petition for winding up is not maintainable.

Heard the learned Counsel for the parties and perused the relevant record referred by them. Sri Tarun Agrawal, learned Counsel for the petitioner, submits that it is established on record that the Respondent Company is not in a financial position to pay the sum due from it. The litigation was carried earlier up to the Apex Court and the Apex Court in its judgment, referred to above, has found besides the other things that the respondents herein should refund the advance amount of Rs. 10 Lakhs with interest at the rate of 12 per cent per annum and furthermore, pay compensation to the extent of Rs. 50 Lakhs. The sum payable by the Respondent Company has been crystallized by the order of the Apex Court and the notice for recovery of proportionate amount due to the petitioner was given through the statutory notice, which has been replied on incorrect facts. The Company is also liable to be wound up, as it has not filed its balance sheet etc.. In reply, on the other hand, Sri R.P. Agrawal, learned Counsel for the Respondent Company, submits that the present petition is not maintainable at the instance of one of the joint decree holders, more so, when an application for execution of the judgment of the Apex Court is pending before the executing court at the instance of all the three creditors. Alternatively, the defence as set out by the Respondent Company is a bonafide defence. The case of the Respondent Company is that they have applied for restitution u/s 144 of C.P.C in the execution case for the recovery of damage/cost of the building demolished by Parasrampurias. The said claim of the Respondent Company is a triable issue and bonafide one, the present winding up petition is not maintainable. An order of winding up of a Company should not be passed readily. It is duty of the Company Judge to see that a winding up petition on behalf of the creditors is not used as a lever to illegally pressurize a company to pay the illegal demands raised by the creditors; where there is a bonafide dispute the company could not be said to have neglected to pay the statutory demand. The Court is required to see as to whether the defence propounded by the Respondent Company is dishonest or malafide, submits the learned Counsel for the Respondent Company. Elaborating the argument, he submits that since Criminal Court has also awarded sentence against Parasrampurias along with the other accused persons, the present petition is liable to be dismissed.

Considered the respective submissions of the learned Counsel for the parties and perused the record. Before entering into the merits of the case, the question of maintainability of the petition even apart from the merits, may be considered. It was pointed out that a joint decree was passed by the Apex Court in favour of three persons namely Sudhir Parasrampuria, his son Shashank Parasrampuria and wife of the petitioner Smt. Parwati Parasrampuria. All these persons, undoubtedly, have put the decree in execution registered as Case No. 5 of 2007. The Respondent Company submits that in view of Section 45 of the Contract Act, the present petition which has been filed solely on behalf of Sudhir Kumar Parasrampuria, is not maintainable.

I have given careful consideration to the above submission of the learned Counsel for the Respondent Company but it is difficult to agree with him. It is difficult to understand as to how Section 45 of the Contract Act is attracted. The learned Counsel could not satisfy the Court about the applicability of Section 45 of the Contract Act except that the principle therein may be applicable. Totally, a different situation is contemplated for its applicability u/s 45 of the Contract Act. Indisputably, the petitioner is one of the creditors in whose favour a decree has been passed by the Apex Court. No statutory provision or principle of law could be pointed out by the Respondent Counsel in support of his above plea that out of many creditors one or some of the creditors cannot file a winding up petition. On the contrary, if a Company is not able to pay the proportionate share of one of the creditors, then by no stretch of imagination it can be said that it is able to pay the debts of all the creditors. A creditors'' winding up petition is for the benefit of the entire body of the creditors of the Company sought to be wound up. There is absolutely no allegation of collusion in between the petitioner and its other creditors and or the Respondent Company. In absence of any such plea of collusion or fraud, a winding up petition on behalf of one of the joint decree holders where the company is unable to pay its proportionate debt to such petitioner, in absence of any contrary statutory provision, is maintainable.

The other technical objection raised by the Respondent Company is that statutory notice was given on behalf of Sudhir Kumar Poddar son of late Jai Narain Parasrampuria, resident of 113/24 A, Swarup Nagar, Kanpur, while the present petition has been filed on behalf of Sudhir Kumar Parasrampuria. The submission of Respondent Company is that Sudhir Kumar Poddar is a person not known to the Company and in absence of statutory notice on behalf of Sudhir Kumar Parasrampuria, the present petition is not maintainable. The Court was taken through the said statutory notice (Annexure-2) and its reply (Annexure-3) to the petition. Undoubtedly, in the opening portion of the notice it is mentioned that the notice is being given on behalf of Sri Sudhir Kumar Poddar son of late Jai Narain Parasrampuria. A perusal of the said notice would show that therein all the necessary facts that Smt. Pushpa Devi Saraf and Sri Mohan Lal Saraf had in their capacity as Directors of the Company executed an agreement to sell on 12th of June, 1984 for a total sum of Rs. 11 Lakhs out of which 10 Lakhs were paid through banker''s cheque, the dispute was decided by the Apex Court by its judgment dated 22nd of August, 1986, the Supreme Court directed the respondents to refund the advance amount of Rs. 10 Lakhs with interest at the rate of 12 per cent per annum and furthermore, to pay the compensation to the extent of Rs. 50 Lakhs have been mentioned. These facts have been replied on their merits by the Respondent Company in their notice to reply. A conjoint reading of the notice and the reply would show that the Company was not mislead in any manner about the identity of the notice giver. It was a matter of sheer mistake that instead of Sudhir Kumar Parasrampuria in the notice it was typed out as Sudhir Kumar Poddar. The parentage of notice giver is correctly mentioned therein. There is no dispute that the parties have been litigating since long in Civil Courts and Criminal Courts. An attempt has been made to make a mountain out of a mole hill by taking advantage of typographical error of insignificant nature. A notice should not be read in a pedantic manner with a view to find out fault therein. It should be read in a reasonable and purposeful manner to find out its real intention, object and purpose. In the notice a demand of Rs. 1,35, 52,347.86 inclusive of Rs. 10 Lakhs and interest thereon in the light of the judgment of the Apex Court between the parties has been set out. The Respondent Company has refuted the claim on the pleas available to it. There being no such allegation that the notice giver and the petitioner are two different and distinct person having no connection therein, it will be hyper-technical to hold that the notice was given by a person other than the petitioner. Otherwise, it would be too technical. The law courts are meant to do justice and not to defeat a claim on technicalities. Having said so, I am of the considered opinion that the argument of the respondent company that the petition due to defect in notice is misconceived, is untenable and liable to be rejected.

Now, the main dispute between the parties as to whether the Respondent Company is liable to be wound up in view of Sections 433 and 434 of the Companies Act, is taken into consideration. A Company is liable to be wound up u/s 433(e) if the Company is unable to pay its debt. Similarly, a Company is liable to be wound up u/s 433(g) of the Companies Act if the Company has made default in filing with Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years.

The simple contention of the petitioner is that a decree for ascertained sum has been passed by the Apex Court in his favour jointly within his wife and son. They have already applied for execution of the said decree. The matter is engaging the attention of the executing Court in Case No. 5 of 2007. The petitioner made a demand for the payment of sum due to him proportionately by serving a statutory notice. The Respondent Company is aware about the said debt and still its failure to pay is indicative of the fact that the Company is unable to pay its debt. The learned Counsel for the Respondent Company submits that a winding up petition is not a legitimate means of seeking to enforce the payment of a debt which is bonafide disputed by the Company.

For the sake of convenience the penultimate paragraph 101 of the judgment of the Apex Court inter parties is reproduced below:

As noticed hereinbefore, the conduct of both the parties are blameworthy. The value of the property is now said to be a few crores. The appellants had deposited a sum of Rs. 10 lakhs as far back as on 12.6.1984. The said amount must be directed to be refunded to the appellants with interest @15% per annum. Although we decline to grant any relief of specific performance of contract to which the Appellants were otherwise entitled to, we are of the opinion that it is a fit case where the respondents should be asked to compensate the Appellants. In view of the fact that the Sarafs are also responsible for bringing out such a situation, we are of the opinion that interest of justice would be met if the respondents are directed to pay a sum of Rs. 50,00,000/- to the Appellants herein by way of compensation. Such amount should be in addition to the sum of Rs. 10,00,000/- deposited by the Appellants together with interest at the rate of 12% per annum thereupon. This order shall not preclude Manoj Kumar Poddar to bring an independent action against the respondents herein, if he so desires.

Conclusion:

(i) The property in suit for all intent and purport was acquired for the benefit of the Company.

(ii) Only because at the time of acquisition of the property by Sarafs, the Company was unincorporated, the same would not mean that no title could have been passed in favour of the Company.

(iii) In view of their conduct, Sarafs were estopped and precluded from denying and disputing the title of the Company over the property in dispute.

(iv) Withdrawal of suit No. 1252 of 1982 by the appellants did not create any embargo in raising a contention that the award of the arbitrator and the consequent decree passed were void ab initio and of no effect.

(v) The agreement for sale dated 11.6.1984 was not a transaction for loan.

(vi) Saraf''s conduct was condemnable so far as they not only raised false and frivolous pleas but also initiated frivolous proceedings in courts of law.

(vii) The subject matter of the agreement was not only the house in question but also the entire lands.

(viii) Prima facie the demolition of the house took place at the instance of the appellants.

(ix) However, it is not a case where the appellants are entitled to a decree for specific performance of contract.

(x) The respondents should refund the amount of advance of Rs. 10,00,000/- (ten lakhs) with interest and furthermore pay compensation to the extent of Rs. 50,00,000/- (fifty lakhs).

On a plain reading of the said paragraph, it may be noted that it has been found even by the Apex Court that conduct of both the parties is blameworthy. The Supreme Court has dismissed the suit for specific performance of contract to sell and instead awarded a certain sum by way of refund and compensation with interest vide Clause (x) of paragraph 101. The judgment of the Apex Court has attained finality between the parties, is also no longer in dispute.

The Respondent Company has not disputed even before this Court its liability to pay the sum so awarded by the Apex Court. The only defence which has been put forward by it is that a larger sum may be found payable by the petitioner including the other creditors of the suit, by way of restitution. Much emphasis was laid by the Company''s counsel on the fact that the conduct of the plaintiff was found blameworthy as they illegally took the possession of the disputed land and demolished the palatial building in the night, without any authority of law. Criminal cases were instituted against them and they have been found guilty of committing various offences for which they have been awarded sentence etc.. Submission is that the Respondent Company is quite hopeful of its success for its claim towards the damages/compensation of the building demolished by Parasrampuria. In this regard, an application by way of restitution has been filed in the Execution Case and the said case has been registered as Case No. 12/74 of 2007. The question which falls for determination is whether filing of such an application on the facts and circumstances of the case can be said to be a bonafide dispute questioning the entitlement of the petitioner to enforce the payment of his debt by means of present winding up petition. To me, the answer is very simple. The claim petition as alleged by the Respondent Company has been filed for alleged restitution not immediately after the incident, or during the journey of litigation up to the Apex Court, but after the final verdict by the Apex Court. It was not disputed and could not have been disputed that even the Supreme Court has found that conduct of both the parties is blameworthy. This being so, the respondent counsel is not right in raising his fingers against the conduct of the petitioner alone. The Apex Court was conscious about the blameworthy conduct of both the parties and also of the fact that in the meantime the value of the property has been appreciated manifolds. While adjusting the equities between the parties by refusing to grant a decree for specific performance of contract, it has balanced the equities by passing the judgment awarding certain sum as also the refund of the advance payment with interest.

The pleading in this regard may be noticed. In paragraph - 8 of the counter affidavit it has been stated that the defendant (Respondent Company) has filed application u/s 144/151 C.P.C which has been registered as Misc. Case No. 12/74 of 2007 in the Court of Additional District Judge (5), Kanpur Nagar claiming Rs. 1,71,95,000/- with interest at the rate of 18 per cent per annum as damages/compensation. The said miscellaneous case is pending. Thus, against the claim of Rs. 10 Lakhs + 50 Lakhs = Rs. 60 Lakhs, the Respondent Company has a cross-claim of Rs. 1,71,95,000/- against the petitioner. The claim made by the Respondent is bonafide and genuine. The claim of Respondent is supported by the findings recorded by the Hon''ble High Court and Hon''ble Supreme Court and is liable to be decreed by the Civil Court. The petitioner cannot claim the amount ordered to be paid to them by the Hon''ble Supreme Court without the setting off of the claim of the Respondent Company. A copy of the said application has been filed as C.A. 15 to the counter affidavit. The prayer clause of the said application is reproduced below:

(a) A sum of Rs. 17,95,000/- towards loss due to demolition of the building of Premises No. 7/169 Swaroop Nagar, Kanpur, as restitution cost plus rise in cost of construction as per Index of Valuer''s report.

(b) A sum of Rs. 100, 000/- for depriving of the possession of the said Bungalow/property during the period as mentioned above as mesne profit/compensation/damages/208 months.

(c) A sum of Rs. 50 lacs for mental pain and agony, loss of reputation and loss of business etc.

(d) Interest on the above amount at the rate of 18% per annum since the date of accrual of each items to the date of actual payment.

(e) Cost of these proceedings in favour of the applicant against the opposite party.

(f) Any other and further amount or amounts which this Learned Court may deem fit and proper in the circumstances of the case be also awarded to the applicant against the opposite party.

According to the Respondent Company the possession was taken on 23rd of September, 1989 and the application u/s 144/151 C.P.C has been filed in the month of February, 2007 i.e. after 18 years. One of the questions that would arise is as to whether such an application is within the period of limitation as has been held that an application for restitution is in the nature of execution proceeding and the period of limitation for filing of such an application is 12 years from the date of order. Secondly, as regards the conduct of Parasrampuria is concerned, the said conduct and the illegal demolition of the construction by them has been taken note of the High Court and the Supreme Court as well. The Supreme Court, as already stated above, has held that the conduct of both the parties is blameworthy.

Taking into consideration the entire facts and circumstances of the case, the Apex Court thought it fit not to grant a relief for specific performance of the contract to sell in favour of Parasrampuria and awarded damages instead. It is difficult to say that after the final curtain drawn on the litigation by the Apex Court through its judgment referred to above that the Respondent Company''s claim of set off still survives, no such claim was put forward immediately after the incident of the year 1989 either before the trial court or before the High Court or before the Apex Court. At least, there is no such material nor was pointed out by the learned Counsel for the Respondent Company during the course of the argument that plea of recovery of damages for illegal demolition was put forth at any stage, earlier. At this distance of time, the plea of set off as set up by the Respondent Company is nothing but an afterthought. It is by way of counter-blast to the claim of the petitioner who has succeeded in part before the Apex Court. What to say, the bonafides of the Respondent Company about its claim of set off, such a claim is unimaginable after the final disposal of the appeal by the Apex Court. It is difficult to say that now plea of set off as claimed by the Respondent Company is in any manner available to it.

The issue has a different angle also. The restitution as contemplated u/s 144 C.P.C presupposes the passing of a judicial order and its modification/variation by a subsequent judicial order. The object, purpose and principle of restitution is that no party should suffer loss for any wrong of Court. If a Court has committed some mistake at the initial stage and the said mistake has been rectified subsequently, the party who has gained any advantage due to the earlier order should restore that advantage to the successful party in whose favour the order has been varied or modified subsequently. No such condition exists in the present case. It is not the case even remotely by the Respondent Company that it was dispossessed due to wrong order passed by any Court nor there is any order varying or modifying an earlier order passed by any Court. On the contrary, the case of the Respondent Company is, which has been found to be correct even by the Apex Court, that Parasrampurias by taking law in their hands unauthorizedly forcibly entered into the possession of the land in question and demolished the building standing therein. In the absence of any court''s order, in my considered view, the principle of restitution cannot be invoked in the present factual scenario. Except making submission that the Respondent Company has a bonafide claim or dispute against the petitioner, the said submission has not been substantiated by its learned Counsel either with reference to any principle of law, statutory provision or case law. If a defence of bonafide claim or dispute has been set out in response to a winding up petition at the instance of the creditor, the Company sought to be wound up, has to establish with some cogent material that its claim has fair chance of success, which in the present case is lacking.

Bonafide dispute over debt is a question depending upon a factual scenario of a given case. Where there is a bonafide dispute, the company could not be said to have neglected the payment on a statutory demand. In all these cases, it has been laid down that a Court is required to see as to whether the defence propounded by the respondent company is dishonest or malafide. The dispute must be bonafide in both the subjective and objective senses. This means that it must be honestly believed to exist and must be based on substantial or reasonable grounds. The leading case of the Apex Court is Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami (1965) 35 Comp Cas 456, 463 wherein it has quoted with approval the following passage from Buckley on the Companies Acts (13th Edition, page 451):

It is well-settled that ''a winding up petition is not a legitimate means of seeking to enforce payment of the debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a scandalous abuse of the process of the court. At one time petitions founded on disputed debt were directed to stand over till the debt was established by action. If, however, there was no reason to believe that the debt, if established, would not be paid, the petition was dismissed. The modern practice has been to dismiss such petitions. But, of course, if the debt is not disputed on some substantial ground, the court may decide it on the petition and make the order''.... If the debt was bona fide disputed, as we hold it was, there cannot be ''neglect to pay'' within Section 434(1)(a) of the Companies Act. If there is no neglect, the deeming provision does not come into play and the ground of winding up, namely, that the company is unable to pay its debts is not substantiated.

The Apex Court in Madhusudan Gordhandas and Co. Vs. Madhu Wollen Industries Pvt. Ltd., has laid down the following principles:

That the defence of the company is in good faith and one of substance;

The defence is likely to succeed in point of law; and

The company adduces prima facie proof of the facts on which the defence depends.

The Apex Court in Mediquip Systems Pvt. Ltd. Vs. Proxima Medical System GMBH, relied upon by the learned Counsel for the respondent company, has held that a debt u/s 433(e) of the Companies Act, must be determined or a definite sum of money payable immediately or at a future date and the expression "unable to pay its debt", therein should be taken in commercial sense and the machinery for winding up will not be allowed to be utlised merely as a means for realising debts due from a company.

On a plain reading of the principles of law as delineated above, this Court is of the opinion that the Apex Court in its judgment inter-parties has in unequivocal terms has directed the Respondent Company to pay its liability in ascertained sums with interest therein as provided therein in Clause (x) of paragraph 101 of the judgment. It has taken into consideration the conduct of the Respondent Company who have been described as Sarafs and has noted that Sarafs'' conduct was condemnable so far as they not only raised false and frivolous pleas but also initiated frivolous proceedings in courts of law. It appears that there is no improvement in their conduct and with a view to circumvent the final verdict of the highest Court of land, have set out a case of counter-claim by way of defence, as a counterblast. Had there been any genuineness in their claim, they would have raised it at the appropriate time and place as soon as the subject matter of the suit was trespassed by Parasrampuria in year 1989. Parasrampurias have been denied the relief for specific performance of the contract to sell for their blameworthy conduct and the Apex Court after weighing the respective conducts of the parties and merits of the case has found an ascertained sum due and payable to Parasrampuria and the said claim has attained finality and cannot be reopened by way of miscellaneous application in execution proceedings.

In view of the discussions made above, the plea that the winding up petition is liable to be dismissed and the debt against the Company cannot be enforced as the same is bonafidely disputed by the Respondent Company, is meritless and is hereby rejected.

As said above, a case against the Respondent Company that it is unable to pay its debts to the petitioner has been made out and the petition is liable to be admitted under Clause (e) of Section 433.

To keep the record straight, it is worthwhile to mention that it was neither argued nor even whispered that the sum due to the petitioner, as claimed by him, is not a ''debt'' within the meaning of Sections 433 and 434 of the Companies Act.

The winding up of the Respondent Company has also been sought for on the ground that the Respondent Company has made default in filing with the Registrar of Companies its balance sheet and profit and loss account or annual return for any five consecutive financial years. The necessary averment in this regard were incorporated through amendment in the petition.

From the pleadings of the Respondents it would show that the balance sheet and profit and loss account for the financial year 1992-1993 was filed on 13th of May, 2009 and for the subsequent years i.e. 1993-94, 2007-08 on 14th of May, 2009. Obviously, these documents were filed before the Registrar of Companies much after the prescribed period. It may be noted that application to amend the winding up petition and to incorporate the grounds relating to Clause (g) of Section 433 was sought for and was allowed by this Court on 22nd of April, 2009. Being faced with this situation, after the amendment application was allowed, the respondents had no option but to file statutory documents long after the expiry of the prescribed period of limitation. This being so, a case for winding up of the company under Clause (e) of Section 433 has also been made out.

Viewed as above, it is established that the respondent company is unable to pay its debts to the petitioner company. The defence as set out by the respondent company does not raise a bonafide dispute. Let the petition be advertised within a period of four weeks as envisaged under Rule 24 of the Companies (Court) Rules, 1953. Advertisement may be issued in two daily newspapers, in Hindustan Times (English) and Dainik Jagaran (Hindi) having wide circulation in District Kanpur as also in the Official Gazette.

Let the matter be listed on 18.12.2009.