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In the Matter of Advent Corporation Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberCompany Petition No. 80 of 1968
Judge
Reported in[1969]39CompCas463(Bom)
ActsCompanies Act - Sections 434(1)
AppellantIn the Matter of Advent Corporation Pvt. Ltd.
Excerpt:
company - winding up - sections 433 (e) and 434 (1) of companies act, 1956 - whether dispute which company sought to raise that amounts mentioned in consent terms not paid in cash but to be adjusted against amounts payable by petitioners for top floor flat they agreed to purchase bonafide dispute - considering all circumstances there is no substance in company's defence to present petition - dispute not bona fide - petitioners therefore made out case that company neglected to pay sum demanded by them by statutory notice - prima facie company must be deemed to be unable to pay its debts within section 433 (e). - indian succession act (39 of 1925), section 63: [s.b. sinha & cyriac joseph, jj] will validity - deceased, was a very wealthy person - he floated several companies - he left.....vimadalal, j. 1. this is a petition under section 433(e) of the companies act for the winding up of a company named advent corporation pvt. ltd. on the ground of its inability to pay its debts, both by virtue of noncompliance with a statutory notice given under the provisions of section 434(1)(a) of the companies act, as well as on the ground of its being commercially insolvent. the petition was accepted by me on the 28th of june, 1968, and notice was directed to be given to the company in respect of the same. it has now come up before me for admission and for consequential orders by way of advertisement. 2. the advent corporation pvt. ltd. (hereinafter referred to as the 'company') was incorporated on the 15th of july, 1959, mainly for the purpose of acquiring building sites and.....
Judgment:

Vimadalal, J.

1. This is a petition under section 433(e) of the Companies Act for the winding up of a company named Advent Corporation Pvt. Ltd. on the ground of its inability to pay its debts, both by virtue of noncompliance with a statutory notice given under the provisions of section 434(1)(a) of the Companies Act, as well as on the ground of its being commercially insolvent. The petition was accepted by me on the 28th of June, 1968, and notice was directed to be given to the company in respect of the same. It has now come up before me for admission and for consequential orders by way of advertisement.

2. The Advent Corporation Pvt. Ltd. (hereinafter referred to as the 'company') was incorporated on the 15th of July, 1959, mainly for the purpose of acquiring building sites and constructing buildings thereon and leasing or disposing of flats therein on ownership basis or otherwise. The company has already constructed a building named 'Advent' on a site at Backbay Reclamation which has been occupied by the various persons and the court is not really concerned in the present case with the building. On the remaining portion of the same plot of land, however, there is under construction by the company another building, the work in respect of which has come up to and inclusive of the 9th floor. By an agreement dated 10th September, 1962, the petitioners, who are husband and wife, contracted to purchase from the company a full basement floor in the said building under construction for the price of Rs. 2,25,000 on certain terms and conditions to which it is unnecessary to refer, and the petitioners paid an aggregate sum of Rs. 80,000 to the company towards the purchase price of the said basement floor. The company having failed and neglected to start the construction of the said building, or to refund to the petitioners the said sum of Rs. 80,000, the petitioners filed a petition (being petition No. 24 of 1966) in this court for winding up the company, but on certain consent terms having been arrived at between the parties, the said petition was allowed to be withdrawn by the consent order passed on the 21st of April, 1966. The said consent terms, a copy of which is annexed to the petition and marked 'A', were as follows :

'1. By consent petition allowed to be withdrawn with leave of the court.

2. By consent Advent Corporation Pvt. Ltd. (hereinafter called 'the company') acknowledges, agrees and undertakes to pay to the petitioners a sum of Rs. 1,04,796. Costs fixed at Rs. 750 and further interest on the said sum of Rs. 80,000 at 9% in the manner following :

(a) a sum of Rs. 10,000 on or before 21st April, 1966;

(b) a sum of Rs. 45,000 within two months, i.e., on or before 21st June, 1966;

(c) the balance on or before 31st August, 1966.

3. In default of payment of any one instalment on its due date the whole of the amount, then remaining due shall become payable immediately and the petitioners will be at liberty to proceed further in the matter.'

3. The company paid to the petitioners the sum of Rs. 10,000 which was payable on the date of the said order in accordance with the consent terms. On the same day, viz., 21st April, 1966, the petitioners agreed to purchase from the company 'the entire top floor (existing at completion) for residence' in the said building under construction at the price of Rs. 30 per square feet which was payable in the following manner :

'(a) a sum of Rs. 5,000 immediately by way of adjustment from the amount due to you by the company :

(b) a sum of Rs. 10,000 on the 1st floor slab of the proposed building being put up;

(c) a sum of Rs. 10,000 on the 2nd floor slab of the proposed building being laid;

(d) a sum of Rs. 10,000 on the 3rd floor slab of the said building being laid;

(e) Rs. 10,000 on the 4th floor slab of the said building being laid;

(f) 15% of the balance of the purchase price on the 5th floor slab of the said building being laid;

(g) 15% of the balance of the purchase price after paying off the sums mentioned in (a) to (f) above on the 6th floor slab of the said building being laid;

(h) a sum equivalent to 15% of the balance of the amount after deducting the payments in accordance with clauses (a) to (g) above on the 7th floor slab being laid;

(i) a sum equivalent to 15% of the balance of the price after payment of the amount mentioned in clause (a) to (b) above on the 8th floor slab of the said building being laid;

(j) balance of the purchase price after all the aforesaid payments have been made on delivery of possession of the said 2 top floor flats and production of completion certificate.

4. Completion - 3 years from date.'

4. A copy of the letter recording that agreement is to be found annexed to the affidavit filed by the company in reply to present petition and marked. 'No. 1'.

5. In addition to the sum of Rs. 10,000 which was paid by the company to the petitioners on the 21st of April, 1966, pursuant to the consent terms mentioned above, a further sum of Rs. 5,000 was adjusted towards the purchase price payable by the petitioners to the company in respect of the purchase of the top floor of the said building under construction in accordance with the terms recorded in the said letter dated 21st April, 1966. The petitioners appropriated the said sum of Rs. 15,000 towards the interest payable to them under the said consent terms dated 21st April, 1966. It is the case of the petitioners that the company has, however, failed and neglected to pay the amounts that became due on the 21st June, 1966, and the 31st of August, 1966, respectively, and they, therefore, through their attorneys, gave a statutory notice dated 28th March, 1968, under the provisions of section 434(1)(a) of the Companies Act demanding payment of the balance due to them under the said consent order dated 21st April, 1966. The company's advocate by his letter dated 17th April, 1968, merely stated that he was obtaining instructions from his clients and would send a reply in due course, and suggested that a meeting of the parties should be called for the purpose of avoiding litigation. No reply was, however, ever sent by the company to the statutory notice given by the petitioners; attorneys. The petitioners, therefore, filed the present winding-up petition on the 13th June, 1968.

6. The main contention of Mr. Bhabha on behalf of the company was that the agreement between the parties was not that the amounts mentioned in the consent order dated 21st April, 1966, were to be paid in cash, but that the same were to be adjusted against the amounts payable by the petitioners to the company in respect of the top floor of the building under construction, the agreement in respect of which was entered into on the very day on which the said consent order was passed in earlier winding-up petition No. 24 of 1966. Mr. Bhabha has contended that there is a bona fide dispute between the parties and no order admitting the petition should, therefore, be made under the provisions of section 434(1)(a) of the Companies Act. Mr. Bhabha has further contended that no case of commercial insolvency has been made out on the affidavits filed in the present petition.

7. Before I deal with these contentions of Mr. Bhabha and some other contentions which he also advanced but which, in my opinion, were of no substance, it would be convenient to state briefly the legal position in regard to the provisions of the said section 434(1)(a). In a passage which is cited in most of the leading cases on the subject it is stated in Buckley on the Companies Acts, 13th edition, at page 451, that a winding-up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company, and that a petition presented ostensibly for a winding-up order but really to exercise pressure should be dismissed and might be stigmatized as a scandalous abuse of the process of the court. The said learned author, however, states a little earlier (at page 450) as follows :

'A creditor who cannot obtain payment of his debt is entitled as between himself and the company ex debito justitiae to an order if he brings his case within the Act. He is not bound to give time. And, notwithstanding a voluntary winding-up, on proving his judgment and that it remains unsatisfied he will be so entitled.'

8. It may be mentioned that the expression ex debito justitiae connotes, according to Jowitt's Dictionary of English Law, a remedy to which the applicant is entitled as of right. It is further stated in the same entry in the said Dictionary that a remedy which may or may not be granted would be called discretionary. The latter statement is presumably intended to bring out the distinction between these two types of remedies. Dealing with the same subject, it is stated in Palmer's Company Precedents, 17th edition, part II, at pages 27, 28, that, the mere omission of a company to comply with a statutory notice is not 'neglect' within the meaning of the statute, 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 further stated there as settled law 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, unless of course, it is shown that the alleged dispute is not a bona fide one, for a winding-up petition is not to be used as machinery to try a common law action. That is precisely what the Supreme Court has laid down in the case of Amalgamated Commercial Trader (P.) Ltd. v. Krishnaswami (1965) 35 Comp. Cas. 456 in which the passage from Buckley cited by me above has been quoted with approval. It is further stated by the Supreme Court in the said case (at page 464) that if a debt is bona fide disputed, there cannot be 'neglect to pay' within section 434(1)(a) of the Companies Act, and if there is no neglect, the deeming provision does not come into play and ground of winding-up, viz., that the company is unable to pay its debts is not substantiated. In view of this well settled position, it is really unnecessary for me to refer to any of the other authorities that were cited by Mr. Bhabha. I may, however, briefly refer to four cases, two of which were not cited before me, as they are of assistance for the purpose of determining the point which I am now considering. In the old case of Tulsidas v. Bharath and Cotton Mills Ltd. : AIR1914Bom251 . It was observed (at page 695) that where the defence was that the debt was disputed, all that the court had first to see was whether that dispute was, on the face of it, genuine, or 'merely a cloak of the company's real inability to pay just debts'. It may be mentioned that it was held on the facts of that case that it was perfectly clear that the defence, whatever its ultimate result might be, had substance in it and that the company was not unable to pay the debt which it owed to the petitioner. In the English case of In re Welsh Brick Industries Ltd. (1946) 2 All E.R. 197, the actual decision in which is not relevant for purpose of the present case, after quoting with approval the passage from Buckley which has already been cited by me above, it was stated (at page 198) that the court had to consider whether or not the dispute was a bona fide dispute or, putting it in another way, whether or not there was some substantial ground for defending the action. In this connection, it may be mentioned that it has been laid down by a Division Bench of this court in the case of Bachharaj Factories Ltd. v. Hirjee Mills Ltd. (1955) 25 Comp. Cas. 227; (1955) 57 Bom. L.R. 378that allegations about the mala fides of the petitioners are entirely irrelevant, because if the petitioners do make out a case for the winding-up of the company, the motive of the petitioners has nothing to do with question whether an order for winding-up should be made or not, and the court cannot take into consideration, 'how wicked the petitioners were or how evil their actions had been.' In his unreported decision dated 23/24th November, 1964, in Company Petition No. 59 of 1964, my brother Mody has stated that merely because the petitioners had two rights in law, viz., to file a civil suit for the recovery of their dues or to file a winding-up petition against the company, and they chose the latter, it could not be said that the petitioners had acted mala fide to put improper pressure on the company. There was an appeal (Appeal No. 86 of 1964) from the said decision of my brother Mody, but there is nothing in the unreported judgment delivered by the appellate bench on 8th/9th April, 1965, to controvert that statement of the law by my brother Mody.

9. The principles formulated in the preceding paragraph are so well-settled that it is too late in the day to dispute them. Mr. Bhabha, however, chose to propound submissions of law which went far beyond the principles formulated above and are, in my opinion, clearly unsustainable. His first contention was that the observations in Bachharaj's case ((1955) 25 Comp. Cas. 227), referred to by me above to the effect that the mala fides of the petitioners is irrelevant, are no longer good law in view of the decision of the Supreme Court in the case of National Conduits (P.) Ltd. v. S. S. Arora : [1968]1SCR430 , in which it was laid down (para. 4) that, in answer to a notice to show cause why a petition for winding up be not admitted, the company may show cause and contend that the filing of the petition amounts to an abuse of the process of the court. Mr. Bhabha has also cited several other decisions in which the standard phrase 'abuse of the process of the court' has been used, and has contended t fides on the part of the petitioners must be taken into account for the purpose of finding out whether a winding-up petition is an abuse of the process of the court. I am afraid I cannot accept the proposition and, in my opinion, none of the cases cited by Mr. Bhabha lay down any such proposition. The 'abuse of the process of the court' which is referred to in various decisions is, as pointed out in the passage from Palmer's Company Precedents cited above, only the conclusion which the court draws from the fact that the petition for winding-up is filed with a view to enforcing payment of a disputed debt. Indeed, Mr. Bhabha has not been able to cite a single case in which that phrase has been used otherwise than in the context of a disputed debt. Not only am I bound by the observation of the Division Bench in Bachharaj's case (1955) 25 Comp. Cas. 227, but I agree fully with them. In my opinion, what the court has to consider is not the mala fides of the petitioners in filing the petition, but the bona fides of the dispute sought to be raised by the company in answer to the same, and it is these two concepts which, in my opinion, have been mixed up by Mr. Bhabha in the course of his argument on the point.

10. On the basis of the submission made by Mr. Bhabha, to which I have referred in the preceding paragraph, he has propounded the following consequential propositions :

(1) If the action of the petitioner is not for the benefit of the general body of creditors, it must be held to be mala fide, and the winding-up petition should not be admitted;

(2) If the company is not commercially insolvent, a winding-up petition on the ground of non-compliance with a statutory notice under section 434(1)(a) must be held to be mala fide, and the winding-up petition should not be admitted;

(3) If the petitioner could have filed a suit but has chosen to file a winding-up petition, the winding-up petition must be held to be mala fide, and should not be admitted, even if there be no bona fide dispute in regard to the debt on which the winding-up petition is founded; and

(4) That the making of a winding-up order is discretionary and the court may decline to make the same, even if a case is made out which would fall within one of the grounds in section 433, because the said section uses the word 'may'.

11. As far as the first of the above propositions is concerned, it is true that, in the ultimate analysis, when a winding-up order is made, as observed by Chagla C.J. in Bachharaj's case (1955) 25 Comp. Cas 227; 57 Bom. L.R. 378, the court passes that order in the interest of the company, 'in the interest of the shareholders, and in the interest of the creditors', but no proposition is to be found either in standard works or in decided cases laying down that no winding-up order can be made unless it is shown that the petitioner is acting in the interest of the general body of creditors. In any event, no such inquiry can possibly be made by the court at the preliminary stage of admission of the petition when all that the court has to ascertain is whether it appears to the court that there is a prima facie case and whether it requires further inquiry and investigation. As observed by my brother Mody in his unreported judgment in Company Petition No. 59 of 1964 already cited by me above, at the stage of admission, the court takes only a prima facie view of the petition on the material before it and has to consider whether that material would justify the court in summarily dismissing the petition, or whether it would require further investigation. At the admission stage, the court has to consider contentions of a preliminary nature that the petition is not maintainable, or that the petition constitutes an abuse of the process of the court in so far as it is based on a disputed debt, or if it is a creditor's petition, that the petitioner has failed to make out that he is a creditor. The court cannot, however, be expected to consider at the admission stage, when it can only take a prima facie view of the matter, the larger question as to whether the petitioner is acting in the interest of the general body of the creditors. Whether such a question would arise for consideration at the stage of the final hearing of the winding-up petition is a matter on which I am not called upon to pronounce an opinion at this stage. Suffice it to say, that Mr. Bhabha has not been able to point out to me a single decided case which would bear out his contention that a winding-up petition should not be admitted if the action of the petitioner is not in the interest of the general body of creditors, even if he makes out a case which would bring it within one or other of the grounds laid down in section 433 read with section 434 of the Companies Act. I have, therefore, no hesitation in rejecting this contention of Mr. Bhabha.

12. The second contention of Mr. Bhabha, viz., that no winding-up order should be made unless the company is shown to be commercially insolvent, even though it may have neglected to comply with a statutory notice under section 434(1)(a) of the Companies Act, is not only unsupported by authority but must be rejected in the face of the statutory provisions that are to be found in sections 433 and 434 of the Companies Act. If Mr. Bhabha's contention that commercial insolvency must be established in every case were to be accepted, it would lead to the logical absurdity that, though section 434 lays down six grounds on which a winding-up order could be made by the court, in the ultimate analysis, it boils down to only one ground, viz., actual inability to pay debt laid down in clause (e) of section 433. Such a construction would render all other clauses of section 433 redundant. Moreover, if that were to be the construction to be placed upon section 434(1)(a), there would be no reason why section 434(1)(a) should have been enacted by the legislature. In my opinion, therefore, it is impossible to accept Mr. Bhabha's contention on this point in the face of these statutory provisions.

13. The next contention of Mr. Bhabha goes still further and is, in my opinion, still more unsustainable. Not only is it contrary to the law laid down by the Division Bench in Bachharaj's case (1955) 25 Comp. Cas. 227; 57 Bom. L.R. 378 to the effect that the mala fides of the petitioner is irrelevant in a winding-up petition, as already pointed out by me above, but this very contention has in terms been rejected by my brother Mody in his unreported judgment in Company Petition No. 59 of 1964 in the passage which has also been cited by me above and which it is unnecessary to repeat. Moreover, the contention of Mr. Bhabha would lead to this that no winding-up order could ever be made since the petitioner in every winding-up petition certainly has the option of filing a suit, if he so chooses. I am not prepared to accept a contention which would render nugatory all the provisions of the Companies Act relating to the winding-up of companies.

14. The last contention of Mr. Bhabha, viz., that a winding-up order is discretionary even in cases in which a ground under section 433 of the Companies Act has been made out by the petitioner, because that section uses the word 'may', must also be rejected. As stated in the passage from Buckley, which I have quoted earlier in this judgment, a creditor who cannot obtain payment of his debt is entitled as between himself and the company ex debito justitiae to an order for winding-up, if he brings his case within the Act, by which is meant that he is entitled to resort to that remedy as of right. Referring to the decision in Bachharaj's case (1955) 25 Comp. Cas. 227; 57 Bom. L.R. 378. a Division Bench of this court in the case of Western India Theatres Ltd. v. Ishwarbhai Somabhai Patel (1959) 29 Comp. Cas 133; 60 Bom. L.R. 1288, observe (at page 1289) that in adjourning the petition the trial court in Bachharaj's case (1955) 25 Comp. Cas. 227, had deprived the petitioner of a right to which he was 'entitled' if his petition was well-founded. That observation supports the view expressed in Buckley that a winding-up order is not a discretionary remedy. In my opinion, the mere use of the word 'may' in section 433 of the Companies Act cannot lead to the conclusion that the court can decline to make a winding-up order even in cases in which the petitioner is entitled to the same ex debito justitiae. In this connection, it may be pointed out that section 434(1)(a) of the Companies Act does not merely lay down a presumption which can be rebutted, but uses the word 'shall' and enacts a deeming provision which must come into play once the company neglects to pay the sum demanded by the statutory notice to which it refers. Mr. Bhabha also relied on the provisions of section 443(2) of the Companies Act. Sub-section (1) of that section lays down the various orders which the court can make at the hearing of a winding-up petition. Sub-section (2) thereof, however, enacts that where the petition is presented on the ground that it is just and equitable that the company should be wound up, which is the ground mentioned in section 433(1), the court can refuse to make a winding-up order if it is of opinion that some other remedy was available to the petitioners and the petitioners were acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy. Mr. Bhabha sought to contend that section 443(2), therefore, shows that the making of a winding-up order is a matter resting in the discretion of the court. I am afraid section 443(2), far from supporting Mr. Bhabha in that contention, goes against him, for it says that the discretion to refuse a winding-up order is conferred on the court only in cases falling within clause (f) of section 433, by clear implication, it negatives discretion in cases falling within any of the other clauses of section 433. There is good reason why that should be so. The reason is that clauses (a) to (e) of section 433 lay down grounds which are specific in nature. When those grounds are made out, clause (f) of section 433, on the other hand, is a residuary clause of an 'elastic' nature and it is for that reason that section 433(2) confers an equally 'elastic' discretion on the court. I must, therefore, reject this contention of Mr. Bhabha also.

15. The only question that arises on the facts of the present case, therefore, is whether the dispute which the company has sought to raise that the amounts mentioned in the consent terms were not to be paid in cash, but were to be adjusted against the amounts payable by the petitioners for the top floor flat which they agreed to purchase, is a bona fide dispute, or, in other words, whether that dispute is based on substantial grounds and has substance in it. There are several reasons why I have come to the conclusion that the dispute which the company has sought to raise in answer to the present petition has no substance whatsoever in it. Not only is there no reference at all to any adjustment in the consent terms dated 21st April, 1966, but they expressly provide for payment of particular amounts on specified dates, which would be wholly incompatible with the company's story of adjustment. Moreover, neither those amounts nor those dates tally with the amounts and the dates mentioned in the company's letter of the same date recording the terms on which the new agreement for the purchase of the top floor was arrived at between the company and the petitioners. The fact that the first payment mentioned in the said letter, viz., of the sum of Rs. 5,000 is expressly stated to be by way of adjustment from the amount due to the petitioner by the company under the consent terms shows that that was the only amount that was to be paid by adjustment and negatives the story of the company that all the amounts mentioned in the consent terms were to be adjusted in that manner. Another reason why the dispute sought to be raised by the company is not bona fide is that no such case was set up by the company in reply to the statutory notice dated 28th March, 1968, and the same appeared for the first time, and that too with some variation, in a suit which the company filed against the present petitioners in the Bombay City Civil Court on the 19th of April, 1968, for a permanent injunction restraining the present petitioners from taking any action pursuant to the statutory notice dated 28th March, 1968. It may be mentioned that the said suit itself is a perfectly frivolous suit filed merely in order to attempt to forestall and prevent the filing of the present winding-up petition. That is clear in view of the provisions of section 41(b) of the Specific Relief Act, 1963, which prohibit a court from granting a perpetual injunction restraining a party from proceeding in a court not subordinate to that in which the suit claiming the injunction is filed. If there was any substance in the company's defence to the present petition that the amounts mentioned in the consent terms were not to be paid in cash, but were to be adjusted in the manner suggested, the most obvious reaction of the company, even without consulting a lawyer, would have been to write back promptly and state 'What are you talking about These amounts were not to be paid in cash but were to be adjusted against the amount payable by you for the top floor of the building under construction.' Such a statement would require no instructions and no legal advice, and the fact that no such statement appeared at all in reply to the statutory notice till the City Civil Court suit was filed three weeks thereafter is, in my opinion, an eloquent pointer to the absence of bona fides in the dispute that is now sought to be raised by the company. An attempt was also sought to be made by Mr. Bhabha in the course of his argument to show that the whole thing was so arranged that the petitioners would be able to use what has popularly come to be known as 'black money', but I am afraid I have not been able to understand how the company's story fits in with any such theory.

16. The last but perhaps an important ground on which I have come to the conclusion that the company's defence has no substance in it and is not bona fide is that it is not disputed that portions of the top floor, as it exists to-day, which is the 9th floor of the building under construction, have been sold by the company to other parties with whom the company has pending disputes which remain to be settled. It was sought to be contended by Mr. Bhabha that, under its agreement with the petitioners, the company was bound to give them the top floor 'existing at completion' within a period of 3 years which would expire on the 21st of April, 1969, and that it is open to the company to build higher floors in view of the balance of its floor space index. The manner in which the payments were to be made by the petitioners for the top floor flat as recorded in the company's own letter dated 21st April, 1966, however, shows clearly that what was intended by the parties was that the petitioners were to have the whole of the 9th floor which would consist of two flats. This is apparent from the fact that clauses (b) to (j) of para. 2 provided for payment of various amounts as the building construction proceeded from one floor to another. Clause (i) of para. 2 of the company's said letter referred to a certain payment having to be made on the 8th floor slab of the said building being laid, and clause (j) proceeded to provide for the payment of the balance of the purchase price on delivery of possession of the two top floor flats, which would clearly indicate that it referred to the 9th floor. When I called for the relevant correspondence between the company and the municipality on the subject as to what were the number of floors that were to be constructed under the plans as sanctioned by the municipality at the date of the agreement, viz., 21st April, 1966, it was clear that the company had applied for and the municipality had sanctioned plans only for the construction of a ground and 9 upper floors, and that that was what both parties had in mind at the date of the agreement, viz., 21st April, 1966. The plan submitted by the company's architects, Messrs. M. G. Bhogle & Co., with their letter dated 5th May, 1965, which was sanctioned on 6th May, 1965, actually shows the tenth upper floor as cancelled and the cancellation as duly signed on the said plan by the architects themselves. The said correspondence further shows that amended plans were submitted by; the company's architects on 26th May, 1966, which would be after the date of the agreement between the parties, by which 18 upper floors were proposed to be constructed. The intention of the parties can be ascertained only in reference to the plans as sanctioned at the date of the agreement between them. Moreover, it may be mentioned that even the subsequent proposal to construct 18 upper floors was expressly rejected by the municipality by notes (11) and (12) of its intimation of disapproval dated 16th June, 1966. As stated by my brother Mody in his unreported judgment in Company Petition No. 59 of 1964, a detailed inquiry at the preliminary stage of admission should be avoided. Even so, my brother Mody has, in the said case, himself proceeded to consider whether the dispute raised by the company in respect of the petitioner's claim was a bona fide dispute, and I am bound to consider the same in the present case also, for the purpose of determining whether the petition should be admitted. It is for that limited purpose that I have considered the matter, and have, for the reasons stated above, come to the conclusion that there is no substance in the company's defence to the present petition and the dispute which it has sought to raise is not a bona fide dispute. The petitioners have, therefore, made out a prima facie case that the company has neglected to pay the sum demanded by them by the statutory notice dated 28th March, 1968, and, prima facie, the company must, therefore, be deemed to be unable to pay its debts within section 433(e) of the Companies Act. In that view of the matter, I admit the petition and direct that it be advertised after two weeks from to-day in the Maharashtra Government Gazette and in the Loksatta as well as in the Indian Express. The company having lost must pay the petitioners' costs.

17. Hearing of the petition fixed on 18th November, 1968.


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