1. Anna Balwant Dunang, the petitioner, has filed this petition for winding up of Dhootpapeshwar Sales Corporation Private Ltd. The ground on which the winding-up petition is presented is that the company is unable to pay its debt and it is otherwise just and equitable that the company should be wound up.
2. The petitioner had filed a suit being Suit No. 339 of 1970 in the city civil court at Bombay against the company. In that suit, on April 30, 1970, a decree on admission was passed in favour of the petitioner and against the company for Rs. 15,872 and interest and costs. Under the decree, the decretal amount was payable by monthly instalments of Rs. 1,000 each, first of such instalments was payable by the company on or before 10th July, 1970, and subsequently monthly instalments were payable on or before the 10th day of each and every succeeding month until the whole of the amount due and payable under the decree was paid in full. There was a default clause contained in the decree and under the default clause, if any two instalments remained unpaid on the due date, the whole amount then due under the decree became forthwith payable. None of the instalments was paid by the company on the due date with the result that upon default of payment of two instalments the whole amount then due under the decree became payable. By the petitioner's attorney's notice dated November 23, 1970, the petitioner gave notice under section 434 of the Companies Act, 1956, calling upon the company to pay the amount due as stated in the said notice. It was stated in the said notice that if the requisition contained therein was not complied with by the company, the petitioner would adopt winding-up proceedings against the company as he may be advised.
3. Under section 433 of the Companies Act, a company may be wound up, inter alia, if the company is unable to pay its debts or if the courts is of opinion that it is just and equitable that the company should be wound up. Sub-section (1) of section 434 provides for cases when a company is deemed to be unable to pay its debts. Under clause (a) of that sub-section, if a creditor, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by causing it to be delivered as its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor, the company shall be deemed to be unable to pay its debts. There is no controversy between the parties that a statutory notice as required under the above provisions was served upon the company by registered post and within three weeks of the receipt thereof, the company has failed and neglected to pay the debt. The petitioning creditor is a creditor of the company in the sum of Rs. 15,194 and in spite of a statutory notice being given to the company as provided by section 434(1)(a) of the Companies Act, the company has failed and neglected to pay the debt due to him. Under the circumstances, it is clearly established that the company is unable to pay its debts.
4. Even apart from that, the company has failed and neglected to file its balance-sheets for the period subsequent to the year ending June, 1967. It is alleged that the company is not carrying on business since 1968. It is also alleged that several decrees are passed by the court against the company. The case of petitioning creditor is that the liabilities of the company are to the tune of about Rs. 7 lakhs and there are no assets available to meet those liabilities. It is now well settled that a company is commercially insolvent if it is unable to pay and discharge its liabilities as they arise in the ordinary course of business. In the present case, the company is clearly commercially insolvent and this is a fit case where an order of winding-up should be passed against the company on the ground that the company is unable to pay its debts and it is just and equitable that the company should be wound up.
5. Mr. Bharucha on behalf of the company submitted that the object of the petitioning creditor, in filing this petition, is to stifle the arbitration proceeding that are pending between the company and the Dhootpapeshwar Industries Ltd. It is undoubtedly true that the arbitration proceedings are pending between the company and the Dhootpapeshwar Industries Ltd. If this company has a genuine claim, notwithstanding the winding up order against the company, the official liquidator will be in a position to proceed with the claim which the company has against Dhootpapeshwar Industries Ltd. Mere pendency of arbitration proceedings, in my opinion, is not a sufficient ground to take the view that a ground for winding up has not been made out and that the company should not be ordered to be wound up.
6. In the result, the company is ordered to be wound up in terms of prayed (a) of the petition. The official liquidator is appointed liquidator with all the necessary powers under the provisions of the Companies Act, 1956, to take charge of the assets of the company and to conduct the affairs of the company in the course of winding up. Costs of the petitioner of this petition will come out of the assets of the company. Order of winding-up to be advertised in the same newspapers in which the petition for winding up was advertised.