Chandrakantaraj Urs, J.
1. This petition under ss. 433(e) and (f) of the Companies Act read with s. 439(1)(b) thereof is by a partnership firm which carries on the business of industrial financing in the city of Bombay. The petitioner-firm has prayed for the winding-up of M/s. Nanadanvan ., a registered company having its registered office at Bangalore. The respondent-company has for its main objects the business manufacture, traders, to act as contractors, representatives, agents, exporters and to act as distributors, sub-agents and carry on the business as transporters, etc.
2. The facts briefly stated leading to this petition are as follows : The petitioner-firm advanced a sum of Rs. 10,00,000 to one Sheth Balchand Menghraj Pamnani who was the owner (hereinafter referred to as the owner) of a biscuit factory to together with the grounds. The machinery and the standing building structures thereon situate at Gwalior City in Madhya Pradesh State on the security of the properties comprised in the biscuit factory, movables and immovables including the machineries and plants. In the execution of the mortgage deed, the lessee of the biscuit factory, M/s. J. B. Mangharam and Co. P. Ltd. (hereinafter referred to as the lessee) was also included as one of the mortgagors. The mortgage deed was executed on September 13, 1972. One the same day, by another agreement between the said mortgagors and the petitioner-firm, it was agreed that the amount paid to the owner, Sheth Balchand and Menghraj Pamnani, should be made available to the lessee, M/s. J. B. Mangharam and Co. P. Ltd., for purposes of carrying on the business of manufacture of biscuits and other confectioneries. On the same day, yet another agreement was entered into by the directors of the lessee-company who guaranteed the repayment of the loan. These three agreements of 13th September, 1972, are annexed to the petition at annexes. B, C and D resplectively.
3. However, on 18th October, 1976 the owner, the lessee-company and the respondent-company entered into a mutual agreement by which the respondent-company had become in effect the conductor of the lessee-company. The salient features of this agreement are that the respondent-company as conductor was put solely and wholly in charge of the plant at Gwalior and would pay a fixed sum of Rs. 8 lakhs to the owner and Rs. 4 lakhs to the lessee-company per annum respectively as consideration. The agreement was to be current in the first instance for a period of five years with an optional clause to renew it for a further period of five years on the same terms and conditions. On the same latter date in 1976, the owner, the lessee-company, the respondent-company and the petitioner-firm entered into a mutual agreement by which the respondent-company under-took to pay a sum of Rs. 20,000 per mensem to the petitioner-firm till the mortgage debt (per annex. B, the deed of 13th September, 1972) was fully discharged out of the amounts payable by the respondent-company under the agreement with the owner and the lessee-company to which reference has already been made. Pursuant to this agreement, up to July 31, 1979, certain sums at the rate of Rs. 20,000 per mensem have been paid. There demanding the payment ceased and the petitioner-firm issued a statutory notice demanding the payment of the balance. As no reply was ever received with in the prescribed time or thereafter, the petitioner was forced to present this petition for winding-up. Before admission, notice was issued to the respondent-company but though notice was served it had not entered appearance. In that circumstance, the petition was admitted without further examination and citation was ordered.
4. Thereafter, the respondent-company has entered appearance and has filed its statement of objections. In substance, the objection has been that the petition is not maintainable against the company for the reason that it is not a debtor of the petitioner-firm, that the agreement of 18th October, 1976, was no more than an arrangement and in any event that agreement is not valid without consideration in so far as the respondent-company was concerned. That the debt of the petitioner-firm being secured, the petitioner can adequately realise his loan without asking for the winding-up of the respondent-company which has no privity of contract to the debt in question with the petitioner-firm. The respondent-company has further made it clear that there are pending litigations at Gawalior by several creditors against the owner and lessee-company, as a result of which, in one such case a prohibitory order came to be issued against the respondent-company from making payments to any one till that case was disposed of. It is in that circumstance the payment to the petitioner-firm pursuant to the agreement of 18th October, 1976, was discontinued. In fact, the petitioner had to suffer the order of the appoint obtained the relief from the Supreme Court which set aside the order appointing a receiver to take possession of the factory with all its buildings, machinery, plant and staff, etc. This relief was given as an interim measure in the proceedings pending before the Supreme Court. Under the directions of the Supreme Court, the respondent-company has deposited Rs. 6,60,000. It is, therefore, the case of the respondent that in the absence of any fiduciary relationship amounting to a valid money contract, the petitioner-firm was not entitled to present the petition, much less seek its (respondent-company's) winding-up.
5. The learned counsel appearing for the petitioner has strenuously contended that the respondent-company is bound to perform its obligations under annex. F, the agreement dated 18th October, 1976, under the terms of which it was obliged to remit Rs. 20,000 per mensem till the mortgage debt under annex. B was discharged. The respondent-company having failed to perform that obligation in spite of a statutory notice, the petitioner-firm is entitled to an order of winding-up. It is difficult to accede to this contention. From the language of s. 433 of Act it is clear that among others a creditor is one who can present a petition for winding up for non-payment of the loan advance by the creditor to that company. In the various documents to which reference has been made, the learned counsel is unable to point out how the respondent-company can be termed a debtor as at no point of time any money was advanced by the petitioner-firm to the respondent-company. On the other hand, it is only correct to uphold the contention advanced for the respondent-company that annex. F, the agreement of October 18, 1976, was no more than an arrangement agreeing to pay certain sums due by the respondent-company to the owner and lessee on their behalf to the petitioner-firm and that agreement was not binding on the respondent-company inasmuch as that agreement was without consideration in so far as the respondent-company was concerned, such an arrangement not being enforceable in a court of law. It has been contended that it cannot be the basis for these proceedings to foist a debt which does not exist in law with reference to the respondent-company.
6. Two things must be proved by the petitioners for moving this court under s. 433 of the Act. The first requirement is that a debt exists. The second requirement is that the company is unable to pay its debts. In the present case, the first requirement itself is not proved. The test for determining whether the agreement at annex. F can form the basis for presenting this petition, one must ask the question whether a court of competent jurisdiction would grant a money decree in favour of the petitioner-firm if a suit on the basis on the agreement is filed. It is impossible to imagine that any civil court would grant a money decree against the respondent-company on the basis of the agreement at annex. F which, as repeatedly said earlier, is no more than an arrangement brought about between the four persons, three of whom only had fiduciary relationship to the exclusion of the respondent-company. If there is no debt, then the petitioner is not a creditor of the respondent-company.
7. Assuming for the sake of argument that some kind of debt did exist, then it is for the petitioner to demonstrate to the satisfaction of the court that the company is unable to pay its debts and, therefore, the same must be wound up. In the instant case, the respondent-company has fairly conceded that it is discontinued the payment under the pressure of a judicial order and is not able to continue the payment even now under the pressure of a judicial restraint imposed on it in the order made by the Supreme court in the appeal now pending before it. In this circumstance, when it is possible to make out from the order of the Supreme Court that the respondent-company as conductor is carrying on the business of management of a running concern, it cannot be said that it is unable to pay its debts.
8. I am, therefore, satisfied that the petitioner-firm is not entitled to the order which it has prayed for. In fact, it must be said, had the respondent-company entered appearance immediately after notice, it is doubtful whether this petition would have been admitted. In this circumstances, the petition is not maintainable against the respondent-company and is, therefore, dismissed. In the circumstances, it is but right that the petitioner-firm is directed to pay costs. Advocate's fee is Rs. 250.