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G.R.S. Constructions Vs. Synergetics Limited - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAndhra Pradesh High Court
Decided On
Case NumberCompany Petition No. 6 of 1982
Judge
Reported in[1984]56CompCas457(AP)
ActsCompanies Act, 1956 - Sections 433, 434 and 434(1)
AppellantG.R.S. Constructions
RespondentSynergetics Limited
Appellant AdvocateS. Suryaprakasha Rao, Adv.
Respondent AdvocateC.P. Sarathy, Adv.
Excerpt:
.....act, 1956 - company filed petition for winding up under section 433 (a) due to non payment of debts - statutory notice for winding up issued and subsequently withdrawn on request along with letter demanding payment of debts - certain debt remained unpaid after withdrawal of letter - company refused to pay debts - petitioner filed company petition - company alleged petition not maintainable as fresh statutory notice under section 434 (1) (a) not issued - petitioner failed to prove that company was unable to repay its debt and failed to comply with requisites of section 434 (1) - held, petition not maintainable but petitioner free to file company petition after complying with due formalities. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj]..........with the withdrawal letter, could seek for immediate payment because according to the withdrawal letter, payment is dependent upon reconciliation and measurements. hence i have no hesitation whatsoever in holding that this second letter extractedabove cannot be said to have been associated. in fact the same is denied to have been received by the respondent company. 7. the learned counsel also submitted that statutory notice need not be issued again because under clause (c) of s. 434(1) of the act, if the court is satisfied that the company is unable to pay its debts, that is adequate for thepurpose of maintainability of this application and for this application and for this he seeks to place reliance on three in stances. one is that the state financial corporation has subjected the.....
Judgment:

Seetharam Reddy, J.

1. This petition under s. 433(a) of the Companies Act, 1956, is for winding up of the respondent company stating that the company ownes a sum of Rs. 89,118.59, with interest. After certain demands, a statutory notice was issued on December 27, 1981, and was acknowledged on December 30, 1981. However, on April 20, 1982, the managing director of the company asked the petitioner to withdraw the statutory notice. The statutory notice was accordingly withdrawn by the petitioner on April 20, 1982, itself. It is averred in the petition that along with the letter of withdrawal, another letter has been sent and the same has been acknowledged by the company. However, after the letter of withdrawal, the amount which was still outstanding, when demanded, was refused to be paid. Several letters were, thereafter, sent demanding the payment but the same were not at all respondent and, hence, this company petition.

2. A preliminary objection is raised by the respondent company on the ground that unless a statutory notice as contemplated under s. 434(1)(a) of the Companies Act is once again issued, the company petition itself is not maintainable. The learned counsel for the petitioner submits that though the statutory notice has been withdrawn, it was, however, accompanied by a letter to the company asking for payment as early as possible, and so the claim cannot be said to have been withdrawn and it is still in subsistence and inasmuch as payment admittedly has not been made, he is entitled to maintain the company petition. He relied upon the judgment in Pandam Tea Co. Ltd. v. Darjeeling Commercial Co. Ltd. [1977] 47 Comp Cas 15 (Cal).

3. Before adverting to the arguments of the learned advocate for the petitioner, the statutory provisions as well as the relevant letters amy be noticed. Section 434 of the Companies Act reads :-

'434. (1) A company shall be deemed to be unable to pay its debts :-

(a) If a creditor, by assignment or otherwise, 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 at its registered office, by regisrtered 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; .....

(c) If it is proved to the satisfaction of the court that the company is unable to pay its debts, and in determining whether the company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company.'

4. The letter dated April 23, 1982, of withdrawal by the petitioner addressing the respondent company reads :-

'We hereby withdrawal the legal notice that we have already issued for collecting the dues from you. We agree with you that there are a lot of issues pending settlement such as reconciliation of accounts, checking up of mearsurements, etc.

We will sit together and sort out everything to enable you in settling our account in a full and final manner and till such time we assure you that we will not resort to any kind of legal action whatsoever.'

5. The letter of withdrawal was said to be accompanied by another letter and the acknowledgment of the same is denied by the company. It reads :

'Further to the discussions the undersigned had with you on 18th instant and with your accountant, we are enclosing the following for your reference :

1. Measurement books,

2. Corrected copy of II running bill,

3. Corrected copy of V running bill,

4. Letter for deduction of income-tax,

5. Letter of withdrawal of legal notice.

In view of the above letters and clarifications, we request you to kindly send our payment immediately.

6. We will be too pleased to call on any further clarifications, if any.' It is very difficult to accede to the contentions of the learned counsel for the petitioner and it is very hard also to reconcile the two letters cited above. On the one hand, in the letter of withdrawal, it is made clear that there are a lot of matters to be discussed, accounts will have to be reconciled and the measurements will have to be checked up. If that is so, it is incomprehensible as to how the second letter which is said to have been enclosed along with the withdrawal letter, could seek for immediate payment because according to the withdrawal letter, payment is dependent upon reconciliation and measurements. Hence I have no hesitation whatsoever in holding that this second letter extractedabove cannot be said to have been associated. In fact the same is denied to have been received by the respondent company.

7. The learned counsel also submitted that statutory notice need not be issued again because under clause (c) of s. 434(1) of the Act, if the court is satisfied that the company is unable to pay its debts, that is adequate for thepurpose of maintainability of this application and for this application and for this he seeks to place reliance on three in stances. One is that the State Financial Corporation has subjected the machinery owned by the respondent company to sale towards the debts owed by the company to it and that is made clear as per the counter-affidavit filed by the State Financial Corporation. Secondly, a suit is said to have been filed against the respondent company by a creditor in the High Court of judicature, Tamil Nadu, at Madras. Thirdly, series of letters are said to have been sent to the respondent-company subsequent to the letter of witdrawal. Thereafter, there is nothing on record to show that the respondent-companhy has made any attempts for making payment; and if that be so, it must be brought within the ambit of 'unable to pay its debts' as postulated by s. 434(1)(c) of the Act. I apprehend the contention is not well-founded. Merely because a suit is filed in the High Court of Tamil Nadu, Madras, it does not give rise to the company being unable to pay its debts. Even assuming that the State Financial Corporation has subjected the machinery belonging to the company to sale for certain debts owed by it, it does not ipso facto establish that the company is unable to pay its debts. With regard to the third circumstance, the receipt of series of letters said to have been sent by the petitioner to the respondent company is denied and, therefore, the petitioner failed to prove to the satisfaction of this court that the company is unable to pay its debts. The judgment is Pandam Tea Co. Ltd.'s case [1977] 47 Comp Cas 15 (Cal), turns upon a different situation altogether. In that case, though statutory notice was issued and a company petition followed, it was stayed because of certain suits being filed before some other forum. In those circumstances, when the company petition was sought to be revived, the court held :

'The creditor, apart from the notice, was entitled to prove by other evidence that the company was unable to pay its debts.'

8. Even otherwise, since I have already concluded that the petitioner has prima facie failed to prove to the satisfaction of this court that the company is unable to pay its debts, the company petition is not maintainable, and since the petitioner failed to comply with the requisites of s. 434(1) (a) or (c) of the Act, the petition is not maintainable on this ground also. Consequently, the company petition is dismissed but in the circumstances without costs. This would not, however, preclude the petitioner from filing a company petition after observing the due formalities.


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