Skip to content


Registrar of Companies Vs. Atlas Transport Private Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtPunjab and Haryana High Court
Decided On
Case NumberCompany Petition No. 53 of 1972
Judge
Reported in[1974]44CompCas496(P& H)
ActsCompanies Act, 1956 - Sections 433
AppellantRegistrar of Companies
RespondentAtlas Transport Private Ltd. and ors.
Appellant Advocate Kuldip Singh, Adv.
Respondent Advocate D.R. Nanda, Adv.
DispositionPetition dismissed
Cases ReferredPunjab v. Rohtak Hissar Transport Company
Excerpt:
.....is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - it is, therefore, not known how the regional director felt satisfied that the company was unable to pay its debts. 500. the registrar of companies has never written to the company to say that any creditor of the company has complained to him that his amount has not been paid. 4. from the evidence led in the case i am satisfied that the company is not unable to pay its debts and, therefore, no case has been made out for the winding up of the respondent-company......contested by the respondent-company and the following issue was framed :' is the respondent-company unable to pay its debts and is, therefore, liable to be wound up under clause (e) of section 433 of the companies act ?'2. on behalf of the petitioner shri brij kishore has appeared as p. w. no. 1 and has stated that according to the balance-sheet for the year ending march 31, 1970, it appeared that the company was unable to pay its debts. he has admitted that no enquiry in this behalf was made by the registrar of companies or other officer on his behalf. the registrar of companies sent a report to the regional director, company law board, at kanpur, and obtained his sanction for filing this petition. the regional director only sent a notice to the company before according sanction,.....
Judgment:

Bal Raj Tuli, J.

1. The Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh, has filed this petition for the winding-up of Messrs. Atlas Transport (Private) Ltd. on the ground that it is unable to pay its debts within the meaning of clause (e) of Section 433 read with Section 439(5) of the Companies Act, 1956. The petition is vehemently contested by the respondent-company and the following issue was framed :

' Is the respondent-company unable to pay its debts and is, therefore, liable to be wound up under Clause (e) of Section 433 of the Companies Act ?'

2. On behalf of the petitioner Shri Brij Kishore has appeared as P. W. No. 1 and has stated that according to the balance-sheet for the year ending March 31, 1970, it appeared that the company was unable to pay its debts. He has admitted that no enquiry in this behalf was made by the Registrar of Companies or other officer on his behalf. The Registrar of Companies sent a report to the Regional Director, Company Law Board, at Kanpur, and obtained his sanction for filing this petition. The Regional Director only sent a notice to the company before according sanction, but after receiving its reply, no further communication was addressed to the company. It is, therefore, not known how the Regional Director felt satisfied that the company was unable to pay its debts.

3. Shri Agya Ram, the managing director of the company, has appeared as R. W. No. 1 and has stated that in the balance-sheet for the year ending March 31, 1970 (exhibit P. 2), the amount of Rs. 32,407 is shown as due to the directors, which amount is due to him and he has never made a demand from the company for its repayment. Another item of Rs. 52,008 is due to the shareholders and none of them has ever demanded this amount from the company. A sum of Rs. 83,640 is shown as due to C. M. A. & P. (Controller of Military Accounts), on the basis of the decree against which the company has filed an appeal which is pending in this court. The company has reserved Rs. 70,446 for payment of the decree in case it is affirmed. This amount is invested in the vehicles of the company. There is an item of Rs. 89,450 due from the debtors and is shown as partly doubtful. The balance-sheet of the respondent-company for the year ending March 31, 1972, exhibit No. R. 1, shows that the amount due from the debtors and partly doubtful is Rs. 25,547.76. This balance-sheet shows a profit of Rs. 19,289.45. The balance-sheet fot the year ending March 31, 1970, also shows a profit of Rs. 6,517. The immovable properties of the company consist of 6 shops, 6 godowns, 6 offices and waiting rooms, one workshop, 10 garages and a big compound for the vehicles to stand, the market value of which is not less than Rs. 1,00,000. Some of these properties are let out and fetch a monthly income of Rs. 500. The Registrar of Companies has never written to the company to say that any creditor of the company has complained to him that his amount has not been paid. Neither the Regional Director nor the Registrar of Companies ever made spot enquiries at Pathankot with regard to the respondent-company.

4. From the evidence led in the case I am satisfied that the company is not unable to pay its debts and, therefore, no case has been made out for the winding up of the respondent-company. In Registrar of Companies v. Ajanta Lucky Scheme and Investment Company (Private) Ltd., [1973] 43 Comp. Cas. 314, 317 (Punj.), I held :

' In order to determine whether a company is able to pay its debts or not, the first matter to be considered is whether the company is able to meet its liabilities as and when they accrue due. Section 434 of the Companies Act, 1956, enumerates the eventualities in which a company is to be deemed to be unable to pay its debts and, admittedly, none of those exigencies were found in the present case. It had been admitted by the witness for the petitioner that no complaint from any creditor of the company had been received to the effect that the amount due to him was not paid by the company. The managing director of the company had categorically stated that all the demands against the company were met when they accrued due and no claim was pending against the company at present.'

5. The same view was reiterated by me in Registrar of Companies, Punjab v. Suraj Bachat Yojna (Private) Ltd., [1973] 43 Comp. Cas. 343 (Punj.) Veeraswami J. in A. C. K. Krishnaswami v. Stressed Concrete Constructions (Private) Ltd., [1964] 34 Comp. Cas. 6 (Mad.)at page 9, held as under:

' It is true that as found in the affidavit of the Registrar, the liabilities of the company far exceeds its assets as in 1962. But it does not necessarily follow from it that the company is unable to pay its debts. A company may have liabilities more than its assets ; but still may have, in particular circumstances, the capacity to meet demands from its creditors. No evidence has been placed before me beyond the affidavit of the Registrar that the company is really unable to pay its debts. The second ground for a winding-up order is, therefore, not made out.'

6. The matter was examined by Harbans Singh J. (as my Lord the Chief Justice then was) in S. Krishnamurthy, Registrar of Companies, Punjab v. Rohtak Hissar Transport Company (P.) Ltd., [1966] 36 Comp. Cas. 9, H (Punj.) and it was observed :

'..... the mere fact that the company's assets are less than its liabilities is, by itself, no ground for sending the company to winding-up. The test laid down is that the company should be commercially solvent which means that the company should be in a position to meet its liabilities as and when they arise.'

7. In the light of the above judgments, I hold that the Registrar of Companies has not been able to prove in the present case that the respondent-company is unable to pay its debts. I, therefore, find no merit in this petition which is dismissed, but the parties are left to bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //