Bal Raj Tuli, J.
1. The Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh, has filed this petition for the winding-up of the respondent-company under Clause (e) of Section 433 read with Section 439(5) of the Companies Act, 1956, on the ground that the company is unable to pay its debts and its liabilities exceed its assets.
2. Written statement has been filed by the company in which it is admitted that the liabilities of the company exceed its assets but it is vehemently contended that the company is not unable to pay its debts. The following issues were framed :
1. Whether the company is unable to pay its debts and meet its liabilities ?
2. Whether the sanction accorded by the Regional Director, Company Law Board, under Section 439(5) of the Companies Act is not valid ?
3. Whether it is a fit case for winding-up ?
Issue No. 2 has not been pressed in arguments and is, therefore, decided in favour of the petitioner. Issues Nos. 1 and 3 are interconnected and are, therefore, decided together.
3. On behalf of the petitioner, statement of Kishan Kumar, senior technical assistant. Office of the Registrar of Companies, has been recorded. He has referred to the balance-sheet of the company as on May 31, 1969 (exhibit P-6), wherein the paid-up capital of the company is shown as Rs- 2,000. The accumulated loss is shown as Rs. 1,85,239.39. On the basis pf the balance-sheet, the net tangible assets of the company, as on May 31,1969, work up to Rs. 3,21,211.62. The outside liabilities of the company as on that day were Rs. 5,04,451.01. Another balance-sheet for the year ending May 31, 1970 (exhibit P-8), shows the paid-up capital of the company as Rs. 28,000 and the accumulated loss as Rs. 2,45,066.39. The net tangible assets of the company were worked out to be Rs. 6,38,535.55 while the outside liabilities amounted to Rs. 8,55,591.94. The deficiency in assets over liabilities as on May 31, 1970, therefore, came to Rs. 2,17,056.39. Thereafter, the paid-up capital of the company was increased to Rs. 56,000. The witness admitted in cross-examination that he had inspected the records of some other companies doing similar business and that more than 100 such companies must be functioning in Punjab which are registered in the office of the Registrar. The Registrar never had any complaint from any creditor or contributory of the company nor has any subscriber made any complaint. The company had issued eight groups of lucky schemes out of which group A has been completely discharged on payment of Rs. 2,17,800. The Reserve Bank exercises some control over the respondent-company because it is a non-barking financing institution but there was no complaint received from the Reserve Bank by the Registrar of Companies. The witness calculated the figures of deficiency from what was stated in the balance-sheets and stated that this deficiency would be there if all the subscribers to the various schemes of the company were to claim back the amount due to them at one time. He further admitted that each subscriber to the lucky scheme or chit fund had to enter into a contract with the company and no subscriber could claim money otherwise than in terms of the contract. As against him, the managing director of the company appeared as R.W. 1 on behalf of the company and stated that the share capital of the company had been increased to Rs. 75,000 on March 3, 1972, and that further applications for shares of the value of Rs. 25,000 had been received on which Rs. 2,500 had been paid by way of share application money. He produced the trial balance-sheet of the company for the period from June 1, 1971, to March 31, 1972 (exhibit R-1), which shows that the company had made a profit of Rs 10,784.18 and that the subscribers of groups A and B had been completely paid off and six schemes were in operation. This witness has categorically stated that the respondent-company has made all payments which were due to the groups whose membership matured and no demand is pending with the company. The company, in fact, advertises the payments of the amounts to the members of the groups whose claims mature and no member of any group has filed any suit against the company. The members of the groups make contributions to the scheme in accordance with the agreement, a copy of which is exhibit R-4. The contribution is made by the members monthly and the payment to them is made when thegroup matures. He further stated that the company is now making profits and that the profits of the company for the financial year ending May 31, 1971, were a little more than Rs. 15,000. The profit for the ten months from June 1, 1971, to March 31, 1972, has been shown as Rs. 10,784.18 and is less than the previous year because of the Indo-Pakistan war which took place in December, 1971. On the basis of this evidence it cannot be said that the company is unable to pay its debts and should, therefore, be wound up.
4. 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 enumerates the eventualities in which the company is to be defined to be unable to pay its debts and, admittedly, none of those exigencies are found in the present case. It has been admitted by the witness for the petitioner that no complaint from any creditor of the company has been received to the effect that the amount due to him was not paid by the company. The managing director of the company has categorically stated that all the demands against the company are met when they accrued due and no claim is pending against the company at present. 'Debt' really means an amount which is due and can be claimed by the creditor, so that if the demand is not met, the company can be said to be unable to pay its debts but if a debt has not yet accrued due, no demand can be made and the mere fact that certain liabilities will accrue due in the future, which are more than the present assets of the company, does not necessarily lead to the conclusion that the company will be unable to meet its liabilities when they accrue due. Veeraswami J. in A.C.K. Krishnaswami v. Stressed Concrete Constructions Private Ltd.,  34 Comp. Cas. 6, 9 (Mad.) held as under ;
'It is true that as found in the affidavit of the Registrar, the liabilities of the company far exceed 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.'
5. In that case, the Registrar had filed an affidavit that as on June 30, 1962, realisable assets of the company were of the value of Rs. 5,51,253 against liabilities of Rs. 14,59,260. 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.,  36 Comp. Cas. 9 (Punj.) and it was held that:
'.........the mere fact that the company's assets are lessthanitsliabilities 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.'
6. In that case, the Registrar of Companies had filed the petition under Section 433(e) of the Companies Act on the ground that the company was unable to pay its debts because of the financial position revealed by the balance-sheet of the company. The learned judge came to the conclusion, after examining evidence, that the facts showed that the company was working properly and was making profits. It was likely to make more profits in future and there was no evidence that the company failed to meet any demand of its creditors, and, therefore, refused to wind up the company on the ground that it was unable to pay its debts. The facts in the present case are similar to the facts in that case and, respectfully following that decision, I hold that the Registrar has been unable to prove that the company is unable to pay its debts and should, therefore, be wound up on that ground. The managing director has stated that the paid up capital of the company has been increased and the business of the company is also increasing every year with the result that the company is making profits and all the subscribers, whose claims had matured, have been paid off. No creditor or contributory or even the Reserve Bank has made any complaint against the financial stability of the respondent-company to the Registrar of Companies. Before filing the petition for winding up of the respondent company, the Registrar ought to have applied his mind to the fact of the future probable income of the company which will accrue before or simultaneously with the maturity of the claims of the subscribers to the various schemes. The mere fact that the company's liabilities exceed its assets, as per the balance-sheets, is not sufficient to lead to the conclusion that it is unable to pay its debts particularly when it has been meeting all the demands of its creditors when they accrued due.
7. For the reasons given above, I find no ground to wind up the company and this petition is accordingly dismissed. I, however, make no order as to costs because on the basis of the balance-sheets alone the Registrar was not unjustified in making this petition and the respondent-company has increased its share capital during its pendency.