1. Elaborate arguments were advanced on the point as to whether this petition is required to be admitted or not. It appears that the petition is required to be admitted or not. It appears that the petitioner served notices on the company of February 27, 1982, and, thereafter, as no payment was made, a petition for winding up was filed on June 7, 1982. In that petition , on December 30, 1982, a compromise was entered into between the parties was that the sum of Rs.3,75,000 was due to the petitioner and the company agreed to pay that amount in monthly INSTALMENTS of Rs. 25,000 each and the first installment was to become due on february 16, 1983, and, thereafter, eight INSTALMENTS were to become due and payable on the 15th day of each succeeding month. It was also provided in the compromise that if there were two consecutive default, petitioner will be at liberty to apply to the court for revival of the petition. The compromise was recorded and the learned company judge by an order passed on the same day directed that a personal undertaking as foresaid will be filed by the managing director on or before January 17, 1983. However, instead of filling the personal undertaking as directed, the managing director chose to file an undertaking on behalf of the company, and there by the order of the company judge was flouted. Thereafter, under the consent terms, Rs. 45,000 were paid on December 30,1982, and Rs. 65,000 were paid during the pendency of this petition. Thus, a total remaining amount comes to Rs. 2,65,000. No instalments were paid thereafter. As a result, the petition came to be revived. After the revival of the petition, an affidavit-in-reply was filed in which it is stated that a statutory presumption under s. 434(1)(a) which arose on March 20, 1982, cannot by implication or otherwise be applicable on September 20, 1984, when during the period, a sum of Rs. 1,10,000 was already paid. Another dispute which is put forward, according to the company, there is a dispute with regard to that. Thereafter, it is stated that unless the amount of Rs. 1,10,000 which was paid to the petitioner deposited in court, the petition cannot be admitted. Thereafter, it is sub-mitted in the affidavit-in-reply that the company is a viable company and the products of the company are well received in export market, but as the bank chose to file a suit in the Court of Civil Judge (S.D.), Jungadh, and obtained in injuction by which the company was retrained from operating the bank account, the company could not function and the manufacturing activities of the company have stopped since January, 1984, and because of the interim orders, the working of the company is paralysed. It is further submitted the in affidavit-in-reply that after the consent term were agreed to between the parties,there were two cyclones and the company suffered heavy loss and the insurance company paid a sum of Rs.4 lakhs which appropriated by the bank and, therefore,the company was not able to pay the installments which became due. Now, these objection are required to be considered. It is more than clear from the affidavit- in-reply itself that the company is not working from January, 1984, and all its operation have come to a standstill. When the company could not manufacture anything for the last nine month, there is no question of receiving any goods manufactured by the company in foreign markets. The situation is such by which one can say that prima facie the Civil Judge, Senior Division, Junagadh, found that an injuction is required to be passed of a far-reaching consequence by which the company is stopped from operating any bank account. In such a situation, the company is unable to function at all. Without repeating, it is required to emphasize that on the very day on which the consent terms were agreed to between the parties, the managing director did not choose to file a personal undertaking as agreed to and directed by the court. Now, that, therefore, what remains is not a equitable factual aspect in favour of the company but something legal which is being argued and is required to be considered. The first legal submission is that the notice has become invalid. When the consent terms themselves provides that the petition would stand revived, it cannot be suggested for a moment that merely because a sum of Rs. 1,10,000 was paid , it can be said for a moment that the company is able to pay its debts to a creditor who had given a statutory notice. It is more than clear that th company is not able to pay its debts even to secured creditors who were banks and, therefore, they had to rush to the court, file a suit, and obtain an injection. It is, therefore, more than clear that the company is unable to pay its debts.
2. Next legal submission is that unless the amount of RS. 1,10,000 which is received by the petitioner is deposited in the court , the petition cannot be admitted. To strengthen the argument, reliance is placed on the case of Bombay Castwell Engineering P.Ltd., which was decided by the Bombay High court on February 18 and July 9, 1982 - (1984) 55 Comp Cas 75 (Bom). Now, it was also a case where during the pendency of a petition, a compromise was entered into between the parties. There, the compromise did not provide for reviving the petition, But it provided that if the amounts are not paid as per the compromise, the petition would automatically gets admitted. Thereafter, it appeared form the judgment that Rs. 37,000 were paid during the pendency of the petition and Rs. 31,000 were paid before the petition was admitted because of the compromise. The question which was being considered by the Bombay High Court was not there at the time of admission of the petition because the petition automatically got admitted, but the question arose at the time of winding up. What was decided was as under (at p. 79):
'An order for winding-up does not endure for the benefit of an individual creditor who obtains the order, but for all creditors. It is not an individual right by a representative right. The creditor who first comes to the court and uses the process of the court cannot feather his best and enrich himself by collecting payment of the strength of consent terms. He must be relegated to the same position in which he was when he presented the petition for winding-up.'
3. Now, that, therefore, that question was being decided at the time not of admission, but at the time when the company judge was deciding as to whether the company was required to be wound up or not. Now that,therefore, in that case, certain amounts were paid because of the consent terms before the petition was admitted. Even thereafter, certain amounts were paid after the petition was admitted. Now , that there is nothing wrong if the payments are made because of the consent terms either before the petition is admitted or even after the petition is admitted. The question of preferential treatment between the creditors arises only at the time when the order for winding up is passed. That this is so is held by the Bombay High Court. That, therefore, this ruling does not help the company because I am not deciding as to whether the petitioner would be getting preferential right of would not be getting preferential right. That question would arise some time after the petition is admitted. The only question, therefore, that remains is whether there is a just claim, a bona fide claim, made by the creditor which the company is unable to pay.
4. My attention was drawn to another case of Cotton Corporation of India Ltd. v. Industrial Bank Ltd., which was decided by the Supreme Court of India of September 19, 1983 - (1984) 55 Comp Cas 423. On p. 439, the arguments which were urged by the counsel appearing for the company were considered and, after considering the arguments, the learned judge observed as under:
'If upon receipt of such notice, the company appears and satisfies the judge that the debt is bona fide disputed or the presentation of the petition is male fide, actuated by an ulterior motive, or an abuse of the process of the court, certainly the judge may decline to admit the petition and may direct the party presenting the winding - up petition to prove its claim by a suit or in an any other manner. It is undoubtedly true that a winding - up petition. Therefrom the power is conferred on the judge before whom the petition comes up for admission to issue pre-admission notice to the company so that the company is not taken unawares and may appear an point out to the judge that the petitioner is actuated by an alterior motive and a presentation of the petition is a device to pressurize the company to submit to an unjust claim.'
5. Now, that, therefore, if the facts of this case are seen in the light of the observation made by the Supreme Court, it clearly appears that in this case, the company is not taken unawares. Pre-admission notice was issued to the company. Thereafter, the company with open eyes compromised the claim. The managing directors was directed to a file a personal undertaking which he did not file. Thereafter, according to the consent terms amount were not paid . The petition got revved. The claim can never be stated to be an unjust claim. Now, what is required to be determined is whether the petitioner are trying the pressurise the company for payment. There is no question pressurising the company. A statutory notice was given. Enough time as demanded was given to receive a just claim, a period longer than what was suggested by the company was given. Yet, the company was not able to pay its debts. It is not shown to be a company which would be suggested to be a solvent company in the sense that it is a company which has stopped its manufacturing activity from January, 1984. The Civil Judge, Senior, Division Junagadh, chose to grant an INJUCTION of such a nature by which the company is not able to withdraw any amount from any account or operate any account. In such a situation. Now , that, therefore, when the petitioner has come with a just claim and the company is unable to pay the debt or unable to run the company even at a loss, it can be clearly stated that the company is unable to function. In such a situation, accompany which is not able to function cannot pay its debt. to Suggest that it is a pressurising tactic only because Rs.1,10,000 are not paid back in the court is rather not pressurising there company, but pressuring the petitioner to withdraw the petition. Cyclone are natural calamities, by the resultant effect is that the company is not able to function. When the company is not able to function at all, it is not able to pay the just claim of any of the creditor5s including the present petitioner. Under these circumstances, the Petition is required to be admitted. Advertisement to issue in Gujarat Samachar and Times of India, the two newspaper which are published from Ahmedabad. Next date is fixed as December 10,1984. The learned advocate, Mr. G.N.Shah, desires to challenges this order by filing O.J. Therefore, the operation of this order is stayed up to November 9, 1984.