BIPLA CHEMICALS INDUSTRIES Vs. KESHARIYA INVESTMENT LIMITED

JUDGEMENT

(1.) A company known as 'Shree Keshariya Investment Limited' owns the Priyalaxmi Mills in Baroda. In March this year, and afterwards, 28 petitions were filed byvarious creditors for the winding up of this company. Notices were issued to it to show cause why each of the petitions should not be admitted. In due course appearance was entered on behalf of the company, and more 'time was obtained to file answers. On 9th May, 1975, time was extended further because Mr. K. K. Jain, counsel for the company, intimated to me orally in court that the company was trying to make arrangements to pay all the petitioning creditors. He prayed for a date to be fixed after the long vacation so as to give the company enough time for the purpose- I acceded to that request. However, on 16th July, 1975, when the petitions were again listed for further orders, it was stated on behalf of the company that it had not succeeded in raising the necessary funds to pay the creditors. Mean while, the company had filed applications under rule 9 of the Companies (Court) Rules 1959 and section 151 of the Civil Procedure Code in each of the proceedings. Counsel for the company said that these may be treated as its answer to the notices to show cause against admission.

(2.) During the discussion on 16th July, 1975, counsel for the company prayed that the petitions be ordered to stand over for a period of four months to enable it to obtain loans from two Banks with which it was negotiating. He said that if the loans were obtained the company would then be in a position to pay its debts. The creditors opposed this request, but, after some persuasion, were minded to agree, provided that satisfactory guarantees were furnished for the amounts owing each of them so that their interests were safeguarded in the intervening period. Counsel for the company took time to obtain instructions. On 25th July, 1975, he informed me that the company was unable to find sureties. Consequently, the petitions have now again been posted for admission.

(3.) I begin my emphasising that the only question presently before me is whether the creditors' petitions should be admitted; and, if so, what further directions ought to be given. The main relevant facts are not in dispute. It is admitted that in the aggregate a sum of about Rs. 10 lakhs is due from the company to the petitioning creditors. It is not disputed that each of the creditors served the company with a notice of demand in accordance with section 434 (a) of the Companies Act 1956, and that the company did not reply to the sameit was conceded on behalf of the company that in its present financial straits it was unable to pay the amounts admitted to be due to the creditors. Clearly, on these facts, the creditors would, prima facie, be entitled to an order for the winding up of the company, and, a fortiori, to have their petitions admitted.