M.V. PAULOSE Vs. CITY HOSPITAL (P.) LTD.

JUDGEMENT

(1.) Appellant submits that the respondent company owed a sum of Rs. 1,74,709.12 to the appellant. Appellant sent a letter marked in the proceedings as Annexure B to the Company requesting to pass a resolution authorising the cashier or accountant to allow the petitioner to draw Rs. 1,000 daily from the cash counter towards the above said dues. It is stated that the Board of Directors passed a resolution resolving to pay Rs. 5,000 to the petitioner every month, by resolution dated 8th May 1989. But, the Company defaulted payment. Therefore, a notice was sent to the respondent Company, exhibited as Annexure C in the proceedings calling upon the respondent Company to pay the said amount to the appellant. The Board of Directors of the respondent Company, passed another resolution on 24th June 1989, whereby it was resolved that the Company should pay to the appellant the amount claimed in monthly instalments of Rs. 10,000. Even though such a resolution was passed, the Company did not pay any amount to the appellant. Further it is stated, that the Company owes an amount of Rs. 2.25 lakhs to the Kerala State Electricity Board and Rs. 50,000 to the Provident Fund Commissioner, Rs. 3 lakhs to debenture loan holders and over Rs. 3 lakhs to Banks. It is also stated that the Company has to pay to the Directors and other individuals Rs. 5 lakhs.

(2.) The definite case of the appellant is that the debts of the Company exceeded its paid up capital and that the Company is unable to pay even the salary to its staff and unable to meet the current demands. In these circumstances, appellant submitted before the court that the Company is commercially insolvent. It was also pointed out that another creditor, one K. A. Albert took proceedings for winding up by filing a company petition and the same was withdrawn when the company discharged its debt. On the aforesaid averments, the appellant invoking the jurisdiction of this court under S.439 (1) (b) of the Companies Act, prayed that the Company may be wound up by the court as per the provisions of the Companies Act, for short, the Act.

(3.) The Company contended that the petition is not maintainable stating that the attempt of the appellant is only to realise the alleged debt by threatening with winding up proceedings against the Company. It is submitted that on 31st March 1989, the Company owed to the appellant a sum of Rs. 1,26,500 as principal and interest Respondent Company has paid Rs. 85,000 in all by 12th July 1989 and after the filing of the company petition, the Company paid Rs. 25,000 in three instalments. Thus, the Company has paid a total sum of Rs. 1,10,000. It was also contended that the appellant was the Managing Director of the Company from August 1982 till May 1989. The grievance of the Company is that as the Managing Director of the Company, the appellant has conducted the affairs of the Company in a manner highly prejudicial to the Company and detrimental to its financial interests. After the appellant relinquished his office as Managing Director, the Company received many complaints from various suppliers of medicines and other items and that large amounts have to be paid to them. -The Company conducted a verification and it was found that many of the items are missing and did not find a place in the stock register. According to the Company, the total value of the missing items comes to Rs. 1,28,900. Further, it is stated that from 1st October 1988 to 30th April 1989, the total cash collection of the company was Rs. 22,13,210.20 and that the amount seen remitted to the Bank was only Rs. 2,20,102.01. According to the respondent Company, appellant is bound to give accounts for the missing amount. The Company seriously disputed the claim of the appellant and prayed that the petition has to be dismissed.