NEW ERA MANUFACTURING CO LTD Vs. STATE

JUDGEMENT

(1.) THE main, and, to ray mind, the sole question in this winding up petition is whether the petitioners are, as they claim to be, but is denied by the company which vehemently oppose the petition, creditors of the company whose winding up they seek. Or, rather, since the winding up court, jealous that its process should not be abased as a means of enforcing doubtful claims, will not ordinarily adjudicate on such a question when there is a bona fide dispute, whether the dispute by the company is a bona fide dispute. If the petitioners are, in truth, creditors I think a winding up order should follow as a matter of course. For, they would, in that case, be creditors to whom more than Rs. 500/- is presently due by the company and whose demand under Ext. P-1 dated 1-2-1965 remained unsatisfied when this petition was brought on 10-3-1965 and still remains unsatisfied. It is no doubt said in the counter-affidavit filed by the company that Ext. P-1 does not satisfy the requirements of S. 434 (1) (a) of the Companies Act. But no attempt has been made to show in what respect it is wanting and the point has not been pressed at the hearing. THE company's debts amount to about Rs. 2,60,000/-and the petitioners claim as much as Rs. 75,000 and odd as due to them. It is true that 947 out of a total number of 2778 creditors to whom a total sum of Rs. 1, 07, 000/- and odd is due have, entered appearance to oppose the petition. THEn there is one other person, V. K. R. V. Vaidyanatha Iyer by name, a director of the company, who is the mainspring of the opposition and who claims to be a creditor the sum of Rs. 45,000/ -. But it is said that he has assigned his debt to some other person and is no longer a creditor. However that might be, assuming that V. K. R. V. Vaidyanatha iyer also is a creditor and that the majority of the creditors in value though not in number are opposed to the winding up these creditors have only repeated parrot-like the objections taken by Vaidyanatha Iyer in the counter-affidavit he has sworn to on behalf of the company and have not chosen to explain how, if the company is really unable to pay its debts, it would be beneficial to the interests of the creditors as a whole if the company is allowed to continue. THE opposition from these creditors may therefore be ignored. Indeed, it seems to me, that a winding up is inevitable and that, if for any reason this petition be dismissed, the company will have to go into liquidation of its own accord or, if an application is made in that behalf, will have no defence to put forward. THE company admittedly stopped business on 27-11-1963 and has not resumed business, since. THEre was a previous winding up petition against the company, C. P. No. 25 of 1963, filed on 20-11-1963. That was by a Hindu joint family whom the present petitioners 2 and 3 represent, and it was brought on the foot of the same debt that they now claim. That petition was dismissed on 9-12-1964, and, although it is said that the company was unable to resume business because of some interlocutory order made in that petition, it is pertinent to note that it was made no attempt whatsoever to resume business even after the dismissal. THE present petition was, as we have seen, brought on 10-3-1965. A provisional liquidator was appointed on 24-6-1965, and he has sold the stock in trade and the raw materials of the brush manufacturing concern which was the sole under-taking of the company. It is not suggested that the company will be in a position to revive this undertaking or embark on some new business it has not the necessary finances and these are hardly times when fresh finances would be forthcoming for a derelict company-and it would therefore appear that, whatever might be the fate of this petition, the company will never be able to resume business.

(2.) I am satisfied that the company's denial of the debt claimed by the petitioners its ease is that there was no debt due to the petitioners and that, if there was it is barred by time far from being bona fide is downright dishonest. Infact the debt claimed by the petitioners arose out of the same transaction as the debts which the company proclaims to be due to three of its directors including Vaidyanatha Iyer. It is only when it comes to the petitioners that there is a denial.

(3.) THE principal contention of the company is that the petitioners' claim was barred by limitation when this petition was brought on 10-3-1965-in this connection it is interesting to note, as a measure of the bona fides of this plea, that one of the principal contentions raised by the company in the previous petition, C. P. No. 25 of 1963, was that there was no debt presently due since, in view of the undertaking in Ext. P-7, the money was repayable only after the liability to the Madras Industrial Investment corporation Limited was discharged, something that has not happened as yet. However that might be, as we have seen, there was a fresh deposit by the firm as on 27-3-1961 free of the undertaking in Ext. P-7. This deposit was split up between the four partners of the firm and by Exts. P-11 (a) dated 1-4-1963 and p-11 (b) dated 31-7-1963 the amounts due on that account to V. V. Krishnier sons, Rs. 59,000/- as principal and Rs. 8744. 54 as interest were entered in the suspense account in the books of the company. This was ratified by the resolution of the Board, Ext. P-14 (a) dated 28-8-1963, so that I should think that there was, on that day, a fresh deposit by V. V. Krishnier Sons of the sums due to them. THE winding up petition having been brought on 10-3-1965, within three years of that date, the debt was not by then barred by limitation,