COIMBATORE TRANSPORT LTD Vs. GOVERNOR-GENERAL IN COUNCIL

JUDGEMENT

(1.) This is an appeal from the order and judgment of Clark, J., in a petition filed by the Income-tax Officer, Special Circle, Coimbatore, to wind up the appellant company viz., The Coimbatore Transport Ltd., a private Company registered under the Indian Companies Act. On an objection taken by the appellant, the Governor-General in Council was substituted in the place of the Income-tax Officer as petitioner. The debts on which the petition was founded were due in respect of income-tax and excess profits tax for the year 1941-42 and 1942-43. With a penalty of Rs. 3,200 the total amount due exceeded Rs. 30,000. There appears to have been a slight reduction in the amount payable on account of a subsequent decision of the Appellate Tribunal but it is not disputed that a very large sum is lawfully due and payable as and for the taxes above mentioned.

(2.) The only ground on which the petitioner sought a winding up order, at the trial, was that the company was unable to pay its debts (vide Section 162, Clause (v) of the Indian Companies Act). The learned Judge found that the company was unable to pay its debts and held that the petitioner was entitled to a compulsory winding up order. He however directed the winding up order to be stayed for a period of one week. If during that time security in the shape of Government paper for the amount of taxes due was deposited in Court, then the application was ordered to be dismissed with no order as to costs. If such security was not supplied within the time fixed, then the winding up order was to stand. No such security was furnished within the time allowed. The company appeals against this order.

(3.) It was contended by the learned advocate for the appellant that there was no sufficient allegation in the petition that the appellant was unable to pay its debts and that in any case there was no proof that it was so unable. We agree with the learned Judge that there is no substance in this objection. In the petition it was alleged that the company purported to have sold its buses on the 23 March, 1946, for a sum of Rs. 1,71,000 but this money was not utilised for payment of the arrears of the taxes. It was also stated that such of the properties as may be traced may not fetch any appreciable sum: The company has been unable to pay the large amount due as taxes in spite of demands. In paragraph 12 of the petition mention is made of the unsatisfactory financial position of the company. The fact that the company is disputing the quantum of the tax assessed does not by itself prevent the Government from recovering the amount assessed and admit-tedly the company is not in a position to pay it. There can be no doubt that the petition did allege the inability of the company to pay its. debts and the learned Judge was justified in finding that the allegation had been proved. In Re Gold Hill Mines (1883) 23 Ch. D. 210, the only basis for the allegation that the company was unable to pay its debts was an ordinary statutory affidavit. In Doraiswamy Ayyar v. Coimbatore E.S. Nidhi , there was a vague statement made in the petition but it was not sup- ported by figures or facts and the only fact relied on was the failure to comply with the statutory demand. These decisions cannot have any application to the present case.