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9. As we have already indicated hereinabove, all these petitions are moved by the petitioning creditors under section 433(e) of the Act. We are, therefore, concerned with a limited question whether in such company petitions, before admitting and advertising the same, the learned company judge has to follow any procedure of enquiry of summary nature or not. All that we will say hereinafter will be confined to this question and no part of it will apply to the procedure to be followed in winding-up petitions invoking the other provisions of the Act, as that question has not arisen before us. Part VII of the Act deals with winding-up of companies. Section 425(1) of the Act found in Chapter I of Part VII deals with modes of winding-up. Sub-section (1)(a) of the said section deals with winding-up of a company by the court. We are concerned with that mode of winding-up Chapter II deals with winding-up by the court. The first section therein is section 433 which deals with cases in which a company may be wound up by the court. It states, a company may be wound up by the court as per clause (e) if the company is unable to pay its debts. Then follows section 434(1) which deals with situations where the company will be deemed to be unable to pay its debts. Therefore, there is a direct linkage of section 434(1)(a) to (c) with the company petition for the winding up of a company by the court on the ground mentioned in section 433(e), i.e., that the company is unable to pay its debts. The deeming fiction regarding inability of the company to pay its debts is said to arise under the three circumstances mentioned in section 434(1)(a), (b) and (c). As this section is relevant for our purpose, it will be useful to extract it in extenso at this stage. It reads as under :

21. In this connection, it will be profitable to refer to a later decision of the Supreme Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Private Limited, . Therein the Supreme Court was concerned with the case in which the learned company judge had dismissed the company petition seeking winding up of the company under section 433(e) and (f) of the Act. The said petition was moved by the directors of the company, who had sold their shares and had gone out of the management of the company. They were parties to the proposed sale of certain machinery. Just when the sale of the machinery was going to be effected, they presented the petition for winding up. It was held by the Supreme Court on these facts that the petition was presented with an improper motive. However, dealing with the scope and ambit of petitions under section 433(e), the Supreme Court in para 21 of the report has made the following pertinent observation (at page 131 of 42 Comp Cas) :

27. The latest judgment of the Supreme Court to which our attention was invited by learned counsel for the parties is rendered in the case of Pradeshiya Industrial and Investment Corporation of U. P. v. North India Petro Chemical Ltd. . In that case, the Supreme Court was concerned with a winding up petition under section 433(e). In that case, the first respondent before the Supreme Court had issued notice under section 434 to the appellant-company. Under a promoters' agreement, a sum of Rs. 72.50 lakhs was payable by the company to the promoter, the petitioning creditor. On that ground it was alleged that the appellant-company was indebted in a sum of Rs. 72.50 lakhs as on November 30, 1991, and as it was not paid, a petition was moved before the Allahabad High Court. The learned company judge issued a show-cause notice to the company before admitting the petition. After considering the evidence led by the company, the learned judge took the view that the petition deserves to be admitted as a prima facie case was made out for admission. However, advertisement was suspended till further orders. Against such an order of admission, the company preferred an appeal to the Division Bench, which was dismissed. It is thereafter that the appellant-company preferred an appeal by special leave before the Supreme Court. Examining the material on record at that stage, it was held by the Supreme Court that it was not a case for admission or advertisement of the petition and on the contrary, as the basic requirements of the relevant provisions of the Act for supporting the petition under section 433(e) were absent, the petition was liable to be dismissed. That is how, even at the admission stage of the petition, the Supreme Court interfered and dismissed the petition. While doing so, the Supreme Court, in paragraphs 26 to 33, went into the question as to what was the requirement to be established even prima facie before getting a petition under section 433(e) admitted and advertised. In para 26, it was observed that defence of the appellant-company in relation to non-payment was a bona fide one. After referring to section 433(e), it was observed that in such a petition, there must be a debt and the company must be unable to pay the same. In para 29 it was observed that the debt under this section is a definite amount payable immediately or at a future date. Then the court considered, at para 30, the scope and ambit of the words "unable to pay its dues" (sick debts). Taking a clue from European Life Assurance Society, In re [1869] LR 9 Eq 122 and other decisions, it was observed that for being plainly and commercially insolvent, it has to be shown that the assets of the company are such and make it reasonably certain, and from which the court feels satisfied that the existing and probable assets would be insufficient to meet the existing liabilities. Reliance was then placed on the observations of the Supreme Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries P. Ltd., and then the following pertinent observations were made in paragraph 32, "it is beyond dispute that the machinery for winding-up will not be allowed to be utilised merely as a means for realising its debts due from a company." In para 33 reasons are given by the Supreme Court for not approving the order of the High Court admitting the petition. It was noted by the Supreme Court that the petitioning creditor was not a creditor. The appellant was not a debtor because it was a financial institution for an amount which is agreed to be subscribed. Neither the learned single judge nor the Division Bench had decided this important question whether there is a debt and the company has either neglected or was unable to pay. It was also observed that there was no definiteness of the debt as the matter was pending adjudication in arbitration. In view of all these, there was prima facie dispute as to the debt and then followed the observations in sub-para (S) of para 33 as under (at page 845 of 79 Comp Cas) :

"The defence raised is a substantial one and not mere moonshine. We find it difficult to appreciate the reasoning of the learned single judge when he holds that there are arguable issues and, therefore, the winding up petition has to be admitted. On this aspect the courts below failed to note that the admission of the winding up petition is fraught with serious consequences as far as the appellant is concerned."

28. This latest decision of the Supreme Court puts the controversy beyond the pale of doubt that, in the case of a company which is a going concern and which is actually functioning, even an order of admission of a company petition under section 433(e) may prove disastrous, even leaving aside the advertisement order which would be still more pernicious, for, even at that stage after hearing the company, it has to be decided whether the petitioning creditor is a creditor of the company, whether any definite amount of debt is due to him from the company, whether the defence of the company in this connection is valid and not mere moonshine and whether it is prima facie shown that the company is plainly commercially insolvent or in other words its existing and probable assets would be insufficient to meet the existing liability. It is not possible to agree with the contention of Sri Raghavan and Sri Jayaram that the aforesaid decision of the Supreme Court has not laid down the ratio that even at the stage of admission of such petition under section 433(e), a prima facie finding has to be reached in connection with the alleged commercial insolvency of the company. If that were so, there would have been no occasion for the Supreme Court to dilate on this aspect in para 30 of the report. In fact, in para 34 of the report, the Supreme Court went into this question on the basis of the material on record and took the view that the company was a profit-making financial corporation and it was paying dividend as seen from the balance-sheet for the year 1991-92. The assets of the appellant-corporation and the reserves are so much, there was no justification whatsoever for admitting the winding up petition. Meaning thereby this exercise about the prima facie finding on the financial condition of the company and for prima facie concluding whether the company was commercially solvent or not has to be undertaken even prior to the admission of such winding-up petition under section 433(e) of the Act. That very exercise was undertaken by the Supreme Court on the material on record and it was found that as the company was not in such financial doldrums, it was not a fit case for admission of the winding up petition against such a company under section 433(e) of the Act. It must, therefore, be held that such consideration at the admission stage of the petition is not only not foreign to the scope of such enquiry but also, it is a part and parcel of such enquiry as authoritatively ruled by the Supreme Court in this decision.