IN THE HIGH COURT OF PUNJAB AND HARYANA 

MANJEET DALAL, Advocate, for the petitioner. 

JUDGMENT 

SWATANTER KUMAR, J. - M/s. J. G. Finance Limited has filed this petition under section 433 and section 434 of the Companies Act, 1956, read with rule 9 of the Companies (Court) Rules, 1959, praying that M/s. Hansaflon Plastochem Limited be ordered to be wound up as this company is unable to pay its admitted debts. 

2. Before deciding the merits of the respective contentions raised by the learned counsel for the parties, it would be appropriate to refer to the necessary facts giving rise to the present petition. 

3. The petitioner company, which is incorporated under the provisions of the Companies Act, 1956, with its registered office at 307, Ajit Sen Bhawan, 13, Crooked Lane, Calcutta, is primarily involved in the business of financing. Of course, under the objects of the company, the company also deals in the products other than merely financing. On 8 March, 1995, the petitioner company made incorporated deposit of Rs. 50,000 with the respondent company for one month bearing interest at the rate of 24% per annum. The amount was deposited by means of Cheque No. 932775, dated 8.3.1995 drawn on Punjab National Bank, Karol Bagh, New Delhi. As the respondent company failed to fulfil its obligation of the re-payment of the incorporate deposit on the expiry of one month, a demand was raised by the petitioner-Company. The respondent company made some payments to the petitioner company of the amount, on the dates indicated hereunder : 

        Date              Amount 

     10.4.1995        15,00,000 
     15.1.1996        18,00,000 
     20.3.1996        12,47,000 

4. A sum of Rs. 4,53,000 remains balance on account of principal accounts payable by the respondent company to the petitioner company. As on 31 March, 1997, the liability of the respondent company on account of the interest on the incorporated deposit was stated to be Rs. 8,74,314.51. The details thereof has been provided in paragraph 12 of the petition. In addition to the above figure, the petitioner company claims a sum of Rs.13,27,314.51 with interest at the rate of 24% per annum in accordance with the terms and conditions of the agreement. The respondent company failed to repay the said amount, thereof, the petitioner company issued a notice, dated 17 May, 1997, demanding the said sum of money. Copy of this notice is annexed with the petition as Annexure P/2. The notice was received by the respondent company. However, inspite of service of the notice, the respondent company failed to pay the amount as demanded by the petitioner, compelling the petitioner to file the present petition. 

5. Vide order, dated 31 July, 1997, notice to show cause to the respondent was issued why petition be not admitted. The respondent company put in appearance and filed the reply to oppose the petition. 

6. It was stated that no statutory notice under section 434 of the Companies Act was served upon the respondent-company and the notice did not satisfy the basic ingredients of section 434 of the Companies Act. On merits, it was stated that no interest was payable, though receipt of Rs. 50,000 was admitted, as stated by the petitioner of this petition. In fact, the liability of more than rupees 7 lakh was admitted by the respondent-company but it stated that it had supplied Black Goat Nappa to the petitioner vide invoices, dated 18.8.1995. Copies of the notices have been annexed to the reply as Annexure R/1 and R/2. Annexure R/1 is the invoice for a sum of Rs. 3,15,120 while Annexure R/2 is the invoice for Rs. 3,91,950. 

7. As is clear from the above admitted facts, the liability of the respondent-company is hardly in dispute. The respondent has admitted the receipt of Rs. 50,000 and also admitted the re-payment to the extent stated in the petition, but for the part of the balance, it is stated that Black Goat Nappa material was supplied. To some extent, element of interest is disputed. Annexure R/1 and R/2, which are stated to be the invoices for the supply of the material does not bear any receipt and in fact is a document signed by the representative of the respondent company alone. 

8. Learned counsel appearing for the respondent company fairly conceded that there was no document on record or even otherwise which could show that material in question was ever received by the petitioner company, as stated. The burden to prove the receipt of the material supplied in lieu of admitted debt was upon the respondent. They have miserably failed to discharge the said onus, at least prima facie, by documentary or other cogent evidence. In these circumstances, I am prima facie of the view that the respondent company owed amount to the petitioner company. The extent of amount may be a question which needs to be gone into on merits, but the balance of more than rupees 7 lakhs is admitted by the respondent company for which the material is stated to have been supplied and, prima facie, the respondent company has failed to show any proof of supply or receipt of the material. Creation of Annexure R/1 and R/2 in their own favour would be of no alternate to the respondent company to show discharge of a valid and admitted due debt. It was a finance transaction where admittedly incorporate deposit was made. The petitioner company has specifically disputed the receipt of the said material. A specific affidavit was filed in this regard stating they are dealing with the finance company. It has been specifically averred that the petitioner company is not a trading concern and is only engaged in business of finance and lease. They never placed any order, nor did they receive the goods as stated in Annexures R/1 and R/2 appended with the reply filed on behalf of the respondent company. If the material is not received, obviously, more than rupees 7 lakhs is due to the petitioner company from the respondent and the court is ex-facie satisfied that the said amount is due and payable by the respondent company to the petitioner company. 

9. The second contention raised on behalf of the respondent is that no notice was served prior to the filing of the petition and the notice does not satisfy the requirement of the provisions of section 434 of the Companies Act. The entire reply is vague and uncertain. Alongwith the main petition, the petitioner has annexed copy of the notice, dated 17.5.1997 as Annexure P/2 and has also filed on record the photo copy of the UPC, postal receipt No. 3998 despatching the said notice by registered post and the acknowledgement receipt duly signed on behalf of the company (as Annexure P/3 collectively). It needs to be noticed that in para 14 of the reply, it is nowhere stated that Annexure P/3 acknowledgement receipt does not bear the signatures of the representatives of the respondent company. This will certainly deem admission of receipt in the face of said pleadings in that regard in paragraph 15. 

10. No doubt the notice does not make a specific mention to the provisions of section 433 and section 434 of the Companies Act and does not specify the period of three weeks, as postulated in the said provisions, but such omission cannot constitute a valid ground for dismissal of the petition for winding up. In paragraph 6 of the notice, it has been specifically stated that in the event of default and failure to pay the petitioner company, the petitioner company would be constrained to take appropriate legal proceedings at the risk and responsibility and costs of the respondent company. The petition for winding up is nothing but a legal proceeding. The notice, dated 17 May, 1997, was received by the respondent company. Thereafter, the petition for winding up has been presented in the Registry of this court on 29.7.1997, i.e., much after the expiry of the period of three weeks from the date of the notice and its service. 

11. It is settled principle of law that mere non-mentioning of three weeks in the notice would not prove fatal and would not invalidate the notice and cannot always result in dismissal of the winding up petition. No doubt, there should be substantial compliance of the mandatory provisions and the notice defaults for any of the essential ingredients may not be termed as a valid notice, but the mere fact that period of three weeks has not been specifically stipulated in the notice and the expression 'winding up proceedings' have not been used in the notice cannot prove fatal to the notice. In this regard, reference can be made to the cases Babu Ram v. Krishna Bhardwaj Cold Stores and General Mills Co. (P) Limited (1965) 2 Comp LJ 215 (All); Re Lympe Investments Limited (1972) 2 All ER 385, and Mohanvi Corporation (P) Limited v. LIC (1972) 42 Comp Cas 393. The conduct of the respondent company itself would be further relevant factor to be looked into. Firstly, inspite of the fact that notice was duly served upon the respondent, no reply was sent to the said notice. If the factum of supply of material as aforeindicated, was true, it would be but natural conduct on the part of the respondent company to react to the said notice forthwith and inform the petitioner company that they owe no amount whatsoever to the petitioner company. No reply to the said notice as well as non-producing of any book of accounts and other statutory book, which the respondent company is obliged to maintain during its normal course of business, showing the satisfaction of the said loan, should lead to adverse inference against the respondent company. 

12. For the reasons aforestated, I am satisfied that the petitioner company has made out a clear case, which remains unrebutted except for making vague and bald allegation of denial. In any case, the respondent company owes more than rupees 7 lakhs to the petitioner company has failed to pay for all this time and has not offered re-payment thereafter even during the pendency of this petition for a period of more than one year. The result is that the respondent company has failed and unable to pay its admitted debts to the petitioner company and as such provisions of section 433 and section 434 of the Companies Act are fully attracted in the facts and circumstances of the case. 

13. Consequently, this petition is admitted. Notice of admission of the winding up petition shall be published in accordance with rules in 'The Tribune', 'Jansatta' and the official gazette of the State of Haryana. Clear 14 days' notice shall be given in the publication prior to the next date of hearing. It is further clarified that if the respondent company deposits a sum of Rs. 7 lakhs in court, publication of admission of this petition shall remain stayed till further orders. 

14. List matter for further direction on 26.11.1998.