A company may be spoiled by the board in the following circumstances:
The companies (second amendment) act 2002 had added clauses (g), (h) and (i) above extending the power of the tribunal to order winding-up of companies.
Inability to pay debts
A company is deemed to be unable to pay its debts, referred to in clause(e) in section 433 in the following circumstances:
Courts decisions in respect of a company’s inability to pay its debts
Lack of proof of notice
It has been held that the creditor must show proof of having served the notice.
Place of serving the notice
The notice by the creditor shall be served at the company registration office and this is a mandatory requirement to be compiled with.
Notice must be addressed to the company
A notice of demand addressed to the managing director asking him to settle the dues expeditiously was held not in order.
Manner of making the notice
The notice need not contain a threat that if the debt is not paid within three weeks proceedings will be taken for winding up.
The particulars of the debt due from the company shall be stated in the notice.
Where the company has a bonafide dispute
Where a counter-claim of the company against the creditor would constitute a reasonable excuse for non-payment.
Debt due was not ascertained
It was held that the amount due from the respondent company as damages for non-delivery of goods to the petitioner was still to be ascertained in accordance with law and hence the court could not assume that a debt existed between the petitioner company and the respondent company.
A company in difficulties for a temporary period cannot be asked to wind-up
Because of financial difficulties for a temporary period, it was not possible for the company to pay its creditors.
A secured creditor whose security is sufficient is not debarred from making a petition for winding-up
Apart from the fact that a secured debenture holder can take legal action against the company if his security is impaired, a debenture holder having not received his dues on maturity can issue a notice to the company.
Law of limitation and winding-up petition
It has been held that a petition for winding-up shall be presented within the period when the debt is recoverable in law.
Contingent and prospective liabilities
In order to satisfy itself that the company will be able to pay its debts, the court will take into account the existing contingent and prospective liabilities of the via-à-vis its existing and prospective assets.
Acknowledgement of debt
According to the limitations act, the period of limitation is three years from the date of acknowledgement and the admission of indebtedness in the balance sheet every year is generally recognized.
It has also been subsequently held that the above ruling is subject to the fact of the debt being proved as indebtedness of the company in addition to the entry in the balance sheet.
A petition for winding-up of a company shall be presented to the tribunal by any of the following :
The Goods and Services Tax (GST) regime in India has brought various concepts to standardize…
Definition of Supply: Under GST, the law widely defines 'supply' to include all types of…
The Hindu Undivided Family (HUF) structure provides a distinct advantage for Hindu families in India…
A continuous flow of money is very important for any MSME to keep its operations…
Starting a business is a dream for many, but transforming that dream into a reality…
What is tax? A tax is a required financial obligation or levy mandated by the…