In Re: Bengal Flying Club Limited

A.N. Ray, J.—There are three Company Petitions Nos. 33, 34 and 35 of 1965. These three petitions are in the matter of applica under Sections 433, 434 and 439 of the Companies Act, 1956. These three applications are in the matter of Bengal Flying Club Ltd. In Company Petition No. 33 of 1965 the petitioner is Jogendra Chandra Das. In Company Petition No. 34 the petitioner is Amrita Sankar Ray. In Company Petition No. 35 the petitioner is Subhas Kanti Chowdhury. Company Petition No. 33 of 1965 was filed on 18 February 1965. Company Petition No. 34 of 1965 was also filed on 18 February 1965. Company Petition No. 35 was also filed on 18 February 1965. Company Petition No. 33 of 1965 was admitted on 1 March 1965. Company Petition No. 34 of 1965 was also admitted on 1 March 1965. Company Petition No. 35 was also admitted on 1 March 1965. It may be stated here that in Company Petition No. 34 of 1965 twenty one creditors are supporters of the winding-up petition and their support is based on the affidavit of Mrinal Kanti Das affirmed on 11 May 1965. The affidavit of the supporting creditors has been answered by Satyendra Kumar Roy affirmed on 6 September 1965 in Company Petition No. 34 of 1965. These three petitions were heard together. The arguments were common and questions involved were common. Company Petition No. 34 was taken out of its turn and Mr. Das, Counsel for the petitioner, advanced the leading arguments on behalf of the petitioning creditors. Counsel for the petitioning creditors in Company Petitions Nos. 33 and 35 had also advanced their arguments. Mr. Sen, Counsel on behalf of the Company dealt with all the arguments advanced on behalf of the petitioning creditors.

The petitioner in Company Petition No. 33 is Jogendra Chandra Das. His claim is for a sum of Rs. 5400/- in respect of salary for the period 16 April 1963 to 31 August 1963. The petitioning creditor in Company Petition No. 34 of 1965 is Amrita Sankar Ray and his claim is for a sum of Rs. 29,501.97 in respect of arrears of salary, compensation, dues in Provident Fund Account. The petitioning creditor in Company Petition No. 35 of 1965, Subhas Kant Chowdhury has a claim for Rs. 1693.75 in respect of balance of salary for the months of April 1962 to August 1963 after having given a credit to the Company for the payments made from time to time.

In view of the fact that Company Petition No. 34 was taken up as the main petition, I shall deal with the facts in Company Petition No. 34 of 1965. The Bengal Flying Club Ltd. Was incorporated in the month of August 1928 as a Company limited by guarantee without any share capital. The registered office of the Company is at Behala. There are various objects of the Company and one of the objects is to bring together persons interested in the encouragement and development of aeronautics and aviation and for that purpose to provide a centre of information and advice on all matters pertaining thereto. The other principal object was to impart training to members to fly and provide facilities for flying and to afford to members all the usual privileges, advantages and accommodation for social and sporting club. The petitioner Amrita Sankar Roy was appointed Assistant Engineer of the Company in the month of December 1947 at a salary of Rs. 500/- per month. The petitioner''s claim is for salary for the years 1955 and 1956 as also salary in lieu of leave not availed of in accordance with application dated 31 October 1958 and again in the year 1959. There is also a claim for salary for the period February to May 1962 amounting to Rs. 3344/-. There is a claim for Provident Fund dues in accordance with the resolution dated 11 April 1947 consisting of the petitioner''s contributions and Club''s contributions. There is a further claim in respect of Provident Fund Account discontinued by the Committee of the Club without the permission of the Commissioner of Provident Fund amounting to Rs. 956/-The total claim is for Rs. 29.501.97. It may be stated here that though the claim in the petition is for Rs. 29,501.97, in the statutory notice u/s 434 of the Companies Act the claim was for the sum of Rs. 29,536.76. The petitioner alleges that the petitioner''s dues have not been paid in spite of statutory notice u/s 434 and therefore there is the statutory presumption of inability to pay and that the Company is insolvent and unable to pay its debts. In paragraph 13 of the petition it is alleged that the Company is not carrying on any business and has suspended its business for over a year. In paragraph 14 of the petition it is alleged that it is just and equitable that the Company should be wound up.

In the affidavit in opposition affirmed by Satyendra Kumar Roy on 6 September 1965 it is alleged that the claims of the petitioner Amrita Sankar Ray are barred by the law of limitation and as such the petitioner has no valid or lawful claim. It is also alleged that the petitioner Amrita Sankar Ray in the month of May 1962 wrongfully, illegally and in violation of the terms of employment left the services of the Company whereby the Company suffered loss and damage assessed at Rs. 10,000/-. The petitioner''s claim for salary for the years 1955-56 is assailed on the ground of limitation. The petitioner''s claim for Rs. 800/- as special allowance is denied. The petitioner''s other claims are also denied. As to the claim for Rs. 3400/-in lieu of leave not availed of pursuant to application dated 31 October 1955 and the application in the year 1959 it is alleged that such applications were not submitted or sanctioned and that the claim is barred by limitation. The petitioner''s claim for salary for the sum of Rs. 3344.80 in respect of salary for the months of February to May 1962 is also denied and disputed, but the ground for such dispute is not alleged in the affidavit in opposition. The petitioner''s claim for Provident Fund is disputed because it is alleged that the petitioner was dismissed for wrongful acts and further that the petitioner''s claim in respect of Provident Fund could not be checked because the Government took possession of all papers and documents in the month of August 1963. As to contributions made by the employees of the Company it is alleged in the affidavit in opposition that they have been regularly kept since the year 1956 in a separate bank account and as such the claims can be paid.

The further allegations in the affidavit in opposition are that the State Government of West Bengal acquired the assets of the Company and the Company has preferred a claim for compensation for such acquisition amounting to Rs. 6,77,681.59 as particularized in Annexure A to the affidavit in opposition. The assets which have been taken over by the State Government are also shown in an annexure to the petition marked with the letter "A". It is alleged that in addition to the Company''s claim in respect of acquisition of assets of the Company, the Company has a sum of Rs. 20,000/- lying in its account of the State Bank of India on account of Accident Reserve Fund and that there is no liability attaching to that fund. In addition to that sum of Rs. 20.000 - it is alleged that a sum of Rs. 34,000/- is cue from the Central Government on account of outstanding subsidy for the third and fourth quarters of the year 1962-63 and a sum of Rs. 10,000/- on account of outstanding subsidy for the first quarter of the year 1963-64 and there is a claim for Rs. 41741- on account of a subvention bill, It is further disputed in the affidavit in opposition that the Company is not carrying on its business or has suspended its business for over a year. It is said that the Company intends to bring out a journal.

As to the supporting affidavit of Satyendra Chandra Sen it is said that a suit has been filed and there are charges of defalcation against Satyendra Chandra Sen. As to the claim of 21 creditors supporting the petition for winding-up it is alleged that they are not entitled to any contributions because of their various wrongful acts. It is alleged that since the assets of the Company were acquired by the State Government on or about 8 August 1963 the supporting creditors left the services of the Company without prior notice and since then they have been working under one B. C. Banerjee, who has been appointed Administrator by the State Government. The Company alleges a claim of Rs. 30,000/- against the supporting creditors.

In the affidavit in opposition it is alleged that the Company is solvent and lawful claims of any creditor can be paid out of the compensation money for which the Company has preferred claims. The Company further alleges that there are some amounts due from the Central Government on account of subsidy and subvention.

With regard to the petition of Jogendra Chandra Das in the Company Petition No. 33 of 1965 it is said on behalf of the Company that though the petitioner alleges to have been employed for 4 months from 16 April 1963 to 31 August 1963 and in the petition it is alleged that on or about 16 April 1963 he was appointed Chief Pilot Officer, but in the statutory notice for demand dated 21 26 May 1964 he has said that he was paid salary up to 15 April 1963 and that thereafter there was default with regard to payment of his salary and therefore the petitioner is guilty of suppression of facts and suggestion of false facts. Secondly it is said on behalf of the company that there is no provision for any appointment by the Administrator under the Memorandum and Articles of Association of the company and as such the petitioner''s claim is not lawful and valid claim.

With regard to the petitioner Subhas Kanti Chowdhury in Company Petition No. 35 of 65 it is said that though the claim in the petition is for Rs. 1693.75 in the statutory notice of demand u/s 434 there is a claim for Rs. 1975/-. Secondly it I said that Subhas Kanti Chowdhury unlawfully left the services of the company whereby the company suffered damages.

Counsel for the petitioning creditors canvassed only three grounds in support of winding up. First, that the company is unable to pay its debts. Secondly that the company ceased to carry on business for over a year. Thirdly, that it is just and equitable that the company should be wound up because its substratum is gone

As to the first point regarding inability to pay debts it is said by counsel for the petitioner that though disputes have been raised with regard to the claim of the petitioning creditor Amrita Sankar Roy in Company petition No. 34 of 1965 no reasonable ground has been given for disputing the claim of the petitioning creditor in respect of his salary for the months of February to May 1962 amounting to Rs. 3344/- and therefore there is indisputably inability of the company to pay. As to the other claims of the petitioning creditor which are disputed it is said that there was default of the company long before acquisition and therefore acquisition of assets of the company by the State of West Bengal is no answer to claims of the petitioning creditors. Counsel for the petitioning creditors in the other two petitions submitted that it was no answer on the part of the company to say that the company was expecting to receive compensation for acquisition because there would not be any proof of solvency or of ability to pay. Counsel on behalf of the company contended that the debt was disputed, first, on the ground of limitation and secondly, on the ground that the notice u/s 434 was disputed as not relatable to any valid or lawful claim it having bean barred by limitation and thirdly, no presumption of insolvency would arise because no notice was left at the registered office of the company. It is also said on behalf of the company that there is a bona fide dispute as to the amount of debt.

In the case of (1) The Company Vs. Sir. Rameshwar Singh the Company commenced a suit against some of its ex-Directors for recovery of a sum of over Rs. 6,00.000/-as damages for fraud and negligence. Subsequently the charge of fraud was withdrawn against one of the Directors and the claim against him was based on the ground of neglect of duty whereby the company suffered loss and damages. A Director thereafter filed a suit for recovery of certain deeds and securities alleged to have been pledged with the company as security for advances made. Thereafter the Director against whom charges wore made for neglect of duty filed a suit against the Company for recovery of a sum of Rs. 2,83,747/- alleged to be due to him in respect of advances made by him to the company. The company''s suit came up for hearing and was adjourned. In the meantime the Director who filed the suit against the company in respect of advances served a statutory notice u/s 163 of the Indian Companies Act, 1914. Thereafter a winding up petition was presented by a creditor. The company made an application for stay of the winding up petition. The application for stay was dismissed and an appeal was preferred. The Appellate Court laid down two principles. With regard to neglect to pay it was said relying on the observation in (2) In Re: London and Paris Banking Corporation (19 Eq. 444) that negligence to pay a debt on demand is omitting to pay without reasonable excuse and that mere omission by itself does not amount to negligence and where a debt is bona fide disputed by the debtor and the debtor alleges that the debtor is willing to pay such sum as is either fair or proper on a competent valuation he does not neglect to pay. Secondly, as to bona fide disputed claim it was said that if there was a bona fide dispute as to the substantial part of the debt on which the winding up petition was based the Court would not be justified in holding the company to be insolvent.

The meaning of the phrase bona fide disputed debt came up for consideration in three recent decisions of this Court. These are (3) In re: Bharat Vegetable Products Ltd. reported in 1956 C.W.N. 29, (4) Bengal Luxmi Cotton Mills Ltd. & Ors. v. Mahaluxmi Cotton Mills Ltd & Ors. and the Bench decision in (5) Ram Kumar Agarwala & Anr. v. Buxer Oil and Rice Mills Ltd. reported in AIR 1960, 764. There is also a recent decision of the Supreme Court in (6) Amalgamated Commercial Trading (P) Ltd. v. A. C. K. Krishnaswami reported in 35 Company Cases 456. In Bharat Vegetables Products Ltd. (Supra), it was said that presentation of a petition for winding up is an abuse of the process of the Court if the debt on which the petition is founded is disputed bona fide. In that case the petitioner preferred a claim and the Court came to the conclusion that there was a bona fide dispute as to the debt between the parties. It was said that the Court would stay the hearing of the petition even when there was ground for supposing that there was bona fide dispute as to any substantial part of the claim. Similar view had been expressed in the case of The Company v. Sir Ramaswar Singh (Supra). In Bharat. Vegetable Products Ltd. (Supra), reference was also made to the decision in (7) Mohammed Amin Bros. Ltd. Vs. Dominion of India and Others, where the Appellate Court directed the petition for winding up to be kept on the file and its hearing was adjourned sine die because the debt for income tax on which the petition was founded was disputed bona fide by the company and it was said that the Court ought not to make a winding up order based on such disputed debt.

In the case of Bengal Luxmi Cotton Mills Ltd. (Supra), it was said that when the company failed to pay a debt and it appeared that the failure occurred not because the company was unable to pay but because it disputed the liability on a substantial ground and there was nothing to show that if the dispute was decided against the company, it would not or would be unable to pay the debt, there was no present proof of insolvency and therefore no sufficient basis for making a winding up order. In the case of Bengal Luxmi Cotton Mills Ltd. (Supra), it was said that there was no dispute as to the existence of debt but only a dispute as to the time of payment and in support of that contention reference was made to the decision in (8) In Re: Welsh Brick Industries Ltd., (1946) 2 All. E.R. 197. In the Bench decision in Bengal Luxmi Cotton Mills Ltd. (Supra), it was said that if the grounds on which the liability was disputed were substantial and if the dispute was in that sense bona fide the Court would not proceed further to decide the dispute and determine whether or not the debt existed. The principle on which the Court will forbear from deciding the dispute and making a winding up order is that winding proceedings are not intended to be exploited as a normal alternative to the ordinary mode of debt realization and that it is more convenient that claims should be investigated and decided in a regular action.

In the case of Ram Kumar Agarwalla v. Buxar Oil and Rice Mills Ltd. (Supra), a creditor presented a petition for winding up. There was a dispute as to whether the debentures were issued without consideration and whether the debentures and the debenture trust deed on which the debt was based were fictitious documents and were brought into existence by the company with a view to defeat and delay the claim of its creditors. It was said that the court was unable to resolve the dispute on the affidavits and that it was not safe to act on the affidavits as their testimony was not reliable. It was held that in order to obtain the winding up it must be affirmatively proved to the satisfaction of the court that the petitioner is a creditor and as such entitled to set in motion the machinery for winding up.

Reliance was placed by counsel for the company on the decision In re: Welsh Brick Industries Ltd. (Supra), where the petitioner issued a writ for recovery of certain sums advanced by him to the company and then presented the petition based on that debt for the compulsory winding up of the company. The company obtained unconditional leave to defend the action. When the petition for winding up came up forhearing a winding up order was made by the County Court Judge. On appeal it was held that inspite of the fact that unconditional leave to defend had been granted it was competent for the judge in the winding up court to go into the evidence which was before him to consider whether or not there was bona fide dispute.

In the more recent decision in (9) In re: Tweeds Garages Ltd.. reported in (1962) 1 All. E.R. 121 a petition was presented for winding up on the ground that the company was insolvent and unable to pay debts. The sum on which the petition was founded was the subject of a settled account. It was held that a dispute as to the precise amount owed was not a sufficient answer to the petition.

Counsel for the company in the present case distinguished the English decisions by submitting that the law laid down by the Supreme Court in the case of Amalgamated Commercial Traders (Supra), is that if a debt is bona fide disputed there cannot be neglect to pay. The case before the Supreme Court related to payment of dividends and the company in answer to the claim stated that there was not a proper declaration of dividend and it did not constitute a proper and valid declaration. It was said by the Supreme Court that there was no neglect to pay. Counsel for the company extracted observations from the decision in The Company v. Rameswar Singh (Supra), as also observations in the case of Bharat Vegetable Products Ltd. (Supra), that if there is bona fid dispute as to the substantial part of the claim that would be a bona fide dispute.

Counsel for the petitioning creditor distinguished the case of Bharat Vegetable Products (Supra), as well as Ramaeswar Singh''s case (supra), that in those cases there were suits and counter claims and therefore there were disputes and secondly, nothing could be ascertained by way of definite sum. Emphasis was placed by counsel for the petitioner on the petitioning creditor''s claim for salary for the months of February to May 1962 and it was said that no reasonable ground was given for non-payment of that sum and that no dispute was raised and therefore, there was inability of the company to pay. Reliance was placed on the decision in (10) Cardiff Preserved Coal & Coke Co. v. Norton, reported in Law Reports Chancery App. Cas. Vol. 2 (1866-67) at p. 405 where Lord Chelmsford. L.C. said that the contention that the winding up order was bad because a sum of �628 was demanded and it appeared that he was entitled only to �411-7s-9d. could not be sustained because the 67th and 68th sections of Joint Stock Companies Act, 1956 (21 and 22 Vict. Ch. 60) made a company liable to be wound up only when a demand was made of a certain sum and the company neglected to pay such sum which they were bound to pay and the liability of a company to be wound up under those provisions arose when a creditor to whom the company was indebted above �50, served a demand requiring the company to pay the sum so due and the company for a certain time neglected to pay such sum. It was said that there was said that there was a debt of more than �50 due in that case and therefore, the winding up order was valid. In Section 434 of the Companies Act it is said that a company shall be deemed to be unable to pay its debt if a creditor to whom the company is indebted in a sum exceeding five hundred rupees then due has served on the company by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks there after neglected to pay the sum, or to.secure or compound for it to the reason able satisfaction of the creditor. It was, therefore, contended that as far as the claim for Rs. 3,344 was concerned there was inability to pay.

The company has raised a dispute as to substantial part of the claim of Amrita Sankar Roy in petition No. 34 of 1965. The claim is for Rs. 29,000 end odd. As to the claim for salary for Rs. 3,344 the company has not admitted the claim but has disputed. The question is whether there is bona fide dispute, or in other words, whether the company merely declines to pay without any reason. With regard to this precise sum of Rs. 3,344 the dispute is to be taken in the context of the entire affidavit evidence. There are grounds of limitation with regard to a large part of the claim. There are grounds of dispute based on the company''s claim against the creditor. The company alleges that it has a lawful claim. The company says that it is rendered inactive by reason of the acquisition of its assets by the State. The company says that it cannot carry on its normal flying aeronautical activities because of the aeroplanes having been acquired by the State. The company further submits that the court should take into consideration the fact that these three petitions are all presented on the same day and doubts whether there is bona fide with regard to presentation of petition. It is said that Amrita Sankar Roy presented the petition on 18 February 1965 in relation to claim which ranged from the year 1955 up to the month of May 1962. There is no explanation as to why the petitioner waited for three years and as to why the petitioner did not in the normal course of affairs file a suit with regard to arrears of salary. These are legitimate questions which occur to the winding up Court with regard to suggestions as to whether the petition is bona fide presented and whether the discretion which is exercised judiciously should be exercised in the facts and circumstances of the present case. The company Court is not a debt collecting court. A person who has the ordinary remedy open should not be allowed to resort to winding up unless there are special circumstances with regard to the debt which raise the irrefutable presumption of inability to pay. Apart from the statutory notice of demand on 21/26 May 1964 there is not in evidence a single letter of demand prior to that. The assets of the company were acquired in the month of August 1963. It is not said as to why the petitioner waited up to 1963 and thereafter waited for one year to serve the notice of demand u/s 434 and then waited another eight months before presentation of the petition.

With regard to the other two petitioner creditors, apart from the fact that there is discrepancy between the figures alleged in the petition and the figures in the statutory notice of demand in the case of Subhas Kanti Choudhury the other contention raised both in the case of Jogendra Chandra Das and Subhas Kanti Choudhury is that the appointment by administrator is not valid and binding on the company and therefore the entire claim is disputed. It is also said that the company has lawful claims against those creditors. The overwhelming evidence is first that there is dispute as to substantial part of the claim of Amrita Sankar Roy and there is dispute with regard to the entire claim on the ground that it is not a bona fide presentation of petition for winding up but is intended to be used mala fide to sub serve the larger claim which is barred by the laws of limitation and secondly, there is bona file dispute as to the entire claims of Jogendra Chandra Das and Subhas Kanti Chowdhury and thirdly, that all the three petitions raise substantial disputes as to the amount of debt, as to whether they are lawful debts and whether there is a proper demand in accordance with section 434 of the Companies Act, and finally whether the petitioners are lawful creditors It is said that the statutory notice is bad because it is not at all in accordance with the provisions of the Companies Act which require service on the company by causing it to be delivered at its registered office. The petitioner creditors have alleged that it could not be served by post and therefore, the notice was by affixation. It is said on behalf of the company that there is no affidavit by the postman and that there is no evidence as to when attempt was made to serve. I am unable to accept the contention on behalf of the company that there has been no service of notice u/s 434. But I uphold the other contentions of the company that there is substantial and bona fide dispute as to debt and therefore the petitions should not be acceded to.

The second contention on behalf of the petitioners was that the Company ceased to carry on business for over a year. Reliance was placed on the provision contained in Section 433 of the Companies Act that the Company may be wound up by the Court if the Company suspends its business for a whole year. Counsel for the petitioner relied on the decision in (11) In Re: Haven Gold Mining Company, reported in 20 Chancery Division 151 and on the observations of Jessel, M. R. at page 161, and of Brett, L. J. at pages 166-167, and Lindley, L.J. at page 167 of the report. The company in that case was established for working a gold mine in New Zealand and it turned out that the Company had no title to the mine and had no prospect of obtaining possession of it, except as to a small portion for a few months; the winding-up order was made although there were general words in the memorandum of association enabling the Company to purchase and work other mines in New Zealand and the large majority of the share-holders wished to continue the company. Jessel. M. R. said that though there were general words in the memorandum and articles of association extending the right to work mineral property generally, but the object of the Company or the special object in the memorandum of association was to work this gold mine, and the point which had to be considered was whether there was any mine at all as to which the Company had a title or a contract which might eventuate in title. Brett, L. J. also said that the proposition was made out that there was a total absence of possession or right of possession by the Company of the subject-matter for which that was formed to work and that there was no reasonable prospect of the Company obtaining possession of such subject-matter. Lindley. L. J. said that the company was formed for the purpose of acquiring and working of the mine upon the representation that they could acquire that upon certain terms and neither the Company nor their officers have had possession of the alleged mine, nor could they get possession and they never had it and they could not therefore work the mine.

In the case of (12) German Date Coffee Company, reported in 20 Ch. 169 the memorandum of association of the Company staled that the company was formed for working a German patent which had been or would be granted for manufacturing coffee from dates and also for obtaining other patents for improvement. The intended German patent was never granted but the Company purchased a Swedish patent. It was held that the substratum of the Company failed and it was impossible to carry out the objects for which it was formed.

Extracting observations from the decisions in Haven Gold Mining Company (Supra), and German Date Coffee Company (Supra), Counsel for the petitioner contended that the Bengal Flying Club Ltd. by reason of acquisition of its assets was rendered totally ineffective for the purpose of carrying on business and that it ceased to carry on business for over a year and it was idle on the part of the Company to contend that its activities as Club were continuing or could continue. Reliance was placed on the decision in (13) Lawang Tahang Vs. Goenka Commercial Bank Ltd., where the company''s name was a material consideration for determining the main or paramount object and for the purpose of finding out whether the substratum of the Company was gone. The question in that case was whether the Company ceased to carry on business as a banking Company. The Company proposed to change its name to Goenka Commercial Co. Ltd. It was said that there was no denying the fact that banking was a primary object of the Company. The Company there did little or no business. On those facts of the case the Company was wound up. As to suspension of business for a year the question which is to be decided is whether the Company has really abandoned the object and not if the suspension is satisfactorily explained and accounted for. Even if suspension is made out the court has a discretion and will hardly make an order if the majority of the share-holders do not want it (14) (See In Re: Middlesborough Assembly Rooms Co.. 14 Ch. D. 104; (15) Murlidhar Roy v. Bengal Steamship Co. Ltd., 47 Cal. 654). In the present case there is no allegation of total suspension. There is no allegation that the company has abandoned its business for all times. In Palmer''s Company Precedents, Volume 2, Seventeenth Edition, it is stated at page 24 that as to the suspension for a year the Court must be satisfied that there has been an intention on the part of the Company to abandon the business or an inability to carry it on. Again at page 30 of the same volume in Palmer it is said that in the case of, (16) Re: Eastern Telegraph Co. Ltd., (1947) 2 A.E.R. 104, the Company had lost its business through nationalization and its only remaining function was to negotiate compensation payable to it and the Court there refused an order on the ground that negotiations could be better conducted by the Directors than by the liquidator.

In the present case it is manifest that the Company by reason of acquisition of its assets by the State of West Bengal cannot carry on its normal activities. There are other activities of the Club of the Company and it is said that the Club activities are going on. The Company proposes to issue a journal. It is said on behalf of the petitioning creditors that mere intention will not suffice. But that intention cannot be denied.

In the case of (17) Bukhtiarpur Bihar Light Railway Co. Ltd., reported in AIR 1954 Calcutta, 499, it was said that a creditor would not ordinarily be heard to urge that winding-up order should be made because the substratum of the Company was gone, not for the reason that he was technically and as a matter of law barred from taking that ground at all, but for the reason that it was not a proper ground for the creditor to urge except in very special circumstance. The disappearance of the substratum was held to be a circumstance in view of which the Court may in a given case consider it just and equitable that a winding-up order should be made. In the Bukhtiarpur Bihar Light Railway Co. Ltd. (Supra), reference was made to the decision in Re: Eastern Telegraph Co. Ltd. (Supra), and it was said that in view of the fact that the Railway was acquired by the Government, the Government could not contend that the substratum of the Company was gone. It is true there the person who rendered the company''s business ineffective was contending that the substratum of the Company was gone. In the present case there is no volition as far as the Company is concerned with regard to the normal activities of the Company. There is a compulsive or what is known as the police force of a State in acquiring the assets of the Company. The Company is left with no choice but to be shorn of its equipments. The company is preferring its claim for compensation. The decision In Re: Eastern Telegraph Co. Ltd. (Supra), seems to be apposite in regard to the facts of the present case. I am unable to hold that the Company has ceased to carry on business within the meaning of the provisions in Section 433 of the Companies Act in order that it might be wound up.

The final contention on behalf of the petitioner creditor was that the subtratum of the Company was gone. There is no allegation that the substratum of the Company is gone. Counsel for the petitioner relied on the decision in (18) In Re: Suburban Hotel Company reported in Law Reports 2 Chancery, Appeal Cases (1866-67) 737 where an application was made for winding up of the Suburban Hotel Company Ltd.. Lord Cairns, L. J, said at page 750 of the report that if it were shown to the Court that the whole substratum of the partnership, the whole of the business which the Company was incorporated to carry on had become impossible, the Court might either under the Act or on general principle, order the Company to be wound up. It was further said in that case that the winding-up process could not be used and ought not to be used as the means of evoking a judicial decision as to the probable success or non-success of a company as a commercial speculation. In the present case, as I have already indicated, there is no allegation that the substratum of the Company is gone. Reference may be made to Palmer''s Company Precedents, Volume 2, Seventeenth Edition, page 54 as to the appropriate form for the winding-up order where the substratum of the Company is gone. One will look in vain at the petitions in the present case to find whether there is any suggestion of an allegation that the substratum of the Company is gone. It is alleged in the petition that it is just and equitable in circumstances alleged in the petition that the Company should be wound up. Inability to pay is a circumstance alleged. It is also alleged that the Company has ceased to carry on business for a year. There is adequate explanation as to why the Company could not carry on business. It was said by Counsel for the petitioner that the just and equitable clause was a genus whereof the case of the Company''s substratum gone was a species and that it was not an independent head of winding-up. It is a question of fact as to whether the substratum of the Company is gone or not. These petitions for winding-up are to be drawn up with a good deal of aft and care. A petition for winding up is a serious matter. It will appear in Buckley on the Companies Act. Thirteenth Edition, page 471 that an order will not be made if a sufficient case is not stated in the petition even if such a case is proved in evidence and the order must be made seconded allegata et probata. It was said by Counsel for the petitioner that the entire affidavit evidence could be gone into to find out that there was no chance of the Company carrying on business. It was also said that it was no longer a demur able petition by reason of affidavit evidence having been there. But the absence of a demurrer does not cure the petition of the inherent vice contained in it of total absence of allegation that that substratum of the Company is gone. Counsel for the petitioner relied on the Bench decision in (19) Ramshankar Prosad v. Sindri Iron Foundry (P) Ltd., reported in 70 C.W.N. 520 where it was said that "a judge has the freedom to look at and draw upon materials other than those contained in the pleadings for fixation of issues." That was a ease under Sections 397, 398, 399, 401 and 402 of the Companies Act as to whether there was oppression on share-holders. I am unable to hold that the decision is of any aid to the petitions for winding up. The petition for winding up is to follow the settled practice in the light of well-established decisions. That which is alleged is to be proved. It has to he alleged as a fact and it has to be proved as a fact. The company had no notice of such allegations. I am unable to accept the contention on behalf of the petitioners that there is any case that the substratum of the company is gone. Assuming it was open to contend that the substratum of the company has gene, on the present affidavit evidence in my opinion no conclusion could have been arrived at in favor of the petitioners. For all these reasons I am of opinion that the petitions fail. The petitions are dismissed with costs. Certified for counsel.