Judgment :- RAMCHANDRA IYER C.J. These appeals arise from the judgment of veeraswami. J. dismissing an application filed by C. Hariprasad, the appellant in O.S.A. no, 18 of 1962, for directing the winding up of the Amalgamated Commercial Traders [Private] limited, which will hereafter be referred to as the Company. "The petition was based on the inability of the company to pay its debt due to him. The appellants in the other two appeals claim also to be creditors of the company. all of them the shareholders in the company The company was incorporated on January 29, 1948 with a capital of Rs. 3, 00, 000 consisting of ten thousand tax free cumulative preference shares of Rs. 10 each and two thousand equtiy shares of Rs. 100 each. its object amount other things, was to take over the selling agency of India sugars and Refineries Limited. Hospect, and exploit an agreement obtained from it by Mr. A.C. K. Krishnaswami, one of the appellants in O.S.A. No. 70 of 1962. The agency agreement turned out to be very profitable. The company maintained its accounts on the mercantile basis, the year adopted being the period ending on 30th April. Its main source of income was the commission earned from India sugar and refiners limited. since the year 1950, the company has been able to declare very substantial dividends to its shareholders For the year ending December 30, 1959, the directors of the company reported to its shareholders that the commission earned during the year had not yet been received from the principals and concluded by saying" YOu will note that the disbursement of the proposed dividends to our shareholders will depend on our being able to collect outstanding from out principals. "At the General body meeting of the company held on December, 30, 1959, the following resolution relating to the declaration and payment of dividend was passed" * ..........that a dividend of rs. 100 per share [taxable] on the equity shares be paid to such shareholders as appear on the register of members as on date, payments, to be effected when commission due from principles are realised It is admitted that the commission due from the India sugars and Refineries, after taking into account of which the dividends were declared for the year, 1959. was received by the company some time during the second week of may, 1960 In the meanwhile, certain events happened, which could be said to have largely contributed to the present petition. During the year 1960. misunderstandings appear to have arisen between certain groups of shareholders. Mr. A.C.K. Krishnaswami, who was the managing director of the company till then, led one such group, while Mr. Parasrampuria was the leader of another group. In the month of March of that year, the former filed an application to this court under section 397 and 398 of the companies ACt, 1959, for certain reliefs. That was followed by acrimonious exchange of allegations and counter allegations in respect of the management of the company by Mr. A C K Krishnaswami. But all these received a quietus by reason of a settlement between the parties which enabled Mr. Parasrampuria to purchase 216 shares owned by Mr. Krishnaswami and by Factors Limited, a concern in which the latter had a controlling interest. The transfers of the shares were completed by the third week of April 1960. It is not very clear from the evidence placed before us whether Mr. Parasrampuria retained the shares so obtained for himself or assigned them to one Mr. M.R. Bank. It is unnecessary to refer to that matter any further, as there is no dispute between of the dividends already declared; Mr. A.C.K.Krishnaswami also claimed that he was entitled to receive the dividends declared before the date of transfer, in respect of all the shares held by him. His claim had this merit, namely, that there had been no specific transfer in writing to the purchaser of dividends already declared by the company, which under the law, should be regarded as a debt due by the company which under the law should be regarded as a debt due by the company to the shareholders. The transfer of the shares only entitled the transferee to obtain further dividends. Indeed, in the affidavit filed by Mr. M.R. Banka before the learned judge, it is specifically stated that the price paid to Mr. A.C.K. Krishnaswami was calculated on the basis of the valuation of the assets of the company and after taking into consideration all the future profit making capacity of the first respondent companyOn May 17, 1960, Mr. Indeed, in the affidavit filed by Mr. M.R. Banka before the learned judge, it is specifically stated that the price paid to Mr. A.C.K. Krishnaswami was calculated on the basis of the valuation of the assets of the company and after taking into consideration all the future profit making capacity of the first respondent companyOn May 17, 1960, Mr. A.C.K. Krishnaswami made a formal demand on the company for the payment to him of the dividend declared towards the close of the year 1959, which amounted to Rs. 11, 620 and a further sum of Rs. 3, 500 as payable to factors limited in respect of a similar claim, Mr. Parasrampuria, who was the managing director of the company, did not repudiate the claim on any such ground as that the resolution, of the general body declaring the dividend was in any way illeger. He, however, complained by his letter dated May 24, 1960, that his predecessor in office, Mr. A.C.K. krishnaswami had failed to produce the mainutes book and certain document belonging to the company and made a demand for their return. On the same day the wrote another letter incoming Mr. A.C. K.Krishnaswami that there was another claimant to the dividend. There was a slight changes in regard to the claim for past dividends in the letter sent some time later where Mr. Parasrampuria claimed that the price paid by him for the transfer of the shares included the dividends already declared. The demand of Mr. Krishnaswami and Factors limited for payment to them of the dividend was not met. Some time later on July 5, 1960. Mr. Parasrampuria wrote to the former a letter informing him that the company was advised that the resolution declaring the dividend was invalid this was third case in respect to the dividends declared for the year 1959 In the meanwhile Mr. Hariprasad the appellant in O.S.A no. 18 of 1962, had made a statutory demand on the company for payment of two sums of money to him, by means of his notice dated May 27, 1960 Rs. 1, 750 towards the dividends for the year 1958 and a further sum of Rs. 7, 605.62 standing to his credit in the books of the company. The company did not pay that amount. 1, 750 towards the dividends for the year 1958 and a further sum of Rs. 7, 605.62 standing to his credit in the books of the company. The company did not pay that amount. He then filed the petition, out of which this appeal arises, for the winding up of the company on the ground that it was unable to pay its debts. The petition was supported by Mr. krishnaswami and Factors limited for the reason that their demands dated May 17, 1960, for payment of the dividends already declared had not been met. There was similar support from Smt. godavari Bai, the mother of Sri Hariprasad and the appellant in O.S.A. No. 37 of 1962, who claimed that she was entitled to get from the company a sum of Rs 7, 280 as and for dividends declared, and Rs. 34, 863.73 as due on accounts. No demand appears to have been made by Smt. Godavari Bai. on the company earlier for payment of those amounts. The company denied that any amounts were due to these three persons. they contested the validity of the resolution declaiming the dividend, as also the liability of the company to pay any sum on accounts to Mr. hariprasad and his mother, smt. godavari baiWhile the winding up petition was pending and the question relating to the valiedtity of the resolution declaring dividend was sub judice the company appears to have proposed to declare afresh at the close of the year 1960. dividend in respect of profits earned for the year 1959 as well. this is somewhat strange, for, if the court were to hold that the resolution of the general body meeting of the company passed on December 30, 1959. in the matter of declaration of dividends was valid, there would be no profits available with the resolution is however apparent. It will be seen that if the second declaration were to be regarded as valid, . at will completely support the case of Mr. Parasrampuria and Mr. M.R. Banka as they will be enabled to get the dividend for the year 1959, although the transfer of the shares in their favour Mr. Krishnaswami took place only in the following year. That is not perhaps all. On December 27, 1960, the Additional Collector of Bombay issued a prohibitory order against the company from either transferring the shares held by Mr. Krishnaswami took place only in the following year. That is not perhaps all. On December 27, 1960, the Additional Collector of Bombay issued a prohibitory order against the company from either transferring the shares held by Mr. hariprasad and Smt. Godavari Bai. or paying dividends in respect thereof as, such shares belong to one R.S, Morarka, against whom the income tax department had a claim for unpaid tax. It has not been made clear before us as to how. Mr. Morarka was entitled to the shares and in what circumstances or at whose instance the attachment order came to be issued There can be little doubt that the winding up proceedings are the outcome to the differences between Mr. Krishnaswami, who is reported to the still keeping with him the minutes book and certain other documents of the company and Mr. Parasrampuria, who can be said to be responsible for the non payment of the dividends for the year 1959 We shall now turn to the petition filed by Mr. Hariprasad. That as we said, was based on the inability of the company to pay two sums of money claimed to be due to him [i] a sum of Rs. 7, 605.62 alleged to be due on accounts and [ii] a sum of Rs. 1, 750 in respect of dividends declared for the year 1959. Both the claims have been disputed. The learned judge held that so far as the first item of claim was concerned, the company could not be said to be acting otherwise than bona fide in disputing it. He, therefore, left the controversy between the parties in that regard to be agitated in an appropriate suit. This view did not prevent the learned judge from proceeding further with the petition. The petitioning creditor had another claim which the learned judge found to be well founded. it is true that the statutory notice issued by Mr. Hariprasad on May 27, 1960. made a demand of the two sums of money, one of which being disputed but the validity of the defence not being yet decided. Even so, it will be complement for the court to direct the winding up of the company it otherwise the petition can be held to be well founded on the basis of the inability of the company to pay that sum. Even so, it will be complement for the court to direct the winding up of the company it otherwise the petition can be held to be well founded on the basis of the inability of the company to pay that sum. This precise question came up for consideration in Cardiff preserved coal and Coke company v. narton [1]1867 l.r.2 Ch. App. 405, 410. where lord chelmsford L.C. saidHe made, it is true, a demand upon the company for payment of more than was due, but of course the amount due was known to the company, and was included inthe demand, and the company neglected to pay such sum, which means not the sum demanded, but the sum due, which they might have paid, and so have prevented the order being made. "Veeraswami J. Held that the resolution dated December 30, 1959. relating to the dividend for that year had been validly passed and that the company must be deemed to be unable to pay that debt. But the learned judge, on a consideration of the other evidence, held that the company was financially sound, in that although it failed to meet the demand of Mr. Hariprasad within the statutory period there would be no proper ground for directing the winding up of a really solvent company. Put in other words, the view taken by the learned judge comes practically to this that so long as the company is commercially solvent, it could not be wound up at the instance of one of its creditors although he was unable to get his dues paid in spite of a demand having been made by him and such demand remained without being compiled with for more than three weeks. We are, with respect, unable to share the view expressed by the learned judge. Under the Indian companies, can be wound up, on the petition of a creditor, for its inability to pay his claim after proper demand had been made by him and on the lapse of three weeks from the date of service of such a demand. Where, however, the company disputes the claim, the court will see whether such a dispute is a genuine one, or merely one to cover up order should ordinarily follow. Where, however, the company disputes the claim, the court will see whether such a dispute is a genuine one, or merely one to cover up order should ordinarily follow. In Buckely on the companies act [ thirteenth edition] the learned author has observed at page 450 A creditor who cannot obtain payment of his debt is entitled as between himself and the company ex debit justitiae to an order if he brings his case within the Act. He is not bound to give time." * Again at page 451 A winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. A petition presented ostensible for a widening up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a shareholder abuse of the press of the court. At one time petitions founded on disputed debt were directed to stand over till the debt was established by action. It, however there was no reason to believe that the debt, if established, would not be paid, the petition was dismissed. The modern practice has been to dismiss such petition was dismissed. The modern practice has been to dismiss such petitions. But, of course, if the debt is not disputed on some substantial ground, the court may decide it on the petition and make the order. "Where in a particular case, the debt is disputed, the court hearing the winding up petition will have to decide, whether the dispute rests on any substantial ground. It it finds that there was no substantial defence, it will have to proceed with the petition, otherwise the court can leave the claim to be proved in an ordinary civil action. In in re kings. s cross industrial dwellings company [1]1870 l.r.11eq.149. it was held that if a creditors petition to wind up a company was based not be ground that the petitioning creditors debt was disputed, the court, instead of directing the petition to stand over with liberty to bring an action on the debt, would have to see whether the debt was disputed on some substantial ground. it was held that if a creditors petition to wind up a company was based not be ground that the petitioning creditors debt was disputed, the court, instead of directing the petition to stand over with liberty to bring an action on the debt, would have to see whether the debt was disputed on some substantial ground. As this case is instructive on the question of the procedure to be followed in such a case, we would like to extract the following passage from the judgment of Sri R. Mains V.C" * The evidence is really only one way that the petitioners gave credit to the company. They had no other course for obtaining payment, except to bring an action and obtain judgment and then they would have received nothing, except by taking out an execution, which would have produced nothing. it is said that this is a bona fide question, whether there is or not a debt of the company but in my opinion, the court is bound in such a case to see that the question is a substantial one before directing an action to be brought. i entertain no doubt that this is a debt of the company, and I should be doing the greatest possible injustice if I allowed any further litigation. I can only make the usual order to wind up, but direct it not to be advertised for a fortnight, in order to enable the company to pay the demand. "To sou up, the position appears to be this. Where a creditors petition for winding up is constested on the ground that no debt is due to him, the court should ordinarily investigate that question. The court has, however, a discretion in the matter. It if finds that the defence is a substantial one, it can direct the creditor to establish has claim in an independent action. It has an equal discretion to decide the dispute particularly in cases where the defence to the claim is an substantial and one it is proved that the debt is due to the petitioning creditor, it should proceed with the winding up petition Section 433 of the Companies Act, 1956, declares the circumstances in which a company may be wound up by the court, That section provides that a company may be wound up by the court if it is unable to pay its debts. Section 434 defines when a company must be deemed to be unable to pay its debts. sub clauses [a] of section 434[1] states that if a creditor who is entitled to receive a sum of more than five hundred rupees from the company has made a demand, in the manner prescribed by the section , on the company and the company has, for three weeks thereafter. neglected to pay his dues, it shall be deemed to be unable to pay its debts. sub clause [c] to section 434[1] says" * If it is proved to the satisfaction of the court that the company is unable to pay its debts, and in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company. "It will thus be seen that clause [a] and [c] of section 434[1] relate to two distinct matters. The first is a neglect to pay the dues of a creditors who has made a statutory demand; In the case of non payment of a creator in spite of the notice issued by them as prescribed by section 434[1] [a] the position inthe words of Sir George Rankin C>J>in Japan cotton Trading Co. Ltd. v. jajodica Cotton Mills ltd. [1] 1927 (54) ILR(cal) 345 1927 AIR(cal) 625. will beThe effect of the statutory notice is that unless the debt is paid within three weeks, or some arrangement is made with the creditors, the company is in the position of being conclusively estoppel from denying that it is unable to pay its debts." * The object of section 434 is to create a fiction as to when a company can be deemed to be unable to pay its debts. It the case comes within the scope of that fiction , it will not be open to the company to say that in reality it is in a position to pay its debts. it would follow that in such case it will really be unnecessary to enquire whether the company is in fact solvent or not. Quite recently in C.A, No 432 of 1961 an full Bench of this court had to consider the true scope of a statutory fiction and it was held that within the area of its operation such a fiction must be regarded as the reality. Quite recently in C.A, No 432 of 1961 an full Bench of this court had to consider the true scope of a statutory fiction and it was held that within the area of its operation such a fiction must be regarded as the reality. it will not be open to the party or the court to apply. But at the same time a fiction cannot be extended to operate beyond the purpose for which it is intended It is plain, on a reading of section 434 of the Indian companies Act, . that the intention of the Legislature was to enact a fiction for the purpose of finding out where a company fails to meet the demand of a creditor notwithstanding the statutory demand made upon it, whether such default must be regard as tantamount to an inability on the part of the company to pay its debt. As we said sub clause [a] of section 434[i] is distinct from sub clause [c] which relates to a state of commercial insolvency. In the latter, case, it will no doubt be open to the court to find out, on a consideration of the value o existing assets and liabilities of the company whether it is really in insolvent circumstances. But in the former case no such investigation is called for nor even can it be undertaken. It will be sufficient for the purpose if there be a failure on the part of the company to meet the demand in terms of the stature. For the purpose of application of section 434[i][a] therefore what all will be necessary to find will be whether the amount was due to the creditor on three dates, namely, the date of issue and service of the notice under that provisions, the date of the presentation of the petition and the date of passing of the order for winding up. If by any of the dates mentioned above, the claim had been discharged, the fiction will cease to operate and the company cannot be regarded as one unable to pay its, debts. If by any of the dates mentioned above, the claim had been discharged, the fiction will cease to operate and the company cannot be regarded as one unable to pay its, debts. In In re Imp[trial Hydropathic Hotel company, Blackpool limited cotton L>J>said that where a statute requires the court to treat a company as if it were insolvent, that is, unable to pay its debts if certain things were done, the question which the court would have to consider would be whether the event has happened on the happening of which the act of parliament required the court to deem it insolvent and not whether the court would be satisfied on the evidence before it, that the company was really insolvent. We are therefore unable to sustain the judgment of the learned judge on this groundLearned counsel appearing on behalf of the company. however, attempted to support the order passed by the learned judge on the ground that neither the petitioning creditor not the supporting creditors could be regarded as creditors of the company so as to entitle anyone of them to susta in the petition for winding up of the company. The first part of the contention under this head related to the right of the creditors to the dividends declared on December 30 1959. It is argued that as Mr. Krishnaswami had transferred his shares to Mr. Parasrampuria in April 1960, the latter alone would be entitled to the dividends declared for the previous year. In support of that contention reference was made to the correspondence that ensued between the parties. As we pointed out earlier, there has been no ensued between the parties. As we pointed out earlier, there has been no assignment in writing by krishnaswami in favour of the purchaser of his shares, of the dividends which prior to the date of transferred been declared by the company. Except the fact that claim to such dividends has been made both by Mr. Parasrampuria and Mr. M R Banka, there is nothing on record to show that there was either an agreement to assign such dividend or an actual transfer of it. It is however argued that as the transferee had paid as much as Rs. Except the fact that claim to such dividends has been made both by Mr. Parasrampuria and Mr. M R Banka, there is nothing on record to show that there was either an agreement to assign such dividend or an actual transfer of it. It is however argued that as the transferee had paid as much as Rs. 800 for a hundred rupee share, it should be assumed that what the parties intended was that the transfer should comprise not merely the shares but also the dividends that had already accrued there on and remained unpaid. We are unable to draw any such inference. the company, as we stated has been successful and since the year 1950 a dividend declared was equal to the value of the share itself. It is not surprising, therefor, that the price at which those shares were sold was eight times the nominal value of each share. Therefore, any having price paid for the shares cannot by itself indicate that the transfer included the right to the past, dividends as well. At any rate, in the absence of evidence in that behalf, one cannot assume that what Mr. Krishnaswami intended to transfer was the shares plus the dividend that had already been declared as payable thereon. It will be interesting to recall that in the affidavit filed by Mr. Banka thereon. It will be interesting to recall that in the affidavit filed by Mr. Banka before the learned judge, he solemnly stated that he was entitled only to the future dividends. That would exclude the past dividend that had already become payable. Even part from that consideration the true rule is that a transfer of shares, effected after the dividend had been declared by the company, cannot as against the company convey tile to receive payment of the dividend to the transferee, although he expressly bought it come dividend. In chunilal v., Adhyaru [1] it was held that a transfer of shares, after a dividend had been declared by the company, could only create an equity between the buyer and seller of shares the former being entitled to such dividends. Therefore, the transfer of shares, though expressly made come dividend after such dividends had been declared, could not, as against the company carry the dividend to the buyerAs regards the dividends payable to Mr. Therefore, the transfer of shares, though expressly made come dividend after such dividends had been declared, could not, as against the company carry the dividend to the buyerAs regards the dividends payable to Mr. hariprasad and Smt. Godavari bai, the only defence to the claim is that their right thereto have, subsequent to the presentation of the winding up petition, been attached by the collector for certain income tax arrears of one Mr. Morarka. An attachment will not have the effect of transferring the debt attached. Further in the prohibitory order issued to the company, it is stated that the shares standing in the names of Mr. Hariprasad and Smt. Godavari Bai belong to Mr. Morarka. There has been no attempt before us to sustain that case, Under section 206 of the Indian companies act, dividends an be paid by the company, only to the registered shareholder. The debt due by the company in respect of the dividends undoubtedly still subsists. The company has defaulted in payment of the same to the registered shareholders as it was bound to do under the act and the resolution of the general body. Having regard to the order which we propose to make in this case, it is really unnecessary to pursue the question as to whether Mr. Morarka would be entitled to any beneficial interest inthe dividends It was then argued that inasmuch as Mr. Krishnaswami had been the managing director and Mr. Hariprasad a director of the company at the time when the dividend was declared they should have paid themselves out within forty two days to such declaration in accordance with the terms of section 207 of the act and they having defaulted to dose, it would not be open to them to make a claim for the dividend and to sustain the petition on the basis thereof. There an relies an obvious misapprehension in the argument. declaration of dividend and the non payment thereof within the time prescribed by section 207 of the act is respectively the act and default of the company. There can be no estoppel, by reason of that act, either in Mr. Krishnaswami or Mr. There an relies an obvious misapprehension in the argument. declaration of dividend and the non payment thereof within the time prescribed by section 207 of the act is respectively the act and default of the company. There can be no estoppel, by reason of that act, either in Mr. Krishnaswami or Mr. hariprasad from claiming what is due to them in their individual capacity from the companyIt was next contended that as the creditors in the instant case will be contributories in case the company were to be wound, up, they could not be regarded as creditors of the company so as to entitle them to file. the petition. OUr attention has been invited in this connection to section 426[g] of the act which declares that come due to any member of the company, in his character as such, by way of dividends, etc. shall not be deemed to be a debt due by the company. Support for the contention has also been sought in two decisions, In re Leicester Club and county race course Company Ex part cannon and In re consolidated gold Fields of New Zealand ltd. Both the cases relate to proof of certain claims in the course of winding up of a company. They cannot be regarded as laying down that, even outside the winding up proceedings, a shareholder member to whom a dividend became due is not a creditor of the company so long as the company is functioning. As pointed out by the supreme court in Bacha F. Guzdar v. commissioner of income tax the right to participation in the profits of the company in a shareholder even exists independently of any declaration of the dividend by the company. A declaration is necessary only for the enjoyment of profits. It will follow that once a declaration of dividend is made and it becomes payable it will partake the nature of a debt due from the company to the shareholder. In In re seven and Wye and Seven bridge Railway company it was held that when a company declared a dividend on its shares, the debt immediately became payable to each shareholder in respect of his dividend for which he could sue at law and the statute of limitation would immediately begin to run from the date of declaration. In In re seven and Wye and Seven bridge Railway company it was held that when a company declared a dividend on its shares, the debt immediately became payable to each shareholder in respect of his dividend for which he could sue at law and the statute of limitation would immediately begin to run from the date of declaration. The position of the company, which is a distinct juristic entity, cannot, therefore, be that of a trustee but only that of a debtor. This view is supported by the observations of Eve J. in In re kidner Kidner v. kinder where what eminent judge statesIt has been argued for the respondent that whatever might be the position in law, a declaration of dividend in this company before the receipt of profits will be unauthorized as Regulation 90 of Table. a in Schedule I to the act had not been adopted by the company. The contention of the learned counsel for the company is that but for the provision in articles like the one contained in Regulation 90, there could be no power in the company to declare dividends in anticipation of the actual receipt of profits. That Regulation empowers a company to declare a dividend by the distribution of specific assets. We are unable to see how that Regulation can have any bearing on the question before us, where what was intended at the time of declaration was only a payment in cash and not a distribution of the assets of the company The next contention was that resolution of the company dated December 30, 1959, contravended the provision of section 207 of the act in so far as it enabled payment of the declared dividends conditional on the receipt of profits and, therefore, it should be declared invalid, as being prohibited by law. section 207 which has been introduced for the first time in the companies act, 14956, has no counterpart in England. It provides fro a penalty in the event of non payment of dividend within the period prescribed by it. The stringent provision contained in the section is evidently intended to protect the shareholders against the arbitrary acts of the company in delaying payment of the dividends justly due. It provides fro a penalty in the event of non payment of dividend within the period prescribed by it. The stringent provision contained in the section is evidently intended to protect the shareholders against the arbitrary acts of the company in delaying payment of the dividends justly due. The learned Advocate General has argued that notwithstanding the provision of the section it would be open to the general body of the shareholder of the company to extend the period prescribed by that section for payment of dividends. In other words, the contention is that section 207 being enacted for the benefit of the shareholder it would be open to them to weigh it. support for the contention was sought in the well known maxim quilibet protest renunci are juri pro se introduce, which, means, any one may, at his pleasure, renounce the benefit of a stipulation or other right introduced entirely in his own favour. But this maxim has exceptions. As has been pointed in Brooms Legal Maxims, tenth edition, at page 481 an individual cannot waive a matter in which the public have an interest nor a public body, entrusted with powers to be exercised for the benefit of the public, waive their right to exercise any of those powers. Again where there is an express statutory direction enjoining compliance with certain prescribed forms, it cannot be dispensed with. In the instant case the object of section 207 of the Act, as we stated, it to protect the individual shareholders against the acts of the company. Reference was, however, placed on the decisions in commissioner of Income tax v. laxmidas Mulraj Khatau, and Purshottamdas Thakurdas v. Commissioner of Income tax as instances where dividends declared payable on a future date of made contingently on the happening of an uncertain event, were accepted as valid. Those cases were concerned with the the Indian companies Act, 1913, where there was no provision like section 207 of the present act. Secondly, the problem in those cases related to the taxability of the income in the hands of the shareholder. No question arose there as to the validity or invalidity of the declaration of dividend. In our view, section 207 mandatorily requires that dividends declared by a company should be paid to the shareholders within the time specified therein. Secondly, the problem in those cases related to the taxability of the income in the hands of the shareholder. No question arose there as to the validity or invalidity of the declaration of dividend. In our view, section 207 mandatorily requires that dividends declared by a company should be paid to the shareholders within the time specified therein. Any resolution of the company which will have the effect of contravening or evading that provision, will be invalid, inasmuch as it would be contrary to the specific terms of the statute, default in that respect of it being made punishable. We are, therefore, unable to agree with the contention of the learned advocate General that the punishment imposed by the section on the delinquent persons responsible for non payment of dividend within the time prescribed is merely one to enforce prompt payment of the dividend. The failure to pay the dividend within the time specified is treated as an offense and it will not be open to the shareholders to contract out of the provision of the sectionBut that does not, however, dispose of the matter. The resolution dated December 30, 1959, in form and substance, consists of two parts, separable between themselves. The first part declares the dividend; the second part says that payments will be effected when the commission due from the principals are realised. A contravention of the provisions of section 207 of the act can arise only by reason of the second part of the resolution. The invalidity of that part cannot, obviously, enter the declaration of dividend itself void. We may in this connection refer to a decision of the House of Lord in Aramayo Francke Mines Limited. v. Public Trustee. In that case an English company had shareholder both in the UNited kingdom as well as in Germany. After the outbreak of the first world war, the company passed a resolution at its general meeting declaring dividends subject to the condition that as regards the members of the company resident in Germany and other enemy countries, the dividend should be payable only out of the assets in those countries, but as regards the shareholders in the United Kingdom out of the assets in England. But under a parliamentary enactment, any sum due to an enemy national, by way of dividend was to be paid to the custodian appointed under that act. But under a parliamentary enactment, any sum due to an enemy national, by way of dividend was to be paid to the custodian appointed under that act. On a claim being made by the custodian for the dividends it was held that that part of the resolution which provided for payment of dividends out of the assets in Germany, was void against the custodian and that the company was liable, out of any assets in its hands, to pay the amount of the dividend. Dealing with the custodian representing the alien shareholders to claim the dividend Lord Buckmaster observed ; " It is contended on behalf of the appellants that there is no right whatever in the custodian trustee to any part of either of these sums of money, because either the conditions that were attached to the resolutions for payment were good and they were at liberty to permit the enemy shareholders to satisfy the debt owing by the English company out of the foreign ass's, or, if they were bad, the whole declaration of dividend was bad throughout, there consequently was never any declaration of dividend, and no debt is due from the company to the custodian trustee. i will not pause to consider what the ultimate effect might be upon the directors of the company it the latter branch of this argument found favour in your lordship minds, because I think it is founded upon a mistaken view of these resolutions. In truth, the company if the latter branch of this argument found favour in your Lordship minds, because I think it is founded upon a mistaken view of these resolutions. in truth, the company did in plain terms declare a dividend, and it was that, and that only, that was within the competence either of the directors or of the company. the conditions which were attached, except the one as to the date of payment, are conditions which there was no power whatever to make effective, but although they have proposed to make these conditions of the declaration of dividend, their addition has not affected the fact that the dividend was declared. It was merely attempted to impose upon the method by which it is impossible for the company to rely. It was merely attempted to impose upon the method by which it is impossible for the company to rely. It is therefore my clear opinion that all these dividends were actually declared, and it results that from their declaration at their various respective dates there were debts that arose from the company to the various shareholders, including those who may be referred to as the enemy shareholdersApplying the above principle to the present case, it would follow that where a condition as to payment of dividend at a future date is contrary to the mandatory provisions of section 207 of the Act, such condition being invalid, the original but separable resolution relating to the declaration of dividend being within the competence of the company to pass, should alone be regarded as the resolution actually passed. In that view, the amount of dividend would become payable forthwith on such a declaration. That amount not having been paid, there will be a valid debt on which the petition for winding up of the company could be founded It is argued on behalf of the company that except these three share holders, the other shareholders of the company have not made demands. But that cannot prevent winding up of the company if the amounts due continue to remain unpaid. We consider that the appropriate order to be made in the case will be to direct the winding up of the company on the ground of its inability to pay its debts, but at the same time direct the order to be kept in abeyance for period of three weeks in order to enable the company to pay up the dividends to the two creditors, namely, Mr. krishnaswami and Mr. Hariprasad for the year 1959. There will be no order for payment in regard to the other claims made by the creditors, as they being disputed will have to be established in a suit. The amount of dividend due to Mr. hariprasad will be deposited in court and the same will be paid over to him only after due notice to the Collector of Bombay who had issued the prohibitory order and after hearing any representation that the may make. In case the amounts are paid or deposited in court as the case may be within three weeks, the winding up petition will stand dismissed. In case the amounts are paid or deposited in court as the case may be within three weeks, the winding up petition will stand dismissed. In default there will be a winding up on the company and further proceedings will ensue. The appellants will be entitled to their costs. We make no order as to payment to Smt. Godavari Bai as she has not made the statutory demand.