JUDGMENT W. Broome, J. - This petition for the winding up of the; Federal Chemical Works Limited of Ghaziabad has been presented under section 439 (1) (b) read with section 433 (e) and (f) of the Companies Act, 1956, by three creditors of the Company, who also happen to be shareholders. The amounts claimed by three petitioners Devendra Kumar Jain, Mahendra Kumar Jain and Mst. Hira Devi are Rs. 7,462, Rs. 30,000 and Rs. 5,000 respectively together with interest. Statutory notices of demand were served on the Company on 26th November, 1963; but the Company made no payment and the petitioners accordingly assert that by virtue of the presumption arising under section 434 (1) of the Act the Company must be deemed to be unable to pay its debts, It is further alleged by the petitioners that Mittra Sain Jain has seized control of the Company and is running it in a manner prejudicial to the interests of the petitioners. 2. The petition is opposed by the Company and its directors, who have filed a counter-affidavit, pleading that there are bona fide disputes with regard to the claims of each of the three petitioners. The stand taken in this counter-affidavit is that although the amounts claimed by the petitioners are due to them, the Company has counter-claims against the petitioners, which cancel out the entire liability of the Company so far as petitioner No. 2 is concerned and the major portion of the liability as regards petitioners I and 3. 3. It is well settled that in order to raise the presumption under section 434 (1) as to a Company's inability to pay its debts, it is not sufficient to show merely that the Company has omitted to pay the debt due to the petitioner despite service of the statutory notice; it must be shown that the Company has omitted to pay without reasonable excuse. The existence of valid counter-claims would clearly constitute reasonable excuse for non-payment. What has to be seen in the present case therefore is whether the counter-claims set up by the Company are prima facie valid and bona fide. 4. As regards petitioner No. 1, the Company asserts that he has been occupying certain premises belonging to the Company without paying rent for the last three years or so. What has to be seen in the present case therefore is whether the counter-claims set up by the Company are prima facie valid and bona fide. 4. As regards petitioner No. 1, the Company asserts that he has been occupying certain premises belonging to the Company without paying rent for the last three years or so. He was asked to vacate these premises in May, 1961 and again in May, 1962, and was informed on the latter occasion (vide Annexure XII to the rejoinder affidavit) that he would be charged Rs. 132-50 per mensem as rent and damages, to be debited to his loan account, until he chose to vacate. The Company is perfectly willing to pay the balance standing to his credit in his account, as soon as he quits the premises. 5. Petitioner No. I denies his liability to pay rent and claims that the house in question was allotted to his family in exchange for another house belonging to them which was taken over by the Company. But the Company has produced evidence to show that when Petitioner No. I was working as one of the Directors of the Company he used to pay 10% of his salary as house rent for the premises in question (vide Annexure C to the counter-affidavit). Petitioner No. 1 tries to make out in his rejoinder that this 10% deduction was not for house rent but merely by way of a 'voluntary cut' in his salary; but the documentary evidence is against him in this respect. 6. I am satisfied that the Company has a bona fide counter-claim against petitioner No. 4 for rent (or damages for use and occupation) of the premises which he continues to occupy in spite of a notice to quit. If the Company were to take legal proceedings for his eviction, some years would presumably elapse before possession could be obtained and by that time the accumulated rent would be equal to the entire amount standing to his credit in the books of the Company. In such circumstances it seems to me that the Company has a reasonable excuse for not paying anything to petitioner No. 1 unless he agrees to vacate the premises. 7. In such circumstances it seems to me that the Company has a reasonable excuse for not paying anything to petitioner No. 1 unless he agrees to vacate the premises. 7. As regards Petitioner No. 2 who was Director and manager of the Company up to 1956 and continued to exercise the powers of a manager up to 1961, the allegation is that during his regime he misappropriated certain sums for which he is liable to account to the Company. He pretended to have sold a car for Rs. 8,300, though its real value as shown in the books of the company was Rs. 10,000; and he realised Rs. 3,500 and Rs. 293-26 on the sale of goods (as revealed by receipts and bills) without crediting these amounts to the Company. Further, the Income-tax Officer has' held that other goods to the value of Rs. 25,000 were sold by petitioner No. 2 without crediting the amounts so received in the Company's books. I am informed that the Company has appealed against this finding of the Income-tax Officer and it is possible that the amount held to have been concealed may be reduced. But as matters stand at present, there is prima facie evidence to support a counter-claim by the Company that would wipe out the entire debt due to Petitioner No. 2. To prove its bona fides in this connexion, the Company has offered to deposit security in the form of National Savings Certificates for the payment of any amount,that may eventually be found due to Petitioner No. 2 after the disputes between him and the Company have been finally decided. 8. The amount standing to the credit of petitioner No. 3 in her loan account in the books of the Company (Rs. 5,000 plus accumulated interest) hers been. debited with a sum of Rs. 4,432.86, comprising the amount due as calls in arrears and the interest thereon; and she has been informed that she can take the balance of Rs. 1,839.59 any time she likes. She asserts that the shares in respect of which call money has been charged belong not to her but to Mittar Sain Jain. debited with a sum of Rs. 4,432.86, comprising the amount due as calls in arrears and the interest thereon; and she has been informed that she can take the balance of Rs. 1,839.59 any time she likes. She asserts that the shares in respect of which call money has been charged belong not to her but to Mittar Sain Jain. 'But the shares stand in her name and are ostensibly hers; and unless Mittar,Sain Jain claims them or admits that they belong to him, the Company would not be justified in treating them as belonging to him instead of to the ostensible owner. 9. My conclusion is that the Company, by setting up counter claims which are prima facie valid, has raised bona fide disputes regarding its liability to pay the debts claimed by all three of the petitioners. It has reasonable excuses.for non-payment and cannot be deemed unable to pay its debts on account of any legal presumption arising under section 434 (1). 10. As for the other allegations put forward by the petitioners to justify winding up, I am satisfied that they make out no case. If the petitioners have any grievance against Mittar Sain Jain (who, it may be noted, happens to be the father of Petitioner No. 2) on account of the way he is managing the affairs of the Company, there are other remedies that they can pursue as shareholders. Winding up would not be an appropriate remedy, when the Company is perfectly solvent and flourishing. 11. This petition is accordingly dismissed with costs