ORDER : 1. These petitions have been filed under section 439 of the Companies Act, 1956 by two creditors of the South India Wire Ropes Limited to wind-up that company on the ground that it is unable to pay its debts within the meaning of clause (c) of section 433 of the Act. 2. The South India Wire Ropes Ltd. (hereinafter referred to as the company) is a public company incorporated in December 1961 under the style “Seshasayee Wire Ropes Limited.” Its present name was adopted in November 1969. The nominal capital of the company is Rs. one crore divided into 8,50,000 equity share of Rs. 10 each, and 1,50,000 redeemable preference shares of Rs. 10 each. It has got a paid-up capital of Rs. 49,99,500. 3. The main objects for which the company was established are: (i) to carry on business as wire and wire rope manufacturers in all its branches. (ii) to carry on the manufacture of ferrous and non-ferrous wire rod, rolled rod, extended rods, and any other material required by the company. (iii) to carry on business as manufacturers, makers, dealers, importers, exporters and traders of all kinds of wire and wire ropes and all similar and auxiliary and ancillary produce and goods. 4. The petitioner in C.P. No. 2 of 1973 is Messrs. Seshasayee Brothers (Travancore) Private Ltd., (who may hereinafter be referred to as Seshasayee Brothers Ltd). The company owes to this petitioner a sum of Rs. 2,88,455 as on 1st February 1972 by way of remuneration for managing agency and loan advanced to the company together with interest at 9 per cent on both the items. The company did not discharge the “above liability in spite of repeated demands. Finally Seshasayee Brothers Ltd. issued I registered notice, dated 3rd November 1971 to the company demanding payment of the above debt. The company has not yet paid the amount; and it is alleged that the Company is unable to pay its debts. 5. The petitioner in CP. No. 7 of 1972 is the Aluminium Industries Ltd; and it claims from the company an amount of Rs. 5,11,662.37 as on 31st March 1971 on account of value of goods supplied together with interest. The liability is admitted, except in respect of the claim for interest. The company could not discharge the debt in spite of repeated demands. No. 7 of 1972 is the Aluminium Industries Ltd; and it claims from the company an amount of Rs. 5,11,662.37 as on 31st March 1971 on account of value of goods supplied together with interest. The liability is admitted, except in respect of the claim for interest. The company could not discharge the debt in spite of repeated demands. Finally the Aluminium Industries Ltd. issued a registered notice, dated 23rd December 1971 demanding payment of the amount. Still the company has not paid it; and it is alleged that the company is unable to pay its debts. 6. The petitions for winding-up is supported also by another creditor of the company M/s P. Achuthan Pillai and Co. to whom the company owes a sum of Rs. 1,28,427.46 as on 19th June 1972. This is the balance of a loan of Rs. 1,50,000 advanced by M/s Achuthan Pillai and Co. to the company in 1965 and sales commission payable to the said creditor. The company could not clear this debt, in spite of repeated demands. Finally, this creditor issued a registered notice, dated 15th February 1971, demanding payment. The company made some small payments and the balance mentioned above still remains to be paid. It is alleged that the company is not in a position to pay its debts. 7. The petitions are opposed by the company, and also by some of its main creditors and shareholders. One of them is the State Bank of Travancore. It is a secured creditor, who has to get Rs. 96.09 lakhs as on 14th November 1972. The whole debt was incurred during the period the petitioner was the managing agent. The second main creditor who opposes the winding-up petition is the Kerala State Industrial Development Corporation Ltd. It is the single largest shareholder of the company, holding about 36 per cent of the paid-up share capital; and it is a secured creditor for Rs. 29.02 lakhs. Then there are two unsecured creditors who oppose the winding-up. One of them has to get Rs. 1,64,420.67 as on, 31st October 1972, while the other has to get Rs. 1,06,853.89 as on 1st November 1972. 8. The annual report of the company for the year 1972-73, which contains the balance sheet and profit and loss account as on 31st March 1973 has been marked in C.P. No. 2 of 1972 as Ext. P-1. 1,64,420.67 as on, 31st October 1972, while the other has to get Rs. 1,06,853.89 as on 1st November 1972. 8. The annual report of the company for the year 1972-73, which contains the balance sheet and profit and loss account as on 31st March 1973 has been marked in C.P. No. 2 of 1972 as Ext. P-1. It shows that the total liability of the company excluding the paid-up capital is Rs. 158.72 lakhs. The total amount due to the four creditors who oppose, the winding-up comes to Rs. 128.82 lakhs, while the total amount due to the creditors who want the company to be wound-up comes to Rs. 9.28 lakhs. Thus the creditors who seek the winding-up of the company represent only 5.8 per cent of its total liability while those who oppose it represent 81.1 per cent of that liability. The winding-up is also opposed by the shareholder, who holds about 36 per cent of the company's paid-up capital. This is the position regarding the opposing interests. 9. The petitions are opposed on the ground that the winding-up of the company is totally detrimental to the interest of the shareholders as well as the creditors, and that public interest demands that the company should be allowed to carry on its business instead of being wound-up. It is also stated that both the winding-up petitions have been moved with ulterior motives, and without any bona fides. The company and the opposing creditors, particularly the Kerala State Industrial Development Corporation Ltd. have stated a lot of facts hi support of their above contention. It would be necessary in this context to refer to some of the relevant averments in the affidavits of the company and the Kerala State Industrial Development Corporation Ltd. 10. Seshasayee Brothers Ltd., the petitioner in C.P. No. 2, was the promoter of the company and its managing agent from the date of its incorporation till 4th July 1969. It was also the managing agent of the Aluminium Industries Ltd. the petitioner in C.P. No. 7 during the said period. The debts now claimed by these. two petitioners and by M/s P. Achuthan Pillai and Co. who support the petitioners were all incurred by Seshasayee Brothers Ltd. during its managing agency. The affairs of the company were so mismanaged by this petitioner that the company reached the verge of liquidation by the beginning of 1969. The debts now claimed by these. two petitioners and by M/s P. Achuthan Pillai and Co. who support the petitioners were all incurred by Seshasayee Brothers Ltd. during its managing agency. The affairs of the company were so mismanaged by this petitioner that the company reached the verge of liquidation by the beginning of 1969. The company stopped its production, and it was under lay-off for fourteen months. The company has then a liability of rupees 84 lakhs. At that time, the Government of Kerala intervened in the public interest for the purpose of reviving the company at the request of Seshasayee Brothers Ltd. Accordingly, the Kerala State Industrial Development Corporation Ltd. who was then one of the major creditors of the company, was brought into the scene. Seshasayee Brothers Ltd. sold to the Kerala State Industrial Development Corporation Ltd. all the shares that the former held in the company and relinquished its management. The Kerala State Industrial Development Corporation Ltd. sold part of its shares to the persons who are now in management of the affairs of the company and persuaded them to take up its management with great difficulty. Seshasayee Brothers Ltd. had then promised the Kerala State Industrial Development Corporation Ltd. that the debts due to it as well as the Aluminium Industries Ltd., and the Japanese collaborators would be postponed to a later date. The filing of the winding-up, petitions are contrary to that assurance. In order to revive the company, the present management took a further loan of Rs. 8 lakhs from the Kerala State Industrial Development Corporation Ltd. and it has restarted the work. The company's production has improved from 9.16 lakhs in 1968-69 to 51.9 lakhs in 1972-73, and 74.69 lakhs up to December 1973 (1973-74). The above facts are not in dispute, except the allegation that Seshasayee Brothers Ltd. has been mismanaging the affairs of the company. 11. The affidavit of the Kerala State Industrial Development Corporation Ltd. states that it has' recently conducted a study of the working of the company with particular reference to the possibility of increasing production with the existing plant facilities, and that the study report shows that the unit is a viable one under the present conditions and can wipe off its losses in a period of 6 to 7 years, if the production is boosted up. Its affidavit also states, that, if the company is now wound-up, the unsecured creditors like the winding-up petitioners and the one who supports them as well as the shareholders would not be able to get anything from the assets of the company, after discharging the secured liabilities, that the continued working of the company in the proper line would not only save, a big industry from extinguishment, but it would also enable the company to discharge all its liabilities in due course. It is alleged in the affidavit of the company that a winding-up of the company would deprive about 200 specialised persons employed in it besides the other workmen, that the company is the only industrial unit in South India engaged in the manufacture of wire ropes, which would be an essential commodity required by the Cochin Shipyard Ltd., and that the continued working of the company is a requirement to safeguard the economic growth of the nation and in the public interest. There is also an allegation by the company that these petitions have been filed with the ulterior motive of driving out the company from the field of wire rope manufacturing and for the Aluminium Industries Ltd. to take up monopoly in that business. This allegation is denied by the petitioners. There is an allegation in one of the petitions that the company is attempting to defeat its creditors. There is no material to support that allegation; and on the broad facts of the case which are not in dispute, I have no hesitation to hold that this is an untrue and mischievous allegation. 12. I shall now refer to the balance-sheet of the company as on 31st March 1973. It shows that the total loss incurred by the company from its inception till the above date is Rs. 76.73 lakhs. It was Rs. 61.64 lakhs as on 31st March 1971 and it increased to Rs. 69.61 lakhs on 31st March 1972. So the loss is on the increase; and the total loss now comes to more than one and a half times the paid-up capital of the company. There can, therefore, be no doubt that' the company is now in an insolvent position. But the profit and loss account for the year ended 31st March 1973 shows that the loss of the company in that year is Rs. 5.59 lakhs after incurring an expense of Rs. There can, therefore, be no doubt that' the company is now in an insolvent position. But the profit and loss account for the year ended 31st March 1973 shows that the loss of the company in that year is Rs. 5.59 lakhs after incurring an expense of Rs. 13.12 lakhs on interest alone, while the loss for the year ended 31st December 1972 was Rs.7.97 lakhs after meeting an interest liability of Rs. 11.83 lakhs. It also shows that the production and sales have also increased considerably during the year ended 31st March 1973. 13. Now the contention on behalf of the petitioners is that the company is admittedly unable to pay its debts and it is in an insolvent position, and that the court is, therefore, bound to pass an order of winding-up. The company and the opposing creditors rely on section 557 of the Companies Act, and contend that an order of winding-up should not be passed, if in the opinion of the court, such a thing would be detrimental to the interest of the creditors and contributories of the company. They also contend that economic interest of the country as well as interest of the society and public good must be taken into consideration in deciding whether a company should be ordered to be wound-up or not. 14. Before I deal with the rival contentions, it is necessary to read the relevant sections, namely sections 433, 434 and 557: “433. Company may be wound up by the court: (a) if the company has by special resolution, resolved that the company be wound-up by the court. (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting. (c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year. (d) if the number of the members is reduced, in the case of a public company, below seven and in the case of a private company, below two. (e) if the company is unable to pay its debts. (f) if the court is of opinion that it is just and equitable that the company should be wound-up.” 434. (d) if the number of the members is reduced, in the case of a public company, below seven and in the case of a private company, below two. (e) if the company is unable to pay its debts. (f) if the court is of opinion that it is just and equitable that the company should be wound-up.” 434. (1) A company shall be deemed to be unable to pay its debts: (a) if creditor, by assignment or otherwise, 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 thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor. (b) if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part. (c) 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. (2) The demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorised on his Dehalf, or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm.” “557. (1) In all matters relating to the winding-up of a company, the court may: (a) have regard to the wishes of creditors or contributories of the company, as proved to It by any sufficient evidence. (b) if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the court direct. (c) appoint a person to act as chairman of any such meeting and to report the result thereof to the court. (b) if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the court direct. (c) appoint a person to act as chairman of any such meeting and to report the result thereof to the court. (2) When ascertaining the wishes of creditors, regard shall be had to the value of each creditor's debt. (3) When ascertaining the wishes of contributories, regard shall be had to the number of votes which may be cast by each contributory.” 15. In support of the petitioners contention, their counsel relies on the decision of a learned Single Judge of the Bombay High Court in re: Advent Corporation Pvt. Ltd. (1969) 39 Company Cases 463. In that case, the learned Judge, relying on a passage in Buckley on the Companies Act, stated that “a Creditor who cannot obtain payment of his debts is entitled M between himself and the company ex debito justitiae to an order of an winding-up, if he brings his case within the Act, by which is meant that he is entitled to resort to that remedy as of right. The learned Judge also sought some support for the above proposition from the language of section 434 (1) of the Act. In that case, he was only dealing with a question whether a creditor of a company, which has to be deemed to be unable to pay its debts within the meaning of the above section can be said to have established a prima facie case for admitting a petition for the winding-up of the company on such a ground. He has not considered the effect of section 557 of the Act, nor was there any Occasion to consider it. The proposition that he has stated was, therefore, obiter; and with great respect I am unable to accept it without qualification. 16. Another case cited by counsel for the petitioners in support of their contention is also a decision of a Single Judge of the Bombay High Court in Gulamhassein Ahammedalli and Co. vs. Canhag Pvt. Ltd. (1972) 42 Company Cases 136. 16. Another case cited by counsel for the petitioners in support of their contention is also a decision of a Single Judge of the Bombay High Court in Gulamhassein Ahammedalli and Co. vs. Canhag Pvt. Ltd. (1972) 42 Company Cases 136. This is a short decision, wherein the learned Judge held that a creditor of the company was entitled to an order or winding-up, if the company was unable to pay its debts within the meaning of section 434 (1) (a) of the Act. The only controversy was whether the company had failed or neglected to pay the debt due to the petitioner. There was no question of the effect of section 557 of the Act. So this decision is not helpful in deciding the point which arises before me. 17. An examination of the authorities, both English and Indian, would show that the right of a creditor of a company, who is unable to pay its debt, to get an order of winding-up is not absolute, and that it is subject to the considerations mentioned in section 557 of the Indian Companies Act which correspond to section 346 of the English Act, namely the Companies Act, 1948. After stating that such a creditor is entitled as between himself and the company ex debito justitiae to an order of winding-up, Buckley on the Companies Act, 13th Edition states as follows at page 450: “This right of the creditor, however, is not his individual right but his representative right as one of a class. If a majority of the class viz., the creditors of like degree, take a different view, the court, in the absence at all events of special circumstances, making an order ‘just and equitable' gives effect to such right as the majority desire to exercise. The court under section 346, then has regard to the wishes of the majority and may refuse to make any order.......” Palmer's Company Law, 21st Edition, at page 742 states the law as follows: “A petitioning creditor who cannot get a sum presently payable has, as against the company, a right, ex debito justitiae, to a winding-up order, even though the assets are overcharged by debentures. This right to a winding-up order is, however, qualified by another rule, viz., that the court will regard the wishes of the majority in value of the creditors, and if, for some good reason, they object to a winding-up order, the court in its discretion may refuse the order.” The above statements of law have been quoted with approval by the Court of Appeal in re: P. and J. Macrae Ltd. (1961) 1 All E.R. 302 There is a fairly elaborate consideration of the English case law in that decision. I think that it would be useful to read here, a statement from one of the decisions referred to therein, which in my view, clearly lays down the correct legal position. In re: Langley Mill Steel and Iron Works Co. (1871) L.R. 12 Eq. 26 Malins V.C. stated: “Counsel for the petitioners passed the order, as being ex debito justitiae; that is to say, that at the instance of one creditor, and against the wishes of all the other creditors, I am bound to make an order to wind-up a company compulsorily, however unjust I may think that course to be. In my opinion, this is not the true construction of the Companies Act; and so far from it being so. I find that by section 91, the court has power in all cases of winding-up to consider what is most beneficial for the interest of all parties, and to have regard to the wishes of the creditors as well as contributories. I am of opinion that the court has under that section, complete discretion in all cases of winding-up, and must exercise that discretion with reference to ail the surrounding circumstances.” The above authorities have been followed by the Supreme Court in M. Gordhandas and Co. vs. Madhu Woollen Industries Pvt. Ltd. (1972) 42 Company Cases 125. The following passage appearing in that decision is relevant: “Another rule which the court follows is that if there is opposition to the making of the winding-up order by the creditors, the court will consider their wishes and may decline to make the winding-up order. Under section 557 of the Companies Act, 1956, in all matters relating to winding-up of the company the court may ascertain the wishes of the creditors. Under section 557 of the Companies Act, 1956, in all matters relating to winding-up of the company the court may ascertain the wishes of the creditors. The wishes of the shareholders are also considered, though perhaps, the court may attach greatest weight to the views of the creditors.” Then alter quoting a part of the passage, which I have read above from Palmer's Company Law, in support of the above statement, the court added: “The wishes of the creditors will however he tested by the court on the grounds as to whether the case of the persons opposing the winding-up is reasonable; secondly, whether there are matters which should be inquired into and investigated if a winding-up order is made. It is also well settled that winding-up order will not be made on a creditor's petition if it would not benefit him or the company's creditors generally. The grounds furnished by the creditors opposing the winding-up will have an important bearing on the reasonableness of the case.” 18. Now it is clear on the facts of the case before me that an order of winding-up would not benefit either the petitioners or the creditor who supports them. On the other hand, such an order would be highly detrimental to all the creditors, particularly the unsecured creditors, and also the shareholders of the company. The winding-up of the company is opposed by an overwhelming majority of the creditors, and a shareholder who holds about 36 per cent of the paid-up capital of the company. Between the petitioners and the sole creditor who supports them, they represent only 5.8 percent of the total debts of the company. It is remarkable that a winding-up of the company is sought by Seshasayee Brothers Ltd. who promoted the company and was its managing agent from its incorporation for a period of about eight years till the company reached a stage of completely closing down its business and the verge of winding-up. It is remarkable that a winding-up of the company is sought by Seshasayee Brothers Ltd. who promoted the company and was its managing agent from its incorporation for a period of about eight years till the company reached a stage of completely closing down its business and the verge of winding-up. The Aluminium Industries Ltd. appears to be a concern in which Seshasayee Brothers Ltd. has a controlling interest and C.P. No. 7 of 1972 seems to have been filed at the instance of Seshasayee Brothers Ltd. The whole debt which the petitioning creditors claim were incurred during the management of the company by Seshasayee Brothers Ltd. From the facts narrated earlier, it is clear that, under the present management, the company has revived its business and it has shown commendable progress; and one may reasonably hope that the company would be able to discharge its debts and stand itself on solid basis if it is allowed to work for a few years more. In these circumstances, nothing could have induced the petitioners to move for the winding up of the company, except the idea of having a fairly large industrial concern extinguished from the field. I am constrained to think that these petitions have been filed without any bona fides. 19. For the reasons herein stated, this is a pre-eminently fit case for exercising my discretion to refuse a winding up order. Accordingly, I dismiss these petitions. The petitioners will pay the costs of the company and the opposing creditors.