JUDGMENT 1. - This petition has been filed under section 439(1)(d),Companies Act, 1956 (hereinafter to be called 'the Act') by a creditor for winding up Silver Cement (P) Ltd., Jodhpur (in short, respondent company) with the averments, in short, as follows. 2. The petitioner deposited certain amount with the respondent company with the condition that interest @ 12% will be paid and the amount may be withdrawn at any time. The respondent company was indebted to her to the extent of Rs. 46,370 on 31 March, 1991. Thereafter, Rs. 12,751 have accrued as interest from 31 March, 1991, to 30 June, 1992. The total amount outstanding against the respondent company as unsecured loan is Rs. 59,121. In October, 1991, the petitioner was in need of the money and requested the respondent company and its new directors, Umesh and Dinesh Dhoot, to repay her (the) amount. They requested their father for issuing a cheque and he issued a cheque on 18 October, 1991, for Rs. 49,160. This amount included interest up to October, 1991. The director, Umesh Dhoot, requested the petitioner to present the cheque in bank after some time. She waited for 51/2 months and, there-after, deposited the cheque on 7 April, 1992. On 8 April, 1992, the cheque was returned with the remark 'payment stopped by the drawer'. She contacted the director, Umesh Dhoot, for payment of the amount of cheque and the latter told her that the company was at present running in loss and requested to wait for three months more. She waited for three months more but no payment was made. She served a notice under section 434(1)(a) of the Act upon the respondent company. Its reply was given by the respondent company, raising false, frivolous and fictitious dispute. The respondent company is unable to pay its debts. 3. On 13 October, 1992, the respondent company moved an application with the prayer that admission of the company petition may kindly be revoked and company petition be dismissed and till then, further proceedings be stayed with the averments, in short, as follows. The respondent company is unable to pay its debts. 3. On 13 October, 1992, the respondent company moved an application with the prayer that admission of the company petition may kindly be revoked and company petition be dismissed and till then, further proceedings be stayed with the averments, in short, as follows. The present directors of the respondent company, Umesh Dhoot and Dinesh Dhoot, took over the management of the respondent company on 18 October, 1991, from the old management represented by Sumer Mal Jain group pursuant to the agreement dated 18 October, 1991, containing the terms and conditions regarding liability, debts and claims relating to the period prior to the change of the management. According to it, Sumer Mal Jain group agreed that in case the actual dues payable to the Rajasthan Financial Corporation by the respondent company as on 17 October, 1991, exceeded Rs. 40.50 lakhs, the old management would bear the burden of such excess amount. It was also agreed that all liabilities/claims/dues including sales-tax demand in respect of the respondent company pertaining to the period prior to 18 October, 1991, would be met by the old management, i.e., Sumer Mal Jain group. Till 18 October, 1991, Sumer Mal Jain, his near relative, Vijay Raj, and his father, Dungarmal, were shareholders of the respondent company and Sumer Mal Jain was one of the directors. There were other directors, but they were outsiders, At the time of the aforesaid agreement dated 18 October, 1991, it was very clear in between the parties to the agreement that Sumer Mal Jain group were in the old management ; the other directors were living outside Jodhpur ; they agreed that the amounts due to the respondent company from the old management would be the responsibility of the local director, Sumer Mal Jain ; he will also recover amounts from the debtors of the respondent company to the extent of Rs. 2,56,344 and will deposit the same with the respondent company for being paid to the outside director, Shri Pawan Gupta. Reply to the notice was given clearly raising a bona fide dispute and disclosing all facts which have been concealed by the petitioner in her company petition. The petitioner was well aware about the fact that the amount of the unsecured loans were to be paid after the adjustment of the old liabilities as per the agreement dated 18 October, 1991. The petitioner was well aware about the fact that the amount of the unsecured loans were to be paid after the adjustment of the old liabilities as per the agreement dated 18 October, 1991. Stop payment was made pending settlement of dues between the parties. There is a genuine dispute about the amounts payable to the petitioners. The petitioner has concealed all these facts in her petition. Sumer Mal Jain and his group owed huge amount to the respondent company which far exceeds the amount due to them. There is no question of any amount being due to the petitioner. The above company petition is simple abuse of the process of the court. A winding up petition is not a mode for the recovery of debt. If the company is shown to be solvent and debt is bona fide disputed, it is not admitted. Ex parte admission of the winding up petition with advertisement thereof has serious consequences on the reputation of the company. The company petition has been advertised in Rajasthan Patrika only. Petiboner was minor when (an) amount was deposited by Sumer Mal in the respondent company in her name. At the time of the execution of the agreement dated 18 October, 1991, Annexure R/1, Sumer Mal assured the new directors that he would discharge the old liabilities and as such cheques were issued to his group in respect of their deposits. On verification, it was found that there were many old liabilities and the respondent company was liable for them. The dues of the Rajasthan Financial Corporation were found to the extent of Rs. 41,91,880. The petitioner was well aware of the agreement, Annexure R/1, executed in between the old management and the new management, the liabilities of the old management, i.e., her father, and until their adjustment she was not entitled to get any amount. New management has never faced any financial crisis. Old losses have been recouped and old dues have been paid to the extent of Rs. 11 lakhs. Notice under section 434 of the Act was not served at the registered office of the respondent company. 4. The petitioner has filed her reply to the application seriously opposing it. She has averred in it that she was not a party to the agreement, Annexure R/1, executed in between the old management and new management of the respondent company. Notice under section 434 of the Act was not served at the registered office of the respondent company. 4. The petitioner has filed her reply to the application seriously opposing it. She has averred in it that she was not a party to the agreement, Annexure R/1, executed in between the old management and new management of the respondent company. Her money does not belong to her father, Sumer Mal Jain. She is not aware of the adjustment of the old liabilities. Her amount cannot be withheld on account of some dispute which exists in between her father and the respondent company. 5. In the rejoinder, the respondent company has stated that total liability of the Rajasthan Financial Corporation as on 17 October, 1991, was found to the extent of Rs. 42,70,718 instead of Rs. 40.50 lakhs ; sales-tax department has raised fresh demands to the extent of Rs. 72,579 for the assessment year 1987-88 ; old management availed excess exemption under Sales-tax Incentive Scheme to the extent of Rs. 4,76,333.02 ; new management has thus been deprived of this amount ; Sumer Mal Jain and his man, Vijay Kumar, have also collected Rs. 1,91,134 from debtors and have not deposit-ed the same with the respondent company, as a result thereof, Sumer Mal Jain and his group have collected Rs. 9,60,764.02 payable to the respondent company and Rs. 3,51,302 are only claimed against the respondent company by them. Instruction of stop-payment was given to the bank the next day of the issuance of the cheques due to non-settlement of the dispute and not for want of funds in the bank. There is direct relation of the petitioner's alleged debt with the agreement, Annexure R/1, and this fact has been admitted in the notice, Annexure R/2, by the petitioner herself. 6. Similar applications have been made by Sumer Mal Jain, his wife, Smt. Maliya Devi, and his daughter, Mohini Devi, and his firm, S. Vijay Kumar, for Rs. 39,796, Rs. 81,762, Rs. 49,160 and Rs. 93,924, respectively, with almost similar averments. 7. The Rajasthan Financial Corporation has also filed its reply seriously opposing the company petition stating that even after waiving penal interest, a sum of Rs. 41,91,880 was outstanding against the respondent company on 17 October, 1991, and as per the agreement, Annexure R/1, the ex-director Sumer Mal Jain was liable to pay it an amount in excess of Rs. 7. The Rajasthan Financial Corporation has also filed its reply seriously opposing the company petition stating that even after waiving penal interest, a sum of Rs. 41,91,880 was outstanding against the respondent company on 17 October, 1991, and as per the agreement, Annexure R/1, the ex-director Sumer Mal Jain was liable to pay it an amount in excess of Rs. 40.50 lakhs. 8. The respondent company has filed joint reply to these petitions seriously opposing them and making similar averments which have been made in its said application for recalling the order of admission and dismissing the company petition. 9. It is well settled law that where the debt is bona fide disputed or a company puts forward counter claim, it cannot be said that the company is unable to pay its debts. The crucial question for consideration in his company petition is whether there exists a bona fide dispute in respect of the debts claimed by Chanchal Devi (petitioner), Sumer Mal Jain, Smt. Maliya Devi, Mohini Devi and S. Vijay Kumar and Co. The following facts and circumstances leave no manner of doubt that there exists bona fide dispute in respect of the debts claimed by them : (1) Admittedly, the agreement, Annexure R/1, was executed in between the old management and the new management on 18 October, 1991, and all the five cheques were issued the same day, i.e., 18 October, 1991. (2) Notice dated 23 April, 1992, Annexure R/2 was served by the petitioner, Chanchal Devi, upon the father of the new directors of the respondent company who issued the said cheque at the instance of the new directors (drawer's sons). It is stated in this notice : "Uprokt factory aapke putr Shri Dinesh Dhoot va Umesh Dhoot duara kharid kar lee gaee. Es factory ke kharidne ke ikrar ke samay meri mwakeela kee jo rakm bakaya the vah ikrar rashi gaironbad kar aapke putran Dinesh Dhoot va Umesh Dhoot ke nirdeshanusar aapne mere mwakeela ko Jodhpur me mere mwakeela ke pita Sumer Mal Jain ke marfat ek cheque Canara Bank Jodhpur No. 7522808 Rs. 49,160 ka dinak 18.10.91 ko diya." It clearly says that, after adjusting the amount as per agreement (Annexure R/1), cheque of Rs. 49,160 was given. 49,160 ka dinak 18.10.91 ko diya." It clearly says that, after adjusting the amount as per agreement (Annexure R/1), cheque of Rs. 49,160 was given. The petitioner has utterly failed to explain as to how and why this adjustment as per terms of the agreement, Annexure R/1, was allowed by her, when according to her, her amount had nothing to do with the liabilities outstanding against her father, Sumer Mal Jain, and in favour of the respondent company. It leaves no manner of doubt that all these matters were connected with each other. This fact alone greatly supports the case of the respondent company. (3) All the five cheques issued by the father of the new directors on 18 October, 1991, were presented to the bank in April, 1992, and the bank returned them on 20 April, 1992, with the same remarks. The time gap of 51/2 months in between the dates of issuance and presentation also supports the case of the respondent company. (4) It has simply been stated in the company petition of Chanchal Devi and other four supporting petitioners that the aforesaid amounts were deposited with the respondent company on the condition that the company will make payment of interest @ 12%. It has not been shown from where and how these amounts were obtained by them. (5) Agreement Exh. R/1 was executed on 18 October, 1991, in between the old management and the new management. On behalf of the old management, it was signed by Pawan Chandra Nanda, Sumer Mal Jain, S.L. Jain, U. Seth and Mrs. N. Seth and on behalf of the new management, it was signed by Umesh Dhoot and Dinesh Dhoot, sons of Shri Shyam Sunder Dhoot. By this agreement, the management was changed. All the cheques were issued the same day. (6) Sumer Mal Jain was one of the old directors ; he was looking after the entire business of the respondent company as all other directors belonged to places outside Jodhpur. (7) The petitioner, Smt. Maliya Devi, who has claimed Rs. 81, 762 is the wife, Chanchal Devi and Mohini Devi who have claimed Rs. 49,160 each are the daughters and M/s S. Vijay Kumar and Co. is the proprietorship firm of Sumer Mal Jain. Sumer Mal Jain has also filed a claim for Rs. 39,976. (8) In para Nos. (7) The petitioner, Smt. Maliya Devi, who has claimed Rs. 81, 762 is the wife, Chanchal Devi and Mohini Devi who have claimed Rs. 49,160 each are the daughters and M/s S. Vijay Kumar and Co. is the proprietorship firm of Sumer Mal Jain. Sumer Mal Jain has also filed a claim for Rs. 39,976. (8) In para Nos. 9, 10 and 11 of the rejoinder, the respondent company has stated that the total claims of Sumer Mal Jain and his family members against the respondent company are to the extent of Rs. 3,51,302 ; this group is liable to the respondent company to the extent of Rs. 9,60,764.02 and as such the respondent company is entitled to get Rs. 6,09,462.02 from Sumer Mal Jain and members of his family/group after adjusting the said amount due to them. As such the company petition cannot be allowed. 10. Accordingly, the company petition is dismissed with costs. The petitioner Chanchal Devi and others may seek other remedy for the recovery of their amounts from the respondent company as may be advised. *******