JUDGMENT 1. - Swedfund International so (hereinafter as Swedfund), Post Box 3286, 103 65 Stockholm Sweden, had filed this petition under section 433(c), (e) and (f) of the Companies Act, 1956, with the prayer that M/ s Aditya Gustavsberg Limited be directed to be wound up and the official liquidator attached to this court be appointed as liquidator. 2. The claim of the petitioner company is based on the ground that a sum of Rs. 35,25,000 is payable which the respondent company failed to pay the same inspite of the demand having been made to it. It is stated that the respondent company Aditya Gustavsberg Limited (hereinafter referred to as Aditya) was a company incorporated initially under the name Aditya Sanitary Ware Ltd. (hereinafter referred to as Gustavsberg) under the provisions of the Indian Companies Act, 1956. The said company entered into a technical knowhow and licence agreement with AB Gustavs- berg another company incorporated under the laws of Sweden. Both the companies agreed to change the name of the respondent company to Aditya Gustavsberg Ltd. The capital of the said company was Rs. 10,00,000 which was increased to Rs. 6,00,00,000 for equity shares of Rs. 10 each. The paid up capital was Rs. 3,400 and there were seven subscribers to the memorandum of association at the time when the said company was incorporated. In the agreement, the Gustavsberg agreed to provide to the respondent company technical information pertaining to ceramic sanitary wares and technical services for establishment of quality control programme and knowhow and technical documents for the improvement of plant, machinery and equipment and an exclusive licence to manufacture, use and sell the said products in India. For providing technical information, knowhow and the licence as aforesaid, Gustavsberg was to receive from the respondent company [technical knowhow fee of US $ one lakh] (sic). Industrial Credit and Investment Corporation of India [ICICI] in participation with the Industrial Development Bank of India and Industrial Finance Corporation of India along with foreign currency loan equivalent to about Rs. 77,00,000 each and Punjab National Bank and State Bank of India and State Bank of Patiala granted the term loan of Rs. 50 lakhs, Rs. 25 lakhs, Rs. 25 lakhs each respectively. 3. 77,00,000 each and Punjab National Bank and State Bank of India and State Bank of Patiala granted the term loan of Rs. 50 lakhs, Rs. 25 lakhs, Rs. 25 lakhs each respectively. 3. Subsequently, it was found that the condition laid down by ICICI in the letter, dated 14.8.1986 for providing the facility have not been fulfilled and accordingly, the loan/assistance sanctioned by ICICI was cancelled vide letter, dated 28.5.1987. The other financial institutions also followed the same steps. It is stated that alternative arrangements were tried, but of no avail and in these circumstances, when the assistance was finally cancelled, Swedfund asked to refund Rs. 35,25,000 vide their letter, dated 2.10.1989. Similar letter was also sent by Gustavsberg on 15.8.1989. The respondent company vide its letter, dated 22.5.1990 alleged that Swedfund and Gustavsberg had sabotaged the entire project and that they were wrongly trying to withdraw the money remitted. It is submitted that the company which was registered on 14.3.1985 had not commenced its business within a year from its incorporation and has never conducted any business at all right from the date of its incorporation, and there is no likelihood of its commencing business in future. There is a drastic change in the situation because of its extraordinary delay. The industrial licence as also the approval for foreign collaboration granted to the respondent company which has lapsed and as such the substratum of the company has disappeared. The provisions of section 433(c) of the Companies Act have been relied on to show that in such a situation, the company should be directed to be wound up. 4. The submission has also been made that since the company has neglected to pay the sum of Rs. 35,25,000 after the demand having been raised, it is unable to pay its debt and as such, in accordance with the provisions of section 433(e), the company should be directed to be wound up. 5. A prayer has also been made that it is just and equitable that the respondent company be wound up in accordance with the provisions of section 433(f) of the Companies Act. 6. By order, dated 24.3.1994, the notices were issued to the respondent company to show cause as to why the petition be not admitted and advertised. The petitioner made an application that the office of the respondent company has closed and the notices could not be served. 6. By order, dated 24.3.1994, the notices were issued to the respondent company to show cause as to why the petition be not admitted and advertised. The petitioner made an application that the office of the respondent company has closed and the notices could not be served. The permission was granted on 6.5.1994 to publish the notices in Rajasthan Patrika and Hindi daily Navbharat Times. One appeared on 20.5.1994 and, therefore, after considering proper service, the petition was admitted and was directed to be advertised. An application was moved to recall the order dated 20.5.1994 which was rejected on 10.2.1995. Interim reply was filed and 15 days time was allowed to file the final reply which has not been filed. 7. The matter came up before this court on 7.7.1995, when the respondents raised an objection that it was on account of breach of contract that the payment has not been made, and that the petitioner is not the creditor of the company and that the amount is freezed by the RBI, and the payment could not be made for that reason also. It was submitted that initially, the company was in the name of Aditya Sanitary Wares Ltd. which entered into agreement known as Technical Knowhow and Licence Agreement on 21.2.1986 and another agreement was entered into on 13.6.1986 between the petitioner and Shri A.K. Jajodia and AB Gustavsberg known as shareholders' agreement in which all the three parties were co-promoters. Shri A.K. Jajodiya contributed Rs. 70,50,000 and the petitioner and Gustavsberg Rs. 35,25,000 each and since it is not a loan, the petition is not maintainable. The agreement is irrevocable and even the arbitration clause as contemplated in the said agreement has not been invoked. The respondents have paid US $ 1,00,000 technical knowhow fees to its collaborator on 30.12.1986 and Gustavsberg intentionally did not send the technical documentation in pursuance of the technical knowhow agreement even after receipt of technical knowhow fee of US $ one lakh. The petitioner and Gustavsberg wrongfully and in breach of the agreement withdrew the powers of management vested with Indian promoters on 21.5.1987 and it was on account of their attitude and approach that the financial institutions cancelled the sanctioned loan. It is admitted that the petitioner in writing demanded the refund of Rs. The petitioner and Gustavsberg wrongfully and in breach of the agreement withdrew the powers of management vested with Indian promoters on 21.5.1987 and it was on account of their attitude and approach that the financial institutions cancelled the sanctioned loan. It is admitted that the petitioner in writing demanded the refund of Rs. 35,35,000 on 2.10.1989, but the said amount was deposited on interest with various banks, and have earned interest. The income- tax authority issued a notice on 10.3.1993 and the total income of the company has been assessed to Rs. 8,56,618. A sum of Rs. 4,71,000 has already been recovered by the income-tax authorities on account of attachment under section 226(3) of the Income-tax Act. Number of proceedings are pending before the income-tax authorities and a sum of Rs. 44,99,194 has already been remitted till 31.3.1994. 8. It is stated that the notices under section 433 of the Companies Act have not been given which is a mandatory requirement and as such, the petition is liable to be dis- missed on that ground. The claim being of civil nature, appropriate remedy is to file a civil suit and there is no debt due or any liability outstanding against the respondent company. The petitioner being at co-promoter, cannot take advantage of his own wrong and file a petition for winding up. The petitioner is not a creditor and the petition is barred by limitation. The respondents are entitled for damages and counter claim and, therefore, for that reason also, the petition is liable to be dismissed. 9. Shareholders' agreement was submitted by the respondent on 20.1.1995 along with the application under rule 9 of the Companies (Court) Rules, 1959, read with section 151 of Civil Procedure Code (CPC). The respondents were directed to produce a copy of the letter restraining them to remit the fund by the RBI. In response to that an affidavit has been filed on 24.7.1995 along with the letter of Gustavsberg, dated 13.7.1987 addressed to the Deputy Controller, Exchange Control Department, Reserve Bank of India, Jaipur, for keeping the money in safe custody. The respondents were directed to produce a copy of the letter restraining them to remit the fund by the RBI. In response to that an affidavit has been filed on 24.7.1995 along with the letter of Gustavsberg, dated 13.7.1987 addressed to the Deputy Controller, Exchange Control Department, Reserve Bank of India, Jaipur, for keeping the money in safe custody. The Deputy Controller has written on 20.2.1988 to deposit the amount in a separate non-resident (ordinary) account to be opened by the foreign collaborators in their name with Punjab National Bank subject to the condition that no transfer/ withdrawal of the funds from the NRO account will be allowed without the permission of RBI. A copy of the order of Commissioner of Income-tax (Appeals), dated 4.8.1992 has also been submitted along with balance sheet. In the balance sheet for the period as on 31.3.1994, the amount has been shown 'non refundable interest fees [free ?] deposit against shares' to be issued against which share application has been received/to be received. 10. Shri K.K. Jajodia group also moved an application on 22.7.1995 along with an affidavit for impleading as a necessary party in the above proceedings on the ground that the entire shares of the company are held by it, and they are negotiating with various groups and talks with M/s Duncan Macneill Plc is at a very advance stage and, therefore, they should be heard. The advertisement was published on 3.5.1994/11.6.1994 and no reason for delay has been shown. However, the arguments of Mr. Mehta were heard. It is stated that Jajodia group is having the business worth Rs. one thousand crores and are engaged in petroleum industry, real estate, finance and securities, etc. They have stated that the initial cost of the project was Rs. 13 crores ; but the project has now reached to Rs. 70 crores. The contention that the petitioner is not a creditor and the amount has not to be remitted has been made. 11. The provisions of section 433 of the Companies Act for winding up of the company are as under : "433. Circumstances in which company may be wound up. 70 crores. The contention that the petitioner is not a creditor and the amount has not to be remitted has been made. 11. The provisions of section 433 of the Companies Act for winding up of the company are as under : "433. Circumstances in which company may be wound up. - A company may be wound up by the court, (a) if the company has, by special resolution, resolved that the company may be wound up by the court; (b) if default is made in delivering the statutory report to the Registrar or in holding statutory meeting; and (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 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." 12. In order to adjudicate the various controversies, the objections which are raised by the learned counsel for the respondents are taken into consideration. 13. Clause (e) of section 433 of the Companies Act provides that if the company is unable to pay its debts, it may be wound up by the court. The word 'debt' has not been defined under the Companies Act, but the interpretation which has been given by the different courts is considered for that purpose. In Halsbury's Laws of England, Fourth Edition, at page 114, it is observed as under : "'Debt' means a contractual liability already incurred : Castling v. Aubert (1802) 2 : East 325, at 330 , per Lord Ellenborough. No previous demand for payment is ordinarily necessary, since the service of the writ itself constitutes such a demand : see Joachimson v. Swiss Bank Corpn. (1921) 3 KB 110 (CA) . However, if a debt is expressed to be recoverable only on. demand, a demand is prerequisite to be cause of action : Esso Petroleum Co. Ltd. v. Alstonbridge Properties Ltd. (1975) 3 All ER 358 : (1975) 1 WLR 1474 . See also Bradford Old Ltd. v. Sutcliffe (1918) 2 KB 833, at 848 , per Scrutton, LJ." 14. However, if a debt is expressed to be recoverable only on. demand, a demand is prerequisite to be cause of action : Esso Petroleum Co. Ltd. v. Alstonbridge Properties Ltd. (1975) 3 All ER 358 : (1975) 1 WLR 1474 . See also Bradford Old Ltd. v. Sutcliffe (1918) 2 KB 833, at 848 , per Scrutton, LJ." 14. In Words and Phrases, Permanent Edition, 11, it is mentioned as under : "A 'debt' exists when a certain sum of money is owing from one person to another, and it is property opposed to unliquidated damages, to liability, when used in the sense of an inchoate or contingent debt, and to certain obligations not enforceable by ordinary process. 'Debt' denotes not only the obligation of the debtor to pay, but also the right of creditors to receive and enforce payment. A 'debt' is that which one owes to another any money, goods or services that one is bound to pay to another ; a pecuniary due ; a liquidated demand ; a sum of money due by certain and express agreement : Henriques v. Vinhance 20 Hae. 702 ." It was further observed at page 392 as under : "A debt is something quite different from a loan. A loan contracted creates a debt, but there may be a debt created without contracting a loan. A debt may be contracted without resorting to a loan ; hence it may be that a corporation may have the power to contract a debt for property which it is authorised to purchase, and not have the power to borrow money or contract a loan : Ketchum v. City of Buffalo N.Y. 21 Barb 294, 305 ." 15. Madras High Court in the case of Commissioner of Wealth-tax v. G.D. Naidu AIR 1966 Mad 74 found that the essential requisites of a debt are : (1) an ascertained or ascertainable, (2) an absolute liability, present or future, (3) an obligation which has already accrued and is subsisting. 16. Corpus Juris Secundum has dealt with debt as under : "In general : From the Latin 'debers' meaning to owe 'debitum' meaning some- thing owed. It is a word of large import, having several recognised meanings which vary greatly, according to the subject matter and the language in connection with which the word is used. 16. Corpus Juris Secundum has dealt with debt as under : "In general : From the Latin 'debers' meaning to owe 'debitum' meaning some- thing owed. It is a word of large import, having several recognised meanings which vary greatly, according to the subject matter and the language in connection with which the word is used. It is a common law word of technical meaning, but it has no fixed legal meaning, and it does not have a fixed or invariable - signification. It takes shades of meaning from the occasion of its use, and color from accompanying use, and it is used in different statutes and constitutions in senses varying from a very restricted - of a debtor, legality of the obligation, the existence of a consideration, and execution or performance by the creditor. Strict-technical sense : In a purely technical sense, it is that for which an action of debt or 'indebitatus assumpsit', will lie ; a sum of money by certain and express agreement ; a sum of money due upon contract, express or implied ; or one which is evidenced by a judgment although a debt, technically so called, may by simple contract only. A debt is an obligation arising otherwise than by sentence of court for breach of public peace or crime and it does not include claims sounding in tort, or those forming the basis for a cause of action in equity. In practice, 'debt' is also used technically as the name of a form of action which lies to recover a sum certain. In practice, 'debt' is also used technically as the name of a form of action which lies to recover a sum certain. Ordinary legal sense : It has been said that the basic idea of 'debt' as a legal term, is that an obligation has arisen out of a contract express or implied, which entitles the creditor unconditionally to receive from the debtor a sum of money, which the debtor is under legal equitable, or moral duty, to pay without regard to any future contingency; and, following this concept, 'debt' has been defined as meaning a liability voluntarily incurred by express contract, an obligation founded on contract, express or implied, for the payment of money or other things of value; a contractual obligation of one person to pay a fixed sum of money to another; a specific sum of money which is due or owing from one person to another; an unconditional and legally enforceable obligation for the payment of money; an unconditional promise to pay a fixed sum at some specified time. While any financial obligation is a debt in a broad and general sense, a debt is not merely a promise to pay money. A debt involves the relationship of debtor and creditor, of borrower and lender, and ordinarily, it signifies an exchange of cash for a promise to return it with an increment of interest, and where money is paid with the intent that the person receiving it shall have restricted use thereof, being liable to pay a similar amount whether with or without interest to the payer or to a third person, a debt is created. Although the word 'debt' is usually limited to liabilities arising out of contract, and in its common signification imports the money obligation of a person incurred in his private capacity, or from his individual acts, and not such obligations as are imposed upon him by law in his public relation, or in common with all other citizens, yet it need not be confined to obligations for the payment of money arising on contract; but in particular connections, it has been defined as any just claim, or demand, for the recovery of money; every obligation by which one is bound to pay money; a liability to pay a sum certain, it making no difference how the liability arises, whether by contract or imposed by law without contract, for it has been said that having money that rightfully belongs to another creates a debt, and, wherever a debt exists without an express promise to pay, the law implies a promise ; and so the term has been construed to include all kinds of obligations such as obligations arising from implications of law, while the term is generally con- fined to legal obligations, it may include equitable obligations as well; and even merely honorary or moral obligations, unenforceable by legal action, although the context negatives any such implication, but there is always some obligation that it shall be paid although the manner in which it is to be paid, and the means of coercing payment, need not enter into the definition ; and where the obligation is to pay money, it makes no difference whether it is payable out of, and limited to, a specific fund, or whether the fund shall prove adequate or not, provided it belongs to, and is, as to the object to which it is to be applied, under the control of, the person who engages to make the payment. It arises at the very moment that the obligation is undertaken and continues until discharge by payment. Therefore, iii this broad and comprehensive sense, it any time elapses between the performance of the service on the one hand, and the payment of money or thing of value for which the contract for that service calls on the other, the relation of the parties to each other will be that of debtor and creditor, and the thing which is owed by one to the other will not be a debt. By some authorities, it seems to be considered that a cause of action which may be assigned, or which will survive for or against the legal representatives after death, is properly called a 'debt', in whatever condition referred to. Popular of widest sense : The purely technical, and the ordinary legal meaning discussed in the two preceding sub-divisions are not the only meanings of the word 'debt', for in its popular sense, it denotes duties and liabilities of infinite variety. In the most extensive sense of the term, everything is a debt which is of absolute obligation; and in this broad or larger sense, the word means that which one is obliged to do or suffer; that which one person is bound to pay to another, or to perform for his benefit, what is due from one person to another, whether money, goods, or services; all that is due under any form of obligation or promise anything had or held of or from another, his property or right, his due ; the obligation of the debtor to pay. The word 'debt' is further defined to mean a thing owed, or what one owes claim due duty, or what one owes to another, alongwith, in its limited sense, only a particular kind of duty; indebtedness ; any kind of just demand; liability obligation and sometimes trespass." 17. From the above interpretation, it is evident that the debt is a sum of money which is payable at present, or will become payable in the future by reason of an obligation. The word 'debt' is of wider import and is not restricted to loan alone. Though all the loans are debts, all the debts could not be loan. The term 'debt' governs liability owing from one person to another. It may be made clear that all the debts are liabilities, but all liabilities are not debt and, therefore, it has further to be seen that the sum should be an ascertained or rightly calculated amount, which is an ascertained, liquidated, and quantified obligation enforceable in praesenti or in futuro. Therefore, the pecuniary liability payable presently or in future, or under a decree or order of a civil or revenue court or otherwise, whether ascertained or to be ascertained is a debt. 18. Therefore, the pecuniary liability payable presently or in future, or under a decree or order of a civil or revenue court or otherwise, whether ascertained or to be ascertained is a debt. 18. From the facts which have come on record, it is evident that the share capital of the respondent company is only Rs. 4,300 and the amount of Rs. 35.25 lakhs was remitted on 17.3.1987 in terms of the shareholding agreement. The shares have not been allotted. Whenever an application is made by the intending shareholder to the company for allotment of shares, may be with some agreement, but that application has to be considered as an offer by him to take certain number of shares, and if the shares are allotted, then the allotment of shares by the company is acceptance of offer. The contract comes into existence with regard to the offer for obtaining the shares when the allotment is made. That acceptance has to be communicated to the intending shareholder and till then, it cannot be said that the said offer has been accepted. Even by allotment, one does not acquire the status of a member, unless he is the signatory of memorandum of association. When an allotment of shares is made in pursuance of a contract, the contract for subscribing the shares is different than the contract for allotment of shares. The obligation of a person may be there to apply for a particular number of shares under a contract and if that is not fulfilled, the respondents would have proceeded for enforcement of such a contract. That dispute is not before me. Here, it is the stage where part payment has been made, [which is] recorded as the share application money and the shares have not been allotted. The question arises as to what is the nature of the sum remitted for allotment of shares. As observed above, it was only an offer so far as the petitioner is concerned and it has not been accepted till date by allotment of shares and this contract has not been completed. The question arises as to what is the nature of the sum remitted for allotment of shares. As observed above, it was only an offer so far as the petitioner is concerned and it has not been accepted till date by allotment of shares and this contract has not been completed. Sections 69 to 73 deal with the allotment of shares by a public limited company and after completed [compliance] therewith and under section 72(5), it is contemplated that an application for shares which is made in pursuance of a prospectus issued generally, shall not be reversible [revocable] until after the expiration of the fifth day after the time of the opening of the subscription lists, or the giving, before the expiry of the said fifth day by some person responsible under section 62 for the prospectus, of a public notice having the effect under that section of excluding, limiting or diminishing the responsibility of the person giving it. 19. Learned counsel for the respondents has placed reliance on the provisions of section 41(2) of the Companies Act under which every other person who agrees in writing to become a member of a company and whose name is entered in its register of members, shall be a member of the company. This provision is not applicable because sub-section (1) is applicable to the subscribers of memorandum of the company, and there were only seven subscribers, the petitioner was not one of such. Sub-section (2) is applicable to a person other than the subscribers [of a memorandum of a company] who agrees in writing to become a member of the company and whose name is entered in the register of members. This is also not applicable because the name of the petitioner has not been entered in the register of members of the company and he has not become a member of the company till date. Section 69(4) of the Act contemplates that all moneys received from applicants for shares shall be deposited and kept deposited in a scheduled bank. Sub-section (5) contemplates that if the conditions are not complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all money received from applicants for shares shall be forthwith repaid to them without interest. There are other provisions with regard to procedure for keeping the money. Sub-section (5) contemplates that if the conditions are not complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all money received from applicants for shares shall be forthwith repaid to them without interest. There are other provisions with regard to procedure for keeping the money. The petitioner has only submitted an application to become a member and that application has not been accepted. I consider that the said amount which is deposited with the company has the nature of trust and the company is the trustee. If the shares are not allotted, then it is the obligation of the company to refund that money. The obligation is in the form of liability and as such, the amount being ascertained one for which even the dispute has not been raised can be considered to be a liability, and as such, the debt. If a company which has received the share application money in part or in full and has not allotted the shares, it cannot retain it indefinitely. The petitioner has already conveyed its intention to withdraw such application and, therefore, the said amount becomes refundable forthwith when such an application is made. The position would have been different if the petitioner was informed about the allotment of shares in respect of money remitted by it before conveying its withdrawal or consent to become a member of the company. In these circumstances, the amount has to be treated [as] debt and failure to refund the same amount would attract the provisions of section 433 of the Act. It is also submitted that the shares cannot be allotted as the conditions contained in article V of the shareholders' agreement are not fulfilled. I need not go into this point because the entire shareholders' agreement is not in dispute before me, nor any adjudication is required on that point. 20. No notice under section 434 of the Companies Act has been alleged to be given. It is true that the provisions of section 434 are mandatory in nature, but, if the facts of this case are seen, respondents have admitted in para 3(j) of their reply that the petitioner in writing demanded the refund of that amount of Rs. 35.25 lakhs on 2.10.89. It is true that the provisions of section 434 are mandatory in nature, but, if the facts of this case are seen, respondents have admitted in para 3(j) of their reply that the petitioner in writing demanded the refund of that amount of Rs. 35.25 lakhs on 2.10.89. Section 434 of the Act has been given the circumstances where the company is deemed unable to pay its debts which are as under : "434. [Company when deemed unable to pay its debts].-(1) A company shall be deemed to be unable to pay its debts (a) if a 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 ; or (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 behalf, 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." 21. From the above provision, it is evident that if a demand is made to the company requiring to pay the sum so due and the company neglects for three weeks thereafter, then it would be deemed that the company is unable to pay its debts. From the above provision, it is evident that if a demand is made to the company requiring to pay the sum so due and the company neglects for three weeks thereafter, then it would be deemed that the company is unable to pay its debts. This section does not prescribe a proforma of notice to be given or demand to be made and the only requirement is : (1) that the amount of debt must be exceeding Rs. 500; (2) the demand must be served to the company by causing it to be delivered at its registered office by registered post or otherwise, (3) the demand should be under the hand of the creditor requiring the company to pay its debt ; and (4) the company should thereafter have neglected the payment of the said amount within three weeks from the said demand. The section does not require a particular notice and it is not even necessary that in the notice, it should be mentioned that this notice is under section 434. The contention, therefore, has no force and is rejected. 22. The question as to whether the dispute is of civil nature and the company court should not interfere in the matter and should allow the parties to raise a dispute before the civil court by way of suit is not relevant for the purpose of proceeding under section 434. There may be a remedy provided for a civil suit, but if the conditions as contemplated under section 433 are found existing, the company court is justified in directing to wind up the company. Even the provisions for arbitration under any agreement will not oust the jurisdiction of the company court for directing the winding up of the defaulting company. The Companies Act has specified the conditions under which the company can be wound up and the only thing to be seen is as to whether any of those conditions exist so as to give the order of winding up. The contention that the direction can be given to the petitioner for filing a civil suit has no substance. 23. It is also contended that the petitioner is a co-promoter and, therefore, it can- not take the advantage of its own wrong. The contention that the direction can be given to the petitioner for filing a civil suit has no substance. 23. It is also contended that the petitioner is a co-promoter and, therefore, it can- not take the advantage of its own wrong. It may be observed that the company Aditya Gustavsberg Ltd. was incorporated, initially, under the name Aditya Sanitary Wares Ltd. The petitioner was not the subscriber to the memorandum and it may be by sub-sequent agreement entered into [between the parties] by which the petitioner agreed to subscribe the shares. There is no provision under the Companies Act by which a person can be compelled to become a shareholder, and if there was any obligation on the part of the petitioner to become the co-promoter by subscribing the shares, that point could not be considered in the present proceedings as the effect of the share- holders' agreement could have been challenged before the appropriate forum and the company court cannot consider all the disputes relating to a company, but the jurisdiction is restricted only to winding up proceedings to see whether any of the conditions contemplated under section 433 are existing so as to direct winding up of the company. If a person is aggrieved to become a co-promoter unless the shares are allotted to him, he is neither a member shareholder nor could he be estopped from filing a petition for winding up of the company. This contention has also no force and is rejected. 24. It has been contended that the proceedings are barred by limitation. It is submitted that the petitioner contributed the capital in March, 1987, and demanded the same in October, 1989. The petition is beyond the period of limitation. Reliance has been placed on article 24 of the Limitation Act. Article 24 of the Limitation Act provides limitation of three years for money payable by the defendant to the plaintiff for the money received, by the defendant, for the plaintiff's use. 25. Now, coming to the case of the petitioner in order to examine the applicability of section 433(e), it has been provided under section 434 as to when the company shall be deemed to be unable to pay its debts. 25. Now, coming to the case of the petitioner in order to examine the applicability of section 433(e), it has been provided under section 434 as to when the company shall be deemed to be unable to pay its debts. The use of the words 'unable to pay its debts' is for the reason that there may be a bona fide dispute in not paying the debts in case the court has to take into consideration the dispute. If the dispute is raised then it has to be seen whether the company in good faith has raised the dispute, or it has some substance or the company is liable to succeed in point of law and sufficient evidence is adduced in support thereof. In the present case, the dispute has not been raised that the sum of Rs. 35.25 lakhs has or has not been paid and the only plea which was taken is that it was not a debt. At the time when it was paid, it was not a loss or debt, but was having the nature of a trust and the respondent company was a trustee in receiving the share application money. The respondent company could have been made responsible for breach of trust and other legal actions which I need not go into in detail because of the other points being considered against the company in subsequent paras. 26. Another question was with regard to direction for winding up on the ground that the company has not commenced its business within one year from its incorporation or suspension of its business for a whole year. So far as this point is concerned, the court has to look to the overall circumstances under which the business could not be carried on and it is not in all the cases where there is no business in a particular year, the directions for winding up should be given. It may be because of lull, legal restraint or other circumstances ; but the main thing which has to be considered is whether there is any possibility of a business being carried in future. A contention has been raised on behalf of the respondents that they are actively negotiating with another company. No evidence in support thereof has been produced. It may be because of lull, legal restraint or other circumstances ; but the main thing which has to be considered is whether there is any possibility of a business being carried in future. A contention has been raised on behalf of the respondents that they are actively negotiating with another company. No evidence in support thereof has been produced. The company itself was incorporated in the year 1985 and the Swedfund International and Gustavsberg were to contribute 50% of the equity share capital for which the petitioner has not been able to get any other co-promoter or collaborator and, therefore, only in expectation that somebody may give help in future, to the respondents, it is only an expectation without basis. It cannot be considered that there is a possibility of commencement of business even in near future. The licence and approval of the company have already come to an end and, more so, when, even according to the respondents, the two co-promoters, namely, the petitioner and Gustavsberg have with drawn, then the object for which the company was formed has prima facie come to an end. The income which has been earned was only because the funds were deposited in the bank and interest was earned therefrom and, therefore, it cannot be considered to be the business for the objects for which the company was incorporated. There does not appear to be any possibility for carrying on the business of the company in near future and, therefore, clause (c) of section 433 is attracted. Various courts have observed in respect of clause (b) [(f) ?] of section 433 on the proposition that substratum of the company has gone when (a) the subject matter of the company is gone, or (b) the object for which it was incorporated has substantially failed, and (c) it is impossible to carry on the business of the company except at a loss which means that there is no reasonable hope that the object of trading at a profit can be attained, or (d) the existing and probable assets are sufficient to meet the existing liabilities. 27. Their Lordships of Privy Council in Davis & Co. 27. Their Lordships of Privy Council in Davis & Co. Ltd. v. Brunswick (Australia) Ltd. (1936) 6 Comp Cas 227 (CA) observed as under : "There is obviously a great difference between a question of positive fact, such as the pecuniary position of a trading company at a particular date and a question of the prospects of such a company in the future, a matter which must depend on all sorts of views as to the state of world trade, the confidence of the public, the price at which articles can be sold - a matter which depends very largely upon the number of such sales - and an infinity of other considerations. It is note the function of a court to determine such a matter on its own views as to probable success or failure, but to form the best opinion it can upon the evidence given by persons with a practical knowledge of the trade in question and the local conditions where these affect the matter." 28. It is contended that the winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by a company. A petition presented ostensibly for winding up order is really to exercise pressure and as such, should be dismissed, in view of the observations made by the Madras High Court in the case of B. Viswanathan v. Seshasayee Paper and Boards Ltd. (1997) 3 Comp Comp LJ 209 (Mad) : (1992) 73 Comp Cas 136 (Mad) . This decision is based on the point whether the question was where [whether] the debt is a disputed one or not. If the debt is disputed then the proper forum to approach is the civil court. In summary proceedings such as the proceedings for the winding up of a company, a detailed investigation and adjudication of the dispute should be avoided. This is not the position over here. 29. Reliance has been placed on the decision of the Calcutta High Court in the case of Pandam Tea Co. Ltd., Re AIR 1974 Cal 170 wherein it was observed that a statement contained in the balance sheet had to be taken into consideration along with the directors' report because the balance sheet may not be confirmed or passed by the share- holders and, therefore, cannot be accepted as the correct one. Ltd., Re AIR 1974 Cal 170 wherein it was observed that a statement contained in the balance sheet had to be taken into consideration along with the directors' report because the balance sheet may not be confirmed or passed by the share- holders and, therefore, cannot be accepted as the correct one. The present balance sheet which has been submitted shows the admission of account by the company towards share application and no such directors' report has been produced. This judgment is of no assistance to the respondent company, because in that case, the directors' report was produced and on that basis it was considered that there was no acknowledgement of liability. In the present case, directors' report was produced and the acknowledgement of the balance sheet which has not even been denied has to be considered acknowledgement of the debt and, therefore, it cannot be considered to have become time barred. 30. For the purpose of considering as to whether it is just and equitable to wind up the company, the interest of shareholders as well as creditors has to be taken into consideration. It has to be seen as to whether substratum of the company has disappeared or the objects for which the company was incorporated have substantially failed, or it has become impossible for the company to carry on the business because of loss or because existing and possible assets are insufficient to meet out the existing liability. The withdrawal of the two promoters and cancellation of the financial assistance by the financial institutions and lapse of licence/ approval given to the company and not initiating any action within the period of ten years show that substratum of the company has gone and the object for which the company was incorporated would not be achieved and the company has substantially failed to commence its business. The interest of the shareholders has not been protected to the extent of civil action made by them and simply [the fact that] the money is kept in the bank would not justify the claim that there is a possibility of commencement of business. It may be considered that the earning of interest would not be an obstacle for directions being given for winding up if it is just and equitable to do so. It may be considered that the earning of interest would not be an obstacle for directions being given for winding up if it is just and equitable to do so. The contention that negotiations are going on with M/s Duncan Macneill Ltd. at advanced stage has no sub-stance in view of the fact that no document in support thereof has been submitted and the apex court has observed in the case of Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd.(1982) 1 Comp LJ 1 (SC), at page 34, para 62 : (1981) 51 Comp Cas 743 (SC), at page 786 , as under : "We appreciate that it is generally unsatisfactory to record a finding involving grave consequences to a person on the basis of affidavits and documents without asking that person to submit to cross-examination. It is true that men may lie, but documents will not and, often, documents speak louder than words. But a total reliance on the written word, when probity and fairness of conduct are in issue, involves the risk that the person accused of wrongful conduct is denied an opportunity to controvert the inference said to arise from the documents." 31. The provisions of just and equitable clause are based on equity. Though the company cannot be considered a sort of partnership, but in cases where three groups intend to form a company, and two of them decide to withdraw for any reason, it would be just and equitable to direct the winding up of the said company, even if shareholding of the third group is more than that of [the other] two groups and they cannot be forced to become members of the company. The mutual confidence and faith between them have already been lost and there does not appear to be any possibility of reconciliation. In such a situation, even if the company is allowed to run, infighting is bound to affect the business which has still not commenced. 32. In Hind Overseas (P) Ltd. v. Raghunath Prasad Jhunjhunwala and another (1976) 46 Comp Cas 91 (SC) , it was observed by the apex court that there must be material to show when the just and equitable clause is invoked, that it is just and equitable not only to the persons applying for winding up, but also to the company and to all its shareholders. The Company Court will have to keep in mind the position of the company as a whole, and the interests of the shareholders and see that they do not suffer in a fight for power that ensues between two groups. It was also observed that in a given case, the principles of dissolution of partnership may apply squarely if the apparent structure of the company is not the real structure and on piercing the veil, it is found that in reality, it is a partnership. The justifiable lack of confidence in the conduct of management of the company's affairs is one of the factors and the interest of the shareholders of the company as a whole apart from the other interests have to be kept in mind at the time of consideration as to whether the principles of just and equitable clauses should be invoked. 33. If the particular group treats a company as its own personal business in-such a way as to destroy the shareholders' confidence, in the impartiality of administration, it may be one of the grounds for considering that it is just and equitable for winding up the company. No business activity has been carried on in accordance with the object for which the company was incorporated. Keeping the money locked in the bank may be at the request of one of the co-promoters, [but it] cannot justify that any activity was carried on. The shareholding of the company till date is stated to be only Rs. 4,300 whereas the claim of the petitioner is for a sum of Rs. 35.25 lakhs which is lying in the bank and there appears to be apparent differences between the petitioner and the respondent and even when an opportunity was given on 20.1.1995 to reconcile on the request of learned counsel for the respondent, no fruitful result has come, and as such, it should be considered that the interest for which the petitioner has prayed was for winding up which has to be considered on merits. 34. 34. The decision of Shamlal Gupta v. Hamco Industries (P) Ltd. (1995) 1 Comp LJ 534 (P&H) has been relied on wherein the question as to whether the claim of the petitioner has become time barred was considered and it was observed that the money was never meant to be kept by the company as deposit, but the same had been paid for allotment of shares in the name of the petitioner. Article 24 is a provision which specifically deals with the refund of money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use. It is this article which will govern the case in hand because the amount was paid to the company for the petitioner's use, i.e., for allotment of shares in his name. According to this article, the period of limitation of three years will begin to run from the date when the money is received, and since the period of three years has lapsed, it was considered that the claim is barred by limitation. In this case, the petitioner claimed that a cheque of Rs. 1,10,000 was encashed and the receipt of the amount is admitted by the company and the same was reflected in its balance sheet. The amount is shown towards share application money and is admitted. Such admission will not make the case of the petitioner barred by limitation. It may also be observed that the question of limitation does not arise in a case falling under section 433(c) and (f) and, therefore, the plea remains only academic. 35. The decision of Kalra Iron Stores v. Faridabad Fabricators (P) Ltd. (No. 2) (1992) 1 Comp LJ 310 (Del) has been relied on to show that the statutory notice is a mandatory requirement. In the case of the petitioner, it has been found that the notice has already been served and, therefore, this decision is of no assistance. 36. The decision of Jose J. Kadavil v. Malabar Industrial Co. Ltd. (1983) 2 Comp LJ 359 (Ker) has been relied on where the question was that the winding up should be the only alternative remedy, and no other efficacious remedy is available. 36. The decision of Jose J. Kadavil v. Malabar Industrial Co. Ltd. (1983) 2 Comp LJ 359 (Ker) has been relied on where the question was that the winding up should be the only alternative remedy, and no other efficacious remedy is available. This judgment is available only when the provision is based on the ground that it is just and equitable to wind up the company, the court in that case may refuse the order of winding up if other remedy is available to the petitioner ; but, here, the question of not commencing the business within a period of one year has also been raised ; therefore, this judgment cannot be applied. It is also claimed that the company is commercially solvent and having considerable assets and there are genuine disputes between the parties and on the other hand, the respondents are claiming the damages and, there- fore, the power under section 433(e) should not be exercised. So far as the question of any counter claim or disputed nature of claim of the petitioner is concerned, nothing has been pointed out, and it cannot be considered that there is any counter claim of the respondent for that reason, the amount was not paid. Even in the reply to the notice, no such assertion was made and even no arguments have been raised as to what extent the respondents are having any counter claim against the petitioner. The objection which has been raised is mainly on the ground that the amount is not a debt. Learned counsel for the respondents on the other hand has submitted that it is not debt, but he himself has submitted the judgment of Punjab and Haryana High Court in the case of Shamlal Gupta [Shamlal Gupta v. Hamco Industries (P) Ltd. (1995) 1 Comp LJ 534 (P&H)] , supra, where the amounts deposited towards share money were considered as debt but the claim was rejected on the ground that it is barred by limita- tion and it was also submitted that the amount has already been paid. The decision of Divya Export Enterprises v. Producin (P) Ltd. (1991) 2 Comp LJ 263 (Karn) referred to by the learned counsel for the respondent has no application. 37. The decision of Divya Export Enterprises v. Producin (P) Ltd. (1991) 2 Comp LJ 263 (Karn) referred to by the learned counsel for the respondent has no application. 37. Section 127 of the Barbados Companies Act, 1910, which is identical with section 222 of the [English] Companies Act, 1948, the various circumstances in which a company should be wound up have been given. In Loch v. J. Blackwood Ltd. (1924) All ER 200 (AC) , it was observed as under : "It is undoubtedly true that at the foundation of applications for winding up, on the 'just and equitable' rule, there must lie a justifiable lack of confidence in the conduct and management of the company's affairs. But this lack of confidence must be grounded on conduct of the directors, not in regard to their private life or affairs, but in regard to the company's business. Furthermore, the lack of confidence must spring not from dissatisfaction at being outvoted on the business affairs, or on what is called the domestic policy, of the company. On the other hand, wherever the lack of confidence is rested on a 'lack' of probity in the conduct of the company's affairs, then the former is justified by the latter, and it is under the statute just and equitable that the company be wound up." 38. The observation of Yenidje Tobacco Co., Re (1916) 2 Ch 426 (CA) , of Lord Cozens-Hardy, MR, as under [may also be noticed] : "I have treated it as a partnership, under the Partnership Act of course the application for a dissolution would take the form of an action ; but this is not a partnership strictly, it is not a case in which it can be dissolved by action. But ought not precisely the same principles to apply to a case like this where, in sub- stance it is a partnership in the form of the guise of a private company ? ... I think that in a case like this we are bound to say that circumstances which would justify the winding up of a partnership between these two by action are circumstances which should induce the court to exercise its jurisdiction under the just and equitable clause and to wind up the company. I have no intention of attempting a definition of the circumstances which amount to a 'just and equitable' clause. I have no intention of attempting a definition of the circumstances which amount to a 'just and equitable' clause. But I think I may say this. A shareholder puts his money into a company on certain conditions. The first of them is that the business in which he invests shall be limited to certain definite objects. The second is that it shall be carried on by certain persons elected in a specified way. And the third is that the business shall be conducted in accordance with certain principles of commercial administration defined in the statute, which provide some guarantee of commercial probity and efficiency. If shareholders find that these conditions or some of them are deliberately and consistently violated, and set aside by the action of a member and official of the company who holds an overwhelming voting power, and if the result of that is that, for the extrication of their rights as shareholders, they are deprived of the ordinary facilities, which compliance with the Companies Acts would provide them with, then there does arise, in my opinion, a situation in which it may be just and equitable for the court to wind up the company." 39. It is also stated that the petitioner was on the board of management till 27.9.1994 and no nomination was sent after 22.3.1994 and that there was a bona fide dispute and the petition has been filed with the ulterior motive - has no substance. The motive of the petitioner is very clear. The amount which was remitted towards share application money and shown in the balance sheet even on 31.3.1994 would be considered as acknowledged. The respondents were under the liability to make the payment when the demand was made. Non-making of the payment is one of the grounds besides that the company has failed to commence its business within a period of one year, and that it is just and equitable in the facts and circumstances of the case that the company be wound up and the official liquidator is directed to be appointed as liquidator of the company. He will take-over the assets and proceed in accordance with law. 40. The company petition is accordingly allowed. *******