JUDGMENT - S.S. NIJJAR, J.:---This petition has been filed under sections 433 and 434 of the Companies Act with a prayer that the Company be ordered to be wound up as it is unable to pay its debts. 2.The petitioners had granted to the Company a packing credit facility in foreign currency upto the limit of U.S. $ 15 lakhs. The aforesaid facility was sanctioned on 10th October, 1995. The terms and conditions for the sanction of the packing credit facility are mentioned therein. It is the case of the petitioner that in respect of the credit facility there is due and payable by the Company to the petitioner a sum of Rs. 3,20,91,096.02 towards the principal and a sum of Rs. 37,34,234.27 ps. towards interest upto 31st March, 1997. The Company was called upon to clear the dues from time to time. The petitioner received from the Company Cheque No. 473600 dated 29th March, 1997, for the sum of Rs. 3,37,65,064 drawn in favour of the petitioners to the Company account with Punjab National Bank, Bhosari Branch, Pune, with instructions to adjust the amount of the cheque towards the overdue export bills purchased payments due and payable to the petitioners. The petitioners accepted the above cheque towards the payment of their dues in pursuance to the Company's letter dated 27th March, 1997. The aforesaid cheque was dishonoured due to "insufficient funds". The petitioners stated that they had accepted the above cheque for value and the borrower has defaulted to make payment to the petitioner in respect of their dues. By Advocate's letter dated 9th April, 1997, the petitioners called upon the Company to pay the dues. In this letter it was also stated that the dishonour of a cheque is a criminal offence and that both the Company as well as the authorised signatory/director would be liable for prosecution under section 138 of the Negotiable Instruments Act, 1881, hereinafter referred to as "the Act". Statutory notice as required under sections 433 and 434 of the Companies Act was served on the Company dated 23rd April, 1997. Another notice was sent on 16th June, 1997 to the Company. However, no reply was received to the aforesaid notice. 3.An affidavit to oppose the admission of the petition was filed by the Company. Statutory notice as required under sections 433 and 434 of the Companies Act was served on the Company dated 23rd April, 1997. Another notice was sent on 16th June, 1997 to the Company. However, no reply was received to the aforesaid notice. 3.An affidavit to oppose the admission of the petition was filed by the Company. It is stated that the petitioners have not come to Court with clean hands and have suppressed important material facts. The Company is stated to be a reputed Company. It is further stated that the Company is a running Company employing about 30 employees. It is regularly paying its statutory dues. The Company is stated to be financially sound. The packing credit facility was granted to the respondent Company as a composite transaction on the basis of the purchase orders placed by one Neptune General Trading (LLC) of United Arab Emirates (hereinafter referred to as "Neptune"). Prior to the grant of the facility, the petitioners had themselves verified the purchase orders and the bona fides and/or creditworthiness of Neptune. It was only after due verification about the soundness of the foreign party that the petitioner advanced the sum to the Company. The respondent Company then procured the goods as per the purchase orders and supplied the same to Neptune. These goods were received and accepted by Neptune without any dispute or demur as regards quality or otherwise. In terms of the agreement of understanding between the petitioner and the respondent Company, the petitioners were fully secured before, during and after the export in the following manner. "(a) stocks/goods purchased from the said credit facility disbursements were hypothecated to the petitioners. (b) all shipping/export documents were routed through the petitioners and negotiated through/by the petitioners. (c) resultant book debts were hypothecated to the petitioners. (d) a direct assignment of the monies payable by Neptune General Trading to the respondents drawing a Bill of Exchange directly in favour of the petitioners and the same being accepted by the said Neptune General Trading, thereby discharging the respondents of any initial liability." However, Neptune Trading had delayed payment without denying their liability. Thus, according to the Company, the petitioners appropriate remedy at law, if any, is to file a suit and enforce the said security. It is further stated that the Company has to recover large sums of money from various other debtors. Thus, according to the Company, the petitioners appropriate remedy at law, if any, is to file a suit and enforce the said security. It is further stated that the Company has to recover large sums of money from various other debtors. Thus, large outstandings have caused a cash flow problem for the Company. However, all the book debts are hypothecated to the petitioners. It is further stated that Export Credit and Guarantee Corporation (ECGC) guarantees export incentive or assistance facilities granted by them such as the said packing credit facility. Thus the petitioners ought to have lodged a claim with the ECGC. It is stated that the petition has been filed with a view to pressurise the respondents to make payment of amounts not due and payable by them and to bypass the normal remedy stipulated by law. It is also the case of the Company that the cheque was given by way of security and was not intended to be encashed since the bills of exchange were made directly in favour of the petitioners. 4.The petitioners have filed a further affidavit in which it is stated that the petitioners purchased six export related bills of exchange aggregating to U.S. $ 9,78,130,50 (equivalent to Indian Rupees 3,49,48,602.76). In respect of the aforesaid bills the petitioners have received the following payments. "(a) Part payment of US Dollars 79,975/- (equivalent to Indian Rupees 28,57,506.75) has been received on 15th April, 1997, in respect of Bill No. 784/P/F02/02719 dated 16th April, 1996. (b) Payment of US Dollars 1,49,875.37 (equivalent to Indian Rupees 53,55,957.37) has been received on 6th November, 1997, in respect of Bill No. 784/P/F02/02716 dated 16th April, 1996." The amount claimed in the petition has been arrived at after giving credit for the part payment received. 5.Another affidavit has been filed by the Company on 19th March, 1999, in reply to the petition. It is stated that the earlier affidavit dated 27th April, 1998 was filed to oppose the admission of the petition. It is pleaded that the petition is wholly devoid of any material particulars as regards the disbursement made by the petitioners under the export credit facility. In the export order dated 25th September, 1995 Neptune Trading were to make payment within 180 days from the date of Bill of lading directly to the Company's Bankers viz. Punjab National Bank, Bhosari, Pune. In the export order dated 25th September, 1995 Neptune Trading were to make payment within 180 days from the date of Bill of lading directly to the Company's Bankers viz. Punjab National Bank, Bhosari, Pune. However, at the insistence of the petitioners the Company executed bills of exchange drawn upon Neptune payable directly to the petitioner. The petitioner forwarded the export documents together with the bills of exchange to their Correspondent Bank viz. Bank of Baroda, Sharjah, U.A.E. for negotiations thereof with Neptune. Specific direction was given to collect the recovery from Neptune directly to the petitioners at New York account. The petitioners had also directed the Bank of Baroda to hand over the export documents of title only against acceptance of the bills of exchange. Till date petitioners have not revealed any particulars as to whether the bills of exchange were presented for acceptance. There are no particulars about the presentation of the bills of exchange for payment or the dishonour thereof. Further there are no particulars about noting or protesting, in accordance with the universal practice in international trade. The petitioners in fact from time to time informed the respondent Company as follows:-- "the proceeds of the bill have been used to liquidate your packing credit". 6.It has been submitted by Mr. Madon, learned Counsel appearing for the petitioner, that the Company is insolvent. The defences raised by the Company are not bona fide. They have no substance in them whatsoever. In fact, the defences put forward are lawyers defences. It is a matter of record that the cheque issued by the Company has been dishonoured for insufficient funds. The petition has been filed on the basis of the dishonour of the cheque. It is also a matter of record that packing credit facility was granted and the money was disbursed to the Company from 20th November, 1995 to 5th December, 1995. Immediately the account of the Company was debited. The Company had agreed to make the payment. Even guarantee had been given by the sister concern. The bills of exchange have been discounted/purchased. The Company has been given credit for the payments made by Neptune. It is submitted that by virtue of a Packing Export facility, the exporter gets the money immediately to carry out its export obligations. The foreign buyer also gets a period of six months to make the payment. The bills of exchange have been discounted/purchased. The Company has been given credit for the payments made by Neptune. It is submitted that by virtue of a Packing Export facility, the exporter gets the money immediately to carry out its export obligations. The foreign buyer also gets a period of six months to make the payment. However, in this case, the foreign buyer failed to live up to its obligations. Knowing fully well that the payments have not been made by Neptune as required under the packing credit facility the Company issued the cheque. This cheque has been dishonoured. Thus the Company is unable to pay its debts and deserves to be wound up. 7.Mr. Mody, learned Counsel appearing for the Company, has however submitted that the petitioners have suppressed material facts about the transaction. In the rejoinder, only partial admissions are made. He submitted that the liability can only be on bills of exchange which had been executed directly in favour of the petitioner. He relied on various provisions of the Act particularly sections 30, 37, 61, 64, 99 and 106. Relying on these sections he submitted that the liability of the drawer of a bill of exchange is until acceptance by the drawee. After that liability recommences only on presentation for payment and on a notice of dishonour. If the bill is not presented for acceptance or payment, then the drawer is not liable at all. He submits that there is no material on the record to show: (a) as to whether the bills of exchange were presented for acceptance. (b) If presented, in that case when and by whom. (c) Whether the bill of exchange were presented for payment, if so, when and by whom. (d) There are no details about the dishonour of the bills of exchange upon presentation for payment. No notice of dishonour has been served upon the Company. According to Mr. Mody these are matters of evidence and can only be gone into in a civil suit. These facts are in the exclusive knowledge of the petitioner. The arrangement between the Correspondent Bank of the petitioner i.e. Bank of Baroda, Sharjah, W.A.E. and the petitioners to transmit the amount directly to the petitioners account in U.S.A. is also within the exclusive knowledge of the petitioners and their Correspondent Bank. These facts are in the exclusive knowledge of the petitioner. The arrangement between the Correspondent Bank of the petitioner i.e. Bank of Baroda, Sharjah, W.A.E. and the petitioners to transmit the amount directly to the petitioners account in U.S.A. is also within the exclusive knowledge of the petitioners and their Correspondent Bank. He has laid considerable stress on the point that notice of dishonour has not been given as required by section 106 of the Act. In such circumstances he submits that the liability of the Company was discharged. In support of this proposition, the learned Counsel has relied upon decisions reported in 1929 A.I.R. Lahore, 577 (Bahadur Chand Prabh Dial v. Gulab Rai)1, and A.I.R. 1958 Punjab 222 (F. Nanak Chand Ramkishan Das v. Lal Chand Ganeshi Lal and others)2. He has further submitted that the cheque per se cannot give a cause of action to the petitioners. The cheque is drawn on self. Therefore, the petitioner does not become either payee of the cheque or holder in due course. It is for this reason, according to Mr. Mody, that the petitioners have relied upon the letter dated 27th March, 1997, to make out a cause of action. He submits that in such circumstances the Company petition is not the appropriate remedy. If a suit was to be filed by the petitioners. Neptune General Trading would be a necessary party. In any event it would be open to the Company to give a third party notice to Neptune in order to substantiate its claim. On the other hand Mr. Madon has submitted that by virtue of section 98 sub-section (c) and (g) notice of dishonour was not required at all. He submits that the goods were exported in April, 1996. Dishonour of the cheque was in September, 1997. By virtue of Clause (g) of section 98 no notice of dishonour is required, if no prejudice is caused to the Company. In the present case the Company was well aware of the fact that the bills of exchange which had been purchased by the bank have been dishonoured by Neptune. It is for this reason that the Company sent a cheque on 27-3-97 which was dishonoured. The aforesaid cheque was sent almost a year after the bills of exchange have been purchased. The Company knew very well, according to Mr. It is for this reason that the Company sent a cheque on 27-3-97 which was dishonoured. The aforesaid cheque was sent almost a year after the bills of exchange have been purchased. The Company knew very well, according to Mr. Madon, that the bills of exchange have to be honoured within 180 days. It is further submitted that the conduct of the Company also clearly goes to show that they were aware of the liability. Even if the cheque was given by way of security it would clearly indicate that the Company had accepted the fact that there was a debt due. The security is only given to secure repayment of the amounts due. The Company never replied to the statutory notice. With regard to the guarantee of ECGC it is stated that the same is not mandatory. 8.I have considered the respective argument put forward by the learned Counsel. The decision given in the case of Bahadur Chand (supra) deals with a case of hundi payable at sight. It is held that a perusal of section 106 of the Act leaves no doubt that the notice of dishonour should be given as soon as the bill is dishonoured. It is the duty of the holder to prove that due notice was given and if not given, he was excused from doing so for any of the reasons specified in section 98. The omission to give due notice of dishonour has the effect of discharging the persons who are entitled to sub-holding. In that case there was a delay of 27 days in giving notice and this was held to be unreasonable. The drawers were consequently absolved from liability by reason of the holders' failure to give notice of dishonour within a reasonable time. Similarly in the case of Nanak Chand (supra) the Division Bench of the Punjab High Court held that where the holder of a hundi payable at sight, without presenting it for acceptance, presents the same to the drawee for payment and the hundi is dishonoured, notice of dishonour to the drawer is necessary and where the same is not given within a reasonable time, the drawer is absolved of his liability on the hundi. In my view, the aforesaid judgments are of no avail to the Company herein. The petitioners have come to Court on the dishonour of a cheque. This cheque according to Mr. In my view, the aforesaid judgments are of no avail to the Company herein. The petitioners have come to Court on the dishonour of a cheque. This cheque according to Mr. Mody, was given as security for due discharge of the liabilities of the Company. The Company has taken the plea that the debt of the petitioners were fully secured in the following manner. "(a) stocks/goods purchased from the said credit facility disbursements were hypothecated to the petitioners." Insufficient notice has been raised by Mr. Mody, it merits due consideration. Having considered the argument of Mr. Mody, I find no merit in the same. The case put forward by Mr. Mody is squarely covered by section 98 of the Act. This section clearly provides that no notice of dishonour is necessary when the party charged could not suffer damage for want of notice. The Lahore High Court in the case of Bahadur Chand (supra) has laid down that section 106 is subject to the provisions of section 98 of the Act, which culls out exceptions to the requirement of notice as provided in section 106. From the conduct of the Company, it is apparent that they were aware of the liability. Thus, no prejudice could be said to have been caused. Thus clearly the case of the Company falls under section 98(c). The case of the petitioner is further strengthened by the fact that the cheque was sent by the Company to the petitioner on 27-3-97. This was almost one year after the execution of the Bills of Exchange. There would be no other reason for the Company to sent the cheque but for the discharge of the debt. Section 98(g) provides that no notice of dishonour is necessary when the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument. Issuing of a cheque is unconditional promise to make payment. A rebuttable presumption arise by the operation of section 118 read with section 139 of the Act that the cheque is given for consideration and for discharge of a debt or a part of a debt. Section 118 provides that until the contrary is proved there shall be a presumption of every negotiable instrument was made or drawn for consideration. A rebuttable presumption arise by the operation of section 118 read with section 139 of the Act that the cheque is given for consideration and for discharge of a debt or a part of a debt. Section 118 provides that until the contrary is proved there shall be a presumption of every negotiable instrument was made or drawn for consideration. Section 139 provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. Thus, when the cheque was issued by the Company with a forwarding letter to the effect that the same is towards adjustment of overdue export bills purchased, there can be no manner of doubt that the aforesaid cheque was issued in discharge of debts due and payable to the petitioner by the Company. Therefore, the petitioner is entitled to claim the benefit of section 98(g). In my view there is no infringement of section 106 by the petitioner. In such circumstances I find that even if the petition is filed on dishonour of the Bills of Exchange, no meaningful defence has been raised by the Company. Surprisingly Neptune has made part payment on 15-4-97and 6-11-97. Thus, it is evident that even Neptune has accepted the liability. 9.In my view, the defences raised by the Company are without substance. The Company is clearly unable to pay its debts as no amount has been paid inspite of the service of the statutory notice. On the one hand the Company is pleading that it is financially sound. On the other hand it is pleaded that the Company has been unable to realise the amounts of money which are due from its debtors. Thus, it is pleaded that there has been delay in making the necessary payment. 10.In view of the above the petition is made absolute in terms of prayer clauses (a), (b) except the bracketed portion and (e). Thus, it is pleaded that there has been delay in making the necessary payment. 10.In view of the above the petition is made absolute in terms of prayer clauses (a), (b) except the bracketed portion and (e). Prayer clauses (a), (b) and (e) read as under: "(a) Sunmick Export Private Limited be wound up by and under the orders and directions of this Hon'ble Court; (b) the Official Liquidator attached to this Hon'ble Court (or some other fit and proper person) be appointed as liquidator of Sunmick Export Private Limited, with all powers under the Companies Act, 1956 including the power to take charge of all the assets of Sunmick Export Private Limited, to conduct its affairs in the course of winding up and to distribute its assets in accordance with law. (e) the costs of this petition be provided." The petitioner is directed to publish the winding up order in Free Press Journal and Janmabhoomi within a period of four weeks from today. Drawn up order is dispensed with. The Official Liquidator not to proceed for a period of eight weeks. The Official Liquidator to act on an ordinary copy of this Order duly authenticated by the Company Registrar of this Court. Certified copy expedited. Petition made absolute. -----