M.S. LIBERHAN, C.J.
(1) THIS appeal arises out of an order declining to admit the Company Petition filed for winding up of the respondent-Company under Sections 433 (e) and (f) and 439 of the Companies Act, 1956. Narration of the following material facts is necessary so as to determine whether or not the company petition has to be admitted.
(2) IT is not in dispute that on 6-2-1994 an agreement was entered intobetween Ch. Savithri, S. Padma and Muralidhar on the one part (hereinafter referred to as the first party) and Sampat and V. Vijayalakshmi on the other part (hereinafter referred to as the second party) as regards payment of Rs. 3,53,330/ -. In pursuance of the same, the first party paid Rs.1,50,000/- to the second party and agreed to pay the balance amount of Rs.2,03,330/ -. Manner and mode of payment was also agreed upon between them and the first party had undertaken the pressing work and the amount due to the first party towards charges of pressing work done in the past was also to be taken into account in arriving at the value of Rs.2,03,330/ -. There are various other terms of contract. Clause 15 of the contract provides that in order to legalise the contract Board meeting shall be called and the contract will be ratified and intimated to the Registrar of Companies within one week thereof. It is not in dispute that the Board of Directors never ratified the contract. The appellant preferred a civil suit for recovery of Rs.7,89,575/- which includes the amount of Rs.82,500/- being the admitted amount shown by the respondent-Company in the balance sheet. In the impugned judgment reference has been made by the learned single Judge to the second clause of the agreement dated 6-2-1994 wherein it is provided that for the value of Rs.2,03,330/- the first party shall undertake the pressing work and the amount due to the first party towards the charges of pressing done in the past shall also be taken into account in arriving at the value of Rs. 1,03,330/- and that the first party was entitled to obtain receipt for the same from the second party.
(3) THE respondent contended that the respondent-Company had adjusted Rs.82,500/- against past pressing work done by the respondent-Company. Be that as it is, there is a bona fide civil dispute pending between the parties in the civil Court. The company is a running company. Mere showing of the part of the amount claimed in a civil suit in the balance sheet by itself is not a sufficient ground for admitting the company petition for liquidation. There is no gainsaying that the object of Section 433 of the Companies Act is to provide a summary remedy and save the shareholders or creditors of a company where the company is unable to meet its admitted liability. It has been umpteen number of times observed that proceeding under Section 433 of the Companies act is not a substitute for a civil suit by a creditor against the Company. No doubt, mere filing of a civil suit need not be an impediment to proceed with the company petition for winding up. Yet, it is a circumstance to be taken into consideration while arriving at the conclusion that the debt is admitted or there is a bona fide dispute with respect to the same and it has to be determined in an appropriate civil forum.
(4) CONCEDINGLY herein it is not disputed that the claim made in the civil suit for recovery includes the alleged amount with respect to which it is stated that it is admitted and the Company is unable to pay the same. Hence it is a part and parcel of the main claim. The question of limitation or the question whether the amount was adjusted by the Company for the work carried out by the company for the appellant are questions of fact which are required to be determined in a regular suit. It cannot be said that the. defence put forth is either frivolous or not bona fide especially when the appellant herself has approached the civil Court in order to determine the liability of the respondent- company. Thus, even if a part of the liability is admitted, that itself will not constitute an admitted amount due which a company is unable to pay nor, can it be inferred that the Company's liabilities are more than its assets and company is not able to discharge its liability or it requires the protection of the debtors by admitting the company petition for liquidation. Thus, we find no ground to interfere with the order of the learned single Judge in order to come to a conclusion that the summary proceedings under Section 433 be initiated to admit the petition for winding up.
(5) THE learned Counsel for the appellant relied on a decision of the Karnataka High Court in State Bank of India vs. Hegde and Golay Ltd. wherein it is observed that showing of an amount in a balance-sheet amounts to an acknowledgement in terms of the Indian (sic.) Limitation Act. Consequently, the amount having been admitted and the respondent having not paid the same, the petition required admission as laid down by the said judgment that civil suit as well as legal proceedings can continue simultaneously. Without expressing our opinion on the law laid down in the said judgment, though it cannot be categorically laid down that mere showing a debt due in a balance- sheet would amount to acknowledgment, we may observe that it is a well established law that for giving an acknowledgment, a person has to be conscious of his act to the knowledge of the other person. Merely showing a debt in a balance-sheet cannot, prima facie, as presently advised, be termed to be an acknowledgment in terms of the Indian (sic.) Limitation Act. The acknowledgment as envisaged by the Limitation Act categorically had to be with the intention of accepting the debt with the object of extending the limitation for recovery, which is not the case herein. Thus, we do not find the case in hand to be covered by the law laid down by the said judgment though we have our own doubts with respect to correctness of the law laid down in the said judgment.
(6) THE learned Counsel for the respondent relied on a decision of the Supreme Court in S. F. Mazda vs. Durga Prasad in order to contend that before the acknowledgment can be proved first the debt has to be proved and then the acknowledgment. No debt due to the company has been proved herein. The alleged agreement entered into by the first and second party was subject to the ratification by the Board of Directors which was never r
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atified. Thus, the company never incurred any liability muchless an admitted liability. Consequently, it is a bona fide dispute which requires to be determined in appropriate civil proceedings and such a course of action has already been initiated by the appellant herein by filing a civil suit. The company is a running company. By winding up the company the rights of shareholders or other creditors, cannot be jeopardised as the appellant would be representing all the creditors of the company in case of the admission of the company petition. Thus, in totality of the facts and circumstances of the case, we find no ground to interfere with the impugned order. The appeal is dismissed. There shall be no order as to costs.