( 1 ) THIS Company Petition, under secs. 433 (e) and 434 of the Companies Act, 1956 (for short the Companies Act ) is filed by M/s. National Research Development corporation, praying to pass an order of winding up against the respondent, namely m/s. Electro Flux (P) Ltd. , and to appoint the official Liquidator attached to this Court, as provisional Liquidator to take custody of its assets.

( 2 ) THE petitioner, which is a Government of India enterprise, is a leading research organization in the country. The petitioner states that the respondent approached them for "know how" to manufacture submerged arc Welding Flux, and to grant them permission to use the invention with an assurance that they would pay premium and royalty. Accordingly, an agreement was entered into by the petitioner with the respondent on 1-3-1984, whereunder the respondent agreed to pay royalty of rs. 15,000/- and licence fee for a period of ten years and 2. 5% of the proceeds on net ex-factory sale price.

( 3 ) THE petitioner further states that as per the agreement, they developed "know how" for the manufacture of submerged Arc welding Flux as required by the respondent, and the respondent having utilized and enjoyed the "know how" for their commercial purposes and having made profits, did not pay the royalty as agreed and committed default, and utilized the entire sale proceeds to their advantage.

( 4 ) DUE to non-payment of royalty by the respondent, disputes arose between the petitioner and the respondent, which in terms of the arbitration clause in the agreement, were referred to a sole arbitrator. Before the Arbitrator, the disputes referred by the petitioner were contested by the respondent. Ultimately, the Arbitrator passed an award on 23-3-1994, for rs. 2,40,912/-, which subsequently, was made the rule of the Court, and as such, the respondent was due and liable to pay a sum of Rs. 2,40,912/- to the petitioner under the award.

( 5 ) CALLING upon the respondent to pay the amount of Rs. 2,40,912/- awarded by the arbitrator under the award, the petitioner got issued legal notice dated 8-5-2002, which the respondent having received, failed to pay the amount, and therefore, the petitioner filed the present Company Petition for winding up of the respondent contending that as the respondent is unable to pay the amount awarded by the Arbitrator under, it should be deemed that it has become commercially insolvent, and is therefore, liable to be wound up.

( 6 ) HEARD the learned counsel for the petitioner. The learned counsel for petitioner submitted that as required by the respondent, the petitioner provided "know how" for manufacture of submerged Arc welding Flux to the respondent, and though in terms of the agreement entered into for providing the "know how", the respondent agreed to pay royalty on the sale of the products, the respondent did not pay any, royalty. Therefore, in terms of the arbitration. , clause in the agreement, the matter was referred to arbitration, and the sole arbitrator, passed an award for rs. 2,40,912/-, which ultimately was made rule of the Court. Thereafter, though the petitioner got issued legal notice dated 8-5-2002 calling upon the respondent to pay the amount under the award, the respondent having received the notice, failed to pay the amount, which amounts to not satisfying the award, which became the rule of the Court, and therefore, the respondent should be deemed to have become commercially insolvent, and an order for its winding up is required to be passed.

( 7 ) THE only question that arises for consideration is whether a Company petition, filed under Sections 433 (e) and 434 of the Companies Act, for winding up of a company, for non-payment of the amount awarded by the Arbitrator under an award, which subsequently became the rule of the court, is maintainable, on the ground that it has become commercially insolvent?

( 8 ) THE answer to this question, in my considered view, should be in the negative. T