A winding up order will not be made on the petition of a person claiming to be a creditor of the company without satisfying itself that the petitioner is in fact such a creditor.

( 1 ) THIS is an appeal from an order refusing to wind up the respondent company, Buxar Oil and Rice Mills Ltd.

( 2 ) THE case of the appellants is that the company issued 300 debentures of Rs. 1,000/- each and executed a debenture trust deed dated 1-3-1954, by which valuable lands, factory buildings, machinery plant and tools appertaining to its factory at Buxar were mortgaged to secure the repayment of the debentures. The appellants are the trustees for the debenture holders appointed by the trust deed. Their further case is that interest since June 1955 payable to the debenture-holders is in arrears that the security constituted by the trust deed became enforceable, that on 7-8-1958 they served upon the company the requisite statutory notice under Section 434 of the Indian Companies Act and that in spite of the notice the company failed and neglected to pay the dues of the debenture-holders. The appellants presented this winding up petition on 15-9-1958. They contend that the company is unable to pay its debts and also that it is just and equitable to wind up the company.

( 3 ) THE company has its registered office in Calcutta. It has an oil and rice mill and factory at Buxar. In this appeal we shall have to notice three sets of transactions entered into by the company viz. (a) the debentures and the debenture trust deed, (b) a lease of lands and machineries in Buxar executed by the company in favour of one Shahabad Industries (Private) Limited, (c) a transaction of loan of Rs. 65,000/- obtained by the company from the respondent Sitaram Bhartia.

( 4 ) THE respondent Sitaram Bhartia, who is an unsecured creditor of the company, opposed the winding up order. No other creditor appeared at the hearing of the application. Apparently, the company also opposed the winding up order. On 17-2-1959, P. B. Mukharji, J. , refused to make the winding up order. The case of Sitaram Bhartia is that the debentures were issued without consideration and that the debentures and the debenture trust deed are fictitious and void documents and were brought into existence by the company fraudulently in order to defeat the claim of its creditors.

( 5 ) IT appears that Sitaram Bhartia lent and advanced a sum of Rs. 65,000/- to the company on 1-6-1949. He instituted a suit for the recovery of his dues in this High Court on 29-5-1952. He obtained a decree against the company for the sum of Rs. 76,600/- with interest and costs on 15-2-1956. The company preferred an appeal from the decree. On 9-4-1956 the Appellate Court passed an order staying execution of the decree, conditionally, on the company depositing Rs. 35,000/- with the Registrar and furnishing security for Rs. 45,000/- within one month from the date of the order. The company could not make the deposit or furnish the security. On 25-6-1956, the decree-holder obtained an order for transmission, of the decree to the District Court at Arrah. In September 1956 the decree was transmitted to the Arrah Court. On 7-11-1956, the decree-holder applied in the Arrah Court for execution of his decree. On 15-11-1956, the Arrah Court passed an order of attachment of the immovables and machinery belonging to the company. On June 27 and again on 7-8-1958 the Arrah Court passed orders for sale of the attached properties.

( 6 ) DURING the pendency of the suit of Sitaram Bhartia, the company executed the lease dated 9-8-1956 in favour of Shahabad Industries (Private) Ltd. By that lease the company demised to Shahabad Industries (Private) Limited its lands, factory buildings, machinery plant and tools appertaining to the factory at Buxar for a term of 5 years with an option of renewal for a further period of 5 years at a monthly rent of Rs. 1,500. The case of Sitaram Bhartia is that this lease was fraudulently brought into existence by the company with a view to obstruct the execution of his decree and that in reality the lease is a paper device and a colourable and collusive transaction. There