( 1 ) THE petitioner who is a Non Resident Indian residing in u. S. A. , has filed this petition seeking winding up of the respondent company (hereinafter referred to as the Company ). He had remitted a sum of US$ 1,00,000 to the respondent company. Making of this payment by the petitioner to the respondent company is not in dispute. The petitioner states that he is entitled to receive back this amount which is a debt the respondent owes to the petitioner and as this liability is not discharged in spite of service of statutory notice dated 31. 3. 1997 under Section 433 and 434 of the Indian Companies Act,1956, it be deemed that respondent is unable to pay the debt and, therefore, winding up of the respondent company under Section 433, 434 and 439 of the Companies Act,1956 is prayed for. The defence of the Company is that the amount in question was remitted as application money for allotment of equity shares of the company to the petitioner and, therefore, there is no question of any refund of this amount to the petitioner. According to the company, the petitioner is only entitled to receive the equity shares of the company which company is still willing and ready to allot and it does not owe any debt. It is in this back drop that the determination of real nature of transaction between the parties would decide the fate of the company petition.

( 2 ) AFTER describing the controversy between the parties, it would be appropriate at this stage to take note of the relevant facts involving this controversy and to know as to how transaction between the parties took place.

( 3 ) AS per the facts unfolded in the petition, in or about the year 1995 Mr. Shakat Singh, the Managing Director of the company met the petitioner on several occasions and also spoke to him over the telephone representing that the company was to establish 56 Super Speciality Hospitals, polyclinics and Diagnostic centres in various cities in India and that the company was being promoted by a consortium which included the world s most known health care companies and gave certain other details of the venture including the total project cost which would be around 25 million US dollors. On these representations petitioner agreed to acquire shares worth US $ 5 lacs initially vide his letter/fax dated 27. 10. 1995. The respondent company agreed to offer an equity stake equivalent to US$ 2. 5 lacs. The petitioner remitted US$ 1 lac in the account of the company with the ANZ Bank, New delhi on 8. 11. 1995 which was duly acknowledged by the company through its officers vide letter/fax dated 8. 11. 1995. In the letter/fax dated 9. 11. 1995 by the respondent company, it was, however, stated that a declaration duly signed by the petitioner stating that he had no objection to the remittance of US $ 1 lac being reflected as an interest free loan in the books of the company pending approval to be granted by the Government of India for issue of shares to Non Residents, be sent to the company. However, the petitioner did not sign this declaration and came to know that in fact the company did not have necessary clearance from the Reserve Bank of india to receive funds from a person like the petitioner as foreign equity. Thereafter the Managing Director of the company sent another fax dated 24. 11. 1995 asking the petitioner to make balance payment of US$ 1. 5 lacs and if the same is not received by 1. 12. 1995 the unpaid equity to that extent would be offered to others and the company would not obtain the consultancy services of the petitioner company for the project in question.

( 4 ) FEW months later, vide another fax dated 26. 6. 1996, the company through its Executive Director confirmed that the petitioner s contribution of us $ 1 lac had been credited towards the equity share application money account and that an application form for issue of shares was being enclosed for being filled up by the petitioner. On receipt of this application form with the instructions