The main legal point established in the judgment is that a reasonably plausible defense available to the company would require the parties to be relegated to proceedings before the civil court, and the company petition should not be used as a measure to enforce payment.

1. - This petition is filed under Sections 433, 434 and 439 of the Companies Act, 1956 (for short "the Act") for winding up of the respondent-company, duly incorporated under the provisions of the Act, having its registered office at H-115, Malviya Industrial Area, Jaipur. The respondent-company is carrying on business of production of copper wire and selling the same throughout the country. For the purposes of manufacture the company purchases copper bars from open market as well as from MMTC and Hindustan Copper Ltd. (HCL).

2. It is alleged that on May 25, 1992, the respondent-company requested for giving financial assistance by way of loan of Rs. 1,30,000 for purchase of raw material from HCL. The petitioner purchased demand draft No. 277194 dated May 29, 1992, drawn on the Punjab National Bank of Rs. 1,30,000 and delivered it to the authorised representative of the respondent-company. The demand draft was given to HCL. Thereafter, vide letter dated June 6, 1992, again the respondent-company requested for giving financial assistance of Rs. 1,50,000. The petitioner purchased demand draft No, 227231 dated June 8, 1992, drawn on Punjab National Bank of Rs. 1,50,000 and handed it over to the authorised representative of the respondent-company. The respondent-company delivered it to HCL for purchase of copper, bars. On June 10, 1992, the respondent-company issued a receipt-cum-Ietter acknowledging the payments made by the petitioner by way of two demand drafts to the value of Rs. 2,80,000, to the respondent-company as loan on interest at the rate of 15 per cent. per annum payable quarterly. The respondent-company neither repaid the loan amount nor paid any interest but has acknowledged the said outstanding amount to the petitioner vide issuing letters dated March 7, 1994, August 20, 1995, and also July 26, 1997. The petitioner came to know that in the manner in which the affairs of the respondent-company are managed it will not be in a position to repay the loan amount to the creditors. The petitioner has also come to know that there are a number of creditors, namely, Smt. Kamla Tandon, Smt. Kusum Caupra and Smt. Krishna Tandon, to whom the company owes various amounts and is unable to repay it. Various demands were made by the petitioner for repayment of the loan amount with interest as agreed, however as no repayment was forthcoming, the petitioner finally sent notice of demand to the respondent-company dated January 23, 1998, calling upon it to make payment of Rs. 2,80,000 along with 15 per cent. compoundable interest from the date of payment. The total sum due against the respondent-company towards principal and interest amount was Rs. 6,44,300. As the respondent-company failed to repay the amount in spite of the statutory notice given under the Act, the present petition for winding up of the company is filed.

3. After notice was issued by this court the respondent-company entered appearance and submitted reply denying its liability. It is alleged that the claim made by the petitioner was based on manipulations, forged documents, issue of false and antedated documents and the respondent-company does not owe any amount to the petitioner. The fraud was being played by manipulation and preparation of the false documents with the aid of ex-director Mr. V. N. Tandon to whom the petitioner is related as brother-in-law. The petitioner Mr. H. N. Tandon is the husband of the sister of Mr. V. N. Tandon, Smt. Krishna Tandon. Mr. V. N. Tandon was director of the petitioner-company from September 6, 1990, to January 12, 1998, till he resigned. The details of directors of the respondent-company from its inception are thus-