Issuance of notice in trhe name of M.D. not found in conformity with the provisions of the Section.

LAKSHMANAN J.

This is a petition under sections 433(e) and (f), 434(1)(a) and 439(1)(a) and (b) of the Companies Act, 1956, for winding up of the respondent-company. It is stated in the petition that the respondent is justly and duly indebted to the petitioner in a sum of Rs. 1, 36, 525 being the amount due on account of failure in supplying seven tonnes of paper in spite of receiving money in advance for ten tonnes, compensation for loss due to breach of contract and expenditure caused by the respondent to the petitioner. According to the petitioner, he approached the respondent for supply of ten tonnes of 10 kg. poster paper and paid an advance of Rs. 1, 78, 200 on June 21, 1989. The said money was paid by means of a demand draft drawn on the Bank of Baroda, Vellore branch, in favour of the respondent. It is the further case of the petitioner that the company supplied only three tonnes of paper and failed to supply the remaining seven tonnes. The value of three tonnes of paper is only Rs. 53, 070 excluding tax. On account of the non-supply of seven tonnes of paper by the respondent, the petitioner could not fulfil his obligation towards his customer, one Royal Agencies, with whom the petitioner had entered into a contract for the supply of ten tonnes of paper. The petitioner states that he had incurred a loss of Rs. 10, 395 due to the breach of contract committed by the respondent. A notice of demand was issued through an advocate by the petitioner on September 9, 1989, for which the respondent sent an evasive reply. This notice was issued under section 434 of the Companies Act. In the above circumstances, the petitioner prays for the winding up of the respondent-company. The respondent has filed a counter-affidavit denying the claim of the petitioner that it is indebted in a sum of Rs. 1, 36, 525. According to the respondent, the demand draft for Rs. 1, 78, 200 dated June 21, 1989, was received by the respondent from its indentor, Efficient Enterprises, which has given specific instructions to appropriate the amount covered by the demand draft towards the dues of the petitioner and supply of three tonnes of poster paper. Accordingly, the respondent carried out the instructions given by the indentor and supplied three tonnes of paper to Royal Agencies and appropriated the balance towards the dues of the petitioner. The respondent had denied knowledge of the contract said to have been entered into by the petitioner with Royal Agencies. It is the claim of the respondent that, even after adjustments, a sum of Rs. 54, 642 together with interest is outstanding in the account of the petitioner. Efficient Enterprises have filed O. S. No. 389 of 1989 in the Court of Sub-judge, Sankari, against the petitioner for the recovery of Rs. 54, 642 in respect of the transaction in question. It is the case of the respondent that no notice was issued as envisaged by section 434(1)(a) of the Companies Act, that the notice issued by the petitioner was addressed to the managing director and not to the company and that such notice was not addressed to the registered office of the company. It is the specific case of the respondent that no amounts were due to the petitioner and the application for winding up has been filed with mala fide intentions.The petitioner examined himself as PW-1 and the accounts officer of the respondent-company has been examined as RW-1. Both the petitioner and the respondent have filed documents in support of their respective cases. I have heard Mr. Jayachandran, learned counsel for the petitioner, and Mr. A. L. Somayaji, learned senior counsel for the respondent.

Though the petition refers to section 433(f) of the Companies Act, learned counsel for the petitioner, confined his case only to sub-section (e) of section 433 of the Companies Act, hereinafter referred to as "the Act". Therefore, the present petition is based on the ground that the respondent is unable to pay its debts. According to the respondent, th