Petition u/s 434(1)(a) not excluded by the provisions of Section 434(1)(b).

ISMAIL J.

This is an appeal against the order of Ramaprasada Rao J., as he then was, dated 6th October, 1977, made in Company Petition No. 96 of 1974 directing the winding up of the appellant-company under the provisions of the Companies Act, 1956, hereinafter referred to as the Act. The facts are not in controversy. The first respondent herein obtained a decree in the City Civil Court, Madras, against the appellant. herein in O. S. No. 3032 of 1966 for a sum of Rs. 17, 093.06 with further interest. The first respondent issued a notice as contemplated in s. 434(1) of the Act. The first notice was returned as "left" and to a second notice issued to the appellant, there was a reply that the original decree under Ex. P-1 was only an ex-parte decree and that efforts were being made to have the same set aside. However, at the time when the matter came to be disposed of by the learned judge, it was not in dispute that the attempt to have the ex parte decree set aside had failed and that the said decree had become final and effective. In view of this, the point that was urged before the learned judge was that since the first respondent had obtained a decree, it had to proceed under s. 434(1)(b) of the Act and not under s. 434(1)(a) of the Act and that in this case the requirements of s. 434(1)(b) had not been satisfied, since the decree had not been put into execution. The learned judge held that even a person who had obtained a decree against a company can take proceedings under s. 434(1)(a) of the Act, that he was not constrained to proceed only under s. 434(1)(b) and that consequently the company petition filed by the first respondent under s. 434(1)(a) of the Act was maintainable. It is the correctness of this conclusion of the learned judge that is challenged in the present appeal.Section 433 of the Act states that a company may be wound up by the court in the circumstances enumerated in cls. (a) to (f). One of the circumstances mentioned therein is "if the company is unable to pay its debts"[s. 433(e)]. Section 434 deals with the question as to when a company shall be deemed to be unable to pay its debts. In this context, the language of s. 434(1), which is relevant is as follows :

"434. (1) A company shall be deemed to be unable to pay its debts.--

(a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding five hundred rupees then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor ;

(b) if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part ; or

(c) if it is proved to the satisfaction of the court that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company.

The controversy that had to be considered in this case was whether the first respondent herein, since it happened to be a decree-holder against the appellant, should be compelled to proceed under s. 434(1)(b) and should not be permitted to avail itself of the provisions contained in s. 434(1)(a) of the Act or not. The learned judge, as we have already pointed out, has held that even a person who has obtained a decree, in the present case the first respondent herein, can take proceedings under s. 434(1)(a) of the Act.It is true that s. 434(1)(a) deals with the case of a creditor to whom the company is indebted in a sum of exceeding Rs.500 then due and his serving on the company a demand under his hand requiring the company to pay the sum so due and the company neglecting to pay the sum or to make satisfactory