ORDER RANA BHGWANDAS, J. - By this petition under section 305, 306 of the Companies Ordinance 1984 (hereinafter referred to as the Ordinance), the petitioner seeks an order for winding up of the respondent company for the reason that there is a running account between the parties and the latter has shown their inability to clear their outstanding dues amounting to Rs. 3,19,752/- for the consignment cleared on 20.7.1991 and a sum of Rs. 2,34,692.00 for the consignment cleared on 8.8.1991. It is alleged that though the respondents have paid the petitioner a huge amount on account of their outstanding dues, despite repeated notices and fax messages they have failed to discharge their liability and thus company is not commercially solvent nor in a position to pay outstanding debt.
2. Respondent company through their counter-affidavit denied the various allegations and stated that the petition is without any merit filed with malice, frivolous, vexatious and brought with an ulterior motive to pressurise them to pay the disputed claim. On merits, they stated during the period between 23.7.1990 to 23.5.1992 petitioners received total amount of Rs. 97,20,807/- mostly as "on account" payments without any proof or accounting. Various documents have been filed to show that the respondent company is commercially solvent and able to pay debts and in fact not liable to pay the debt of the petitioner.
3. At the hearing, learned counsel for the petitioner vehemently contended that the respondent company having failed to pay up outstanding dues to the petitioner despite repeated notices, fax messages and statutory notice before the institution of the petition is commercially insolvent and not in a position to meet its liability. On the other hand, it was urged on behalf of the company that there being a running account between the parties and the respondents having paid a sum of Rs.
97,20,807/- during a period of less than two years towards the claim of the petitioner cannot be termed as commercially insolvent by any stretch of reasoning. With reference to the balance sheet for 1993 for the period ending 31.12.1993. It was pointed that the company despite having shown its disputed and contingent liabilities earned pre-tax profits to the tune of Rs. 2,39,713/-. After the payment of tax, the company earned Rs. 1,22,713/- and unappropriated profits worth Rs. 6,52,255/- were carried over to the next year. Faced with this balance sheet, learned counsel for the petitioners contended that profits earned on huge investment are too inadequate and much less than the average profits earned on investments in commercial banks. Learned counsel also referred to the liabilities shown in the balance sheet including that relating to the petitioner but the argument advanced on behalf of the respondent company is that under the Income Tax laws, assessee are required to acknowledge their debts, present and future liabilities even if not admitted and disputed.
4. On an assessm ent of the material on record, I am of the view that settlement of disputed claims between the parties cannot be undertaken in the exercise of the company jurisdiction which is unique in its nature. Debt or claim of a party against a company cannot be settled in winding up proceedings which are not a substitute for sorting out the dispute before a Court of plenary jurisdiction. At any rate, the presumption drawn on this account in terms of section 306(8) of the Ordinance is completely misconceived. It was contended that the Muslim Commercial Bank Limited had obtained a decree over Rs. 7,00,00,000/- (Rupees seven Crores) which was not satisfied by the respondent company which is indicative of the circumstance that the company is unable to pay heavy debts. It is not necessary to deal with this aspect of the case because the petitioner has not been able to establish that the company is unable to pay up heavy debts including that of the petitioner.
5. In support of the petition, learned counsel for the petitioner referred to the Supreme Court judgment in Sind Glass Industries Limited v. National Development Finance Corporation and others (PLD 1996 S.C. 601) which does not advance the case of the petitioner as in the present case the debt of the petitioner is neither admitted nor established. For the sake of guidance relevant paragraph from the reported case may be reproduced which reads as under:- "Under section 306(l)(a), if a creditor serves a notice for repayment of the amount due as specified in this provision, by registered post, demanding it to pay the sum due and the company refuses or neglects to pay for 30 days thereafter or to secure or compound to the reasonable satisfaction of the creditor, then the company shall be deemed to be unable to pay its debt. In such circumstances, presumption will be that the company is unable to pay its debt. This would be a sufficient proof of company's inability to pay its debt, but such presumption is rebuttable and if the company is able to show that it has sufficient assets to pay the debts, then the Court will inquire into it to satisfy itself whether it is unable to pay the debts. In order to discharge this burden, the company cannot by mere denial of liability avoid winding up action under this provision. It is the first and foremost duty of the creditor to show that an amount as required by law is due and the company is indebted in a sum of money presently due and payable. The inability to pay an undisputed debt as a rule may lead too a conclusive proof of the fact that the company is unable to pay debts, however, when the company disputes any debts, it should bring forth sufficient material to rebut the presumption arising from section 306(1 )(a) that the debt is either not due or there is a bona fide dispute. Mere flat denial without showing that there exists bona fide-and genuine dispute about the indebtedness will not displace the presumption of inability to pay".
For the aforesaid facts and reasons, there is no merit in this petition which must fail and is hereby dismissed.