company may be wound up by the court-
the company is unable to pay its debts.
For the purpose of this section, a debt is a sum of
money which is now payable or will be payable in future by reason of a present
obligation debitum solvendum in futuro. The
expression 'unable to pay its debts' should be taken in the commercial sense of
being unable to meet current demands, though the company may have large assets.
See, Tripura Administration vs. Tripura
State Bank Ltd., (1960) 30 Com Cases 324 : AIR 1959 Tripura 41; Sundhiya Nath
Bhaduri vs. Bihar National Insurance Co. Ltd (1942) 12 Com Case 66 : AIR 1941
Section 434 of the Companies Act, 1956
A company shall be deemed to be unable to pay its debts-
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 it to the reasonable satisfaction of the creditor;
demand referred to in clause (a) of sub-section (1) shall be deemed to have been
duly given under the hand of the creditor if it is signed by any agent or legal
adviser duly authorised on his behalf, or in the case of a firm, if it is signed
by any such agent or legal adviser or by any member of the firm.
It is no defence to say that its assets are highly
valuable and will, if realised, far exceed its liabilities. Cf.
In Re Dhootpapeswar Sales Corporation (P) Ltd., (1972) 42 Com Cases 139 (Bom.).
Further, several creditors can join hands in filing a
winding up petition jointly. See, B.P.
Gupta vs. Standard Enamel Works (P) Ltd., (1986) 3 Comp LJ 85 : (1987) Com
Cases 36 (Del).
PAYMENT OF BONUS
As you may kindly be aware that this Act is
applicable to every factory and every other establishment in which twenty or
more persons are employed on any day during an accounting year as per Section
According to Section 8, every employee shall be
entitled to be paid by his employer in an accounting year, bonus, in accordance
with the provisions of this Act, provided he has worked in the establishment for
not less than thirty working days in an accounting year.
Section 10 provides that the minimum bonus is 8.33
per cent of salary earned during the accounting year, whether or not the
employer has any allocable surplus in the accounting year. This Section is not
violative of Articles 19 and 301 of the Constitution. Even if employer suffers
losses during the accounting year, he is bound to pay minimum bonus as
prescribed by Section 10. See, State vs. Sardar Singh Majithia 1979 Lab. I.C.
As regards the amount of bonus, the Act has laid down
a detailed procedure for calculating the amount of bonus payable to employees.
First of all, Gross Profit is calculated as per First or Second schedule. To
this figure, a sum equal to the difference between the direct tax calculated on
gross profit for the previous year and direct tax calculated on gross profit
arrived at after deducting the bonus paid or payable to the employees. The
figure so arrived will be the ‘available surplus’. Of this surplus, 67% in
case of company (other than a banking company) and 60% in other cases, shall be
the ‘allocable surplus’ which is the amount available for payment of bonus
to employees. The details of such calculations are given below:
Computation of gross profit (Section 4)
The Gross profit derived by an employer from an establishment in respect
of an accounting year shall:
the case of banking company be calculated in the manner specified in the First
from gross profit (Section 6)
amount by way of depreciation admissible in accordance with the provisions of
Section 32(1) of the Income Tax Act, or in accordance with the provisions
of the Agricultural Income-Tax Law, as the case may be:
is deductible u/s 6(a), “depreciation admissible in accordance with the
provisions of Section 32(1) of the Income Tax Act, 1961 and not depreciation
allowed by the Income Tax Officer in making assessment on the employer.
by way of development rebate, investment allowance, or development allowance
which the employer is entitled to deduct from his income under the Income Tax
the provisions of Section 7 and direct tax which the employer is liable to pay
for the accounting year in respect of his income, profits and gains during that
further sums as are specified in respect of the employer in the Third Schedule.
Deductions specified in the Third Schedule
following is the extract of Third Schedule specifying further deductions
available under Section 6(d) of the Act from gross profits for arriving at
the employers is a company, further sums to be deducted are:
payable on its preference share capital for the accounting year calculated at
the actual rate at which such dividends are payable;
its paid up equity share capital as the commencement of the accounting year;
of its reserves shown in its balance sheet at the commencement of the accounting
year including any profits carried forward from the previous accounting year.