• Non payment of salary to an employee-whether a debt

The High Courts of Madhya Pradesh, Andhra Pradesh and Bombay have offered different opinions. Whereas Madhya Pradesh and Bombay High Courts in Pawan Kr. Khullar v. Kaushal Leather Board Ltd. (1996 MP), and Indo French Time Industries Ltd. In re [2002] respectively have held that payment of salary to an employee is not a debt, the Andhra Pradesh High Court said that unpaid salary of an employee is also a debt -Capt. B.S. Damagry v. VIF Airway Ltd. (1998 AP).

· The inability to pay debts should be interpreted in the commercial sense of company being unable to meet current demands though the company may have large assets (Tripura Admn. v. Tripura State Bank Ltd. (1960). The company buried under heavy losses was ordered to be wound up though the demand was not immediately due as it was felt that t.o wind up such a company would be an act of social service by preventing directors enriching themselves at the expense of petty shareholders (Navjivan Trading Finance (P.) Ltd., In re (1978). However, the fact that liabilities exceed assets does not necessarily mean that the company is unable to pay its debts. It may still be in a position to meet the demands of the creditors as and when they are made. (ROC Punjab, Himachal Pradesh and

Chandigarh v. Atlas Transport (P.) Ltd. (1974).

6. Just and Equitable. The Court may also order for the winding-up of a company if it is of opinion that it is just and equitable that the company should be wound up. In exercising its power on this ground, the Court shall give due weightage to the interest of the company, its employees, creditors and shareholders and the interest of the general public. A few of the examples of ‘just and equitable’ ground on the basis of which the Court may order the winding-up are given below:

(i) When the Substratum of the Company Has Gone. The substratum of a company is deemed to be gone where its main purposes have failed or become impossible of achievement (Re Bleriot Aircraft Co.). However, a temporary difficulty which does not knock out the company’s bottom shall not be permitted to become a ground for liquidation (Re. Shah Steam Navigation Co.).