TMI Blog2014 (7) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... - Reva Khetrapal And Pratibha Rani,JJ. For the Appellant : Mr. Manoj Kumar Garg, Advocate. For the Respondents : Ms. Vibha Mahajan Seth, Advocate. Mr. Rajiv Bahl, Advocate for the Official Liquidator. JUDGMENT Reva Khetrapal, J. 1. The present appeal is preferred against the order dated 13.02.2014 passed by the learned Single Judge in Company Application No.898/2013 of Company Petition No.136/2005 filed by the Respondent No.1 under Rule 9 read with Rule 29 of the Companies (Court) Rules, 1959. 2. The facts necessary for deciding the appeal are briefly delineated hereunder. 3. A Company Petition was filed by the Respondents alleging that the Appellant Company is liable to be wound up under Sections 433(c), (e) and (f) read with Section 434(1)(a) and (c) of the Companies Act, 1956 (hereinafter referred to as the Act ). The Respondents are admittedly shareholders of the Appellant Company and the Respondent No.1 also claims to be a creditor of the Company. By an order dated 16.02.2009, the learned Company Judge admitted the winding up petition and ordered the Appellant Company to be wound up, simultaneously appointing the Official Liquidator as Liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when an application for winding up is presented it shall be posted before the judge in Chambers for admission and fixing a date for hearing and for directions as to the advertisements to be published and the persons, if any, upon whom copies of the petition are to be served and that the judge, if he thinks fit, direct that notice be given to the company before giving directions as to the advertisement of the petition. There is thus an opportunity to be provided to the company as contemplated by the rule. 4. It can still be argued that the opportunity to the company is required to be given only if the judge thinks it fit to do so and that in the present case, having regard to the tenor of the impugned judgment, the learned judge did not consider it fit to give notice to the appellant-company before issuing directions as to the advertisement. Such an argument is taken care of adequately by Rule 9 of the aforesaid Rules noticed by the Supreme Court in the judgment cited supra which reads: Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the court to give such directions or pass such orders as may be necessary for the ends of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The impugned judgment in which several directions are rolled-up, (vide paragraph 46) including the direction to advertise the petition for winding-up, read in light of the judgments of the Supreme Court (supra), seems to have denied the appellant-company an opportunity to invoke the inherent powers of the court, codified by Rule 9, that the winding up petition should not be advertised on whatever grounds it would be advised to take. 6. It was contended on behalf of the respondent who had succeeded before the learned single judge that the purpose of the advertisement is the protection of the creditors and the shareholders of the company which is the primary consideration and the fact that the company sought to be wound up was not heard before the advertisement was ordered was not relevant. The answer to this contention is to be found in the judgment of the Supreme Court itself (supra). In the penultimate paragraph of the judgment (@ page 789), the court was examining the correctness of the view expressed by this court that the court must, as soon as the petition for winding up is admitted, advertise the petition. Rejecting the view, the Supreme Court observed: Such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of the High Court of Karnataka dated 21.10.2009 passed in OSA No. 36 of 2009, and we order accordingly. However, we make it clear that the observations and findings rendered by this Court in this proceeding will not prejudice the parties in approaching the appropriate forum for redressal of their grievances and, in the event of which, that forum will decide the case in accordance with law. This is sufficient justification for granting an opportunity to the company (appellant herein) to show to the company court why an advertisement should not automatically follow the admission of the petition. It can invoke the inherent powers of the court embodied in Rule 9 and it would then be for the company court to deal with the reasons shown and take a decision. 7. Counsel for the respondent however points out that there can possibly be no damage to the reputation or business of the company since its operations have been closed down as is evident from the letter dated 15.04.2009 written by its managing director, a copy of which was filed before us. One Anil Koshal has in the letter informed the official liquidator that the company has closed down its manufacturing activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Official Liquidator to take over the possession of the Appellant Company had not been set aside by the Division Bench. Liberty was, however, granted to the Respondents to seek a clarification from the Division Bench in this regard. 7. As a result of the aforesaid, the Respondents filed Company Appeal No.21/2013 before a Division Bench of this Court impugning the order dated 27.02.2013. The Division Bench disposed of the said appeal by an order dated 18.03.2013 by permitting the Petitioners to seek clarification from the Division Bench which passed the order dated 07.01.2013. 8. The Respondents thereupon filed a Review Petition being Review Petition No.116/2013 before the Division Bench which passed the order dated 07.01.2013 in Company Appeal No.19/2009 extracted hereinabove. The said Review Petition was disposed of by an order dated 05.04.2013. The relevant extract of the order dated 05.04.2013 is for the sake of facility reproduced hereunder: This Court has considered the submissions and also the judgment dated 16.02.2009. As is evident from the discussion in the final judgment of the Division Bench dated 07.01.2013, the point which persuaded the Court to set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egations which it made in the winding-up proceedings resulting in the admission order passed on 16.02.2009. No such pleas or allegations were made in the appeal filed against the admission order dated 16.02.2009 which appeal in any case was only against the rolled up procedure followed by the learned Company Judge, and which did not question the admission order on merits. The order of the Division Bench dated 05.04.2013 passed in the review petition filed by the petitioners attained finality; this Court clarified that the admission order made by the learned Company Judge would remain undisturbed and it was only the question of appointing the provisional liquidator and advertisement of the winding-up proceedings that will have to be decided by the learned Company Judge. Thus even after the merits of the admission order became final, the respondent-company is making a last ditch or desperate attempt to stall the proceedings by making the present application seeking to enforce the attendance of petitioner No.1, taking advantage of some orders passed by the disciplinary committee of the ICAI in the case of the petitioner No.1. Such a conduct on the part of the respondent-company cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the prima facie observations made by the learned Single Judge in his order dated 16.02.2009 with regard to the admission of the petition attained finality and there remained no scope for overturning the said findings. 13. With regard to the grievance of the Appellant Company that the learned Company Judge was not within his rights to issue orders for advertisement of the citation of the Company and appointment of the Official Liquidator as Provisional Liquidator to take charge of all the assets and records of the Company, learned counsel appearing for Appellant Company has been unable to point out to us any infirmity or error in the said order. 14. Notwithstanding, we have painstakingly examined the order and are unable to find any reason for setting aside the same. At the risk of repetition, we reiterate that the Division Bench had clarified by its order dated 05.04.2013 passed in Review Petition No.116/2013 that the prima facie observations with regard to the admission of the winding up petition would stand. The relevant extract reads as under:- In these circumstances, the final direction contained in paragraph 8 is clarified appropriately; it stands modified to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 07.01.2013 and we are unable to deduce therefrom anything which comes to the rescue of the Appellant Company. In any event, it is stated at the risk of repetition that the said order was clarified by the Division Bench by its subsequent order dated 05.04.2013 wherein the Division Bench categorically observed that the point which persuaded the Court to set aside the earlier Single Judge s order dated 16.02.2009 was the rolled up procedure adopted by him in discussing the merits of the case, not advertising the proceedings and straightaway directing winding up. The intent was not to comment and decide upon the merits of the observations of the learned Company Judge which undoubtedly point to the fact that the petition needed to be admitted. 18. In the aforesaid scenario, in our view, the learned Single Judge rightly observed that there was no reason why advertisement should be deferred, more so as the Appellant Company had not availed of the opportunity granted to it by the Division Bench to move an application for deferment of the advertisement of the petition. Even otherwise, there did not appear to be any special circumstances which would warrant deferment or suspension ..... X X X X Extracts X X X X X X X X Extracts X X X X
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