TMI Blog1993 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... second instalment of payment of Rs. 5,40,000. The Company was called upon to pay the defaulted instalment by a notice dated August 9, 1991, but under the reply of the company dated August 19/ 1991, the company whilst not denying that the instalment had not beer/paid, denied that there was any default and otherwise denied that the provisions of section 434 can be invoked by the petitioner. In the meantime, some more instalments were paid by the company, but the eighth instalment due on December 51, 1991, was not paid and the company/invoked the jurisdiction of the civil court to extend time for payment of the instalments due upon the decree. It is also the case of the petitioner that in terms of clause 13 of the consent decree default in payment of any two instalments make the entire balance amount payable forthwith and as the company failed to effect payment of two instalments, the entire amount under the decree is payable, together with interest at the rate of 18 per cent, per annum payable thereon. Statutory notice under section 434 of the Companies Act, 1956, dated January 1, 1992, was served and despite calling upon the company to pay the amount due within three weeks from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the threshold, for if the company application is allowed and the summons is made absolute, there can be no hearing of the company petition on the merits. He, therefore, took umbrage to both the petitions being placed on the board together. It must be pointed that before the arguments were heard in both these matters, it was made clear that the court will take the company petition as well as the company application simultaneously for hearing on the merits, for the reasons that the company application was instituted much after the company petition became ripe for hearing on admission and the entire set of pleadings had been completed. It was obviously, therefore, an attempt by the company to somehow delay the hearing of the company petition on the merits. In fact, the grounds taken in the application are the very grounds taken in the affidavit opposing the winding up petition. Perhaps there is one more reason as to why the company resorted to obtaining a chamber summons. It was set out as a defence by the company in their affidavit that the company has moved the civil court of Vasco da Gama for extension of time to pay the instalments falling due in terms of the consent decree date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition is presented on the ground that it is just and equitable that a company should be wound up the court may refuse to make an order of winding up if it is of the opinion that some other remedy is available to the petitioner and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy. In other words, the contention of Mr. Kakodkar is that clause ( f ) of section 433 cannot be invoked by this court inasmuch as the petitioner can take up execution proceedings to execute a consent decree when there has been default in payment of the instalments under a decree. Mr. Kakodkar then contends that in so far as clause ( e ) of section 433 is concerned, no ground is made out for this court to make a winding up order. Upon reading the company petition he refers to paragraphs 6 and 19 to say that after making some statement of fact, the petitioner's ground with regard to the company's inability to pay is based upon an inference. He now urged that inference has no place in winding up proceedings and a petitioning party must clearly aver the inability of the company to pay and if there is no averment of this kind, no ground is available a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Haryana High Court held that an affidavit in support of a company petition is treated as substantive evidence and where there is no affidavit in accordance with law accompanying the petition, it is no petition in the eye of law. It was further observed that amendment of a petition for winding up, if allowed, relates back to the date of presentation of the petition and, therefore, it would lead to a great deal of confusion if the petitioning party is allowed to swear and supply a fresh affidavit at a later stage because rights of third parties may crop up. This was undoubtedly a case where there was defect in the verification in the sense that the affidavit contains blanks, with the result the court could not know which blank paragraphs were true and correct to the best of the knowledge and what blank paragraphs are true to the belief. This case no doubt, in turn, referred to a judgment of the Division Bench of the same High Court rendered in Mool Chand Wahi v. National Paints (Pvt.) Ltd. [1986] 60 Comp. Cas. 402 (P H). Mr. Kakodkar thereafter placed reliance on a decision of this court in Gangadhar Narsinghdas Agrawal v. Timble Pvt. Ltd. [1992] 74 Comp. Cas. 846. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. In my view, the prime purpose is that a party pleading must be confined to the pleadings. In so far as an affidavit is concerned in company petitions, there is no trial nor evidence is ordinarily taken, with the result, the affidavit evidence becomes the sole evidence for the court to decide the petition one way or the other. The Constitutional Bench of the Supreme Court in the decision of A.K.K. Nambiar v. Union of India, AIR 1970 SC 652, has laid down that verification of an affidavit is necessary and the observation "affidavits not properly verified" cannot be admitted in evidence. The reason for verification is to enable the court to find out which facts can be said to be proved on the affidavit evidence of rival parties. The importance of verification is to test the genuineness and authenticity of the allegations and also to make the deponent responsible for the allegations. In essence, the verification is required to enable the court to find out as to whether it will be safe to act on such affidavit evidence. In my view not much effort is necessary in the present case, because finally, as mentioned earlier, the petition for winding up has been contested and what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which company law has to be administered. When substantial compliance is there, more particularly when facts are clearly and substantially admitted, it can never be the basis for rejection of a petition. The next question to consider is whether a decree-holder is entitled to maintain a petition under section 433 of the Companies Act under its clause ( e ). I have already referred to the submissions of Mr. Kakodkar, learned counsel for the company, and I do not think it is necessary to refer to them once again. There is enough justification for Mr. Chagla to contend that even in addition to the execution of a decree winding up proceedings at the instance of decree-holder are permissible and a petition by a decree-holder would fall within the ambit and scope of section 433( e ). He placed reliance on the decisions in Madhuban Pvt. Ltd. v. Narain Dass Gokal Chand [1971] 41 Comp. Cas. 685 (Delhi), Seethai Mills Ltd. v. N. Perumalsamy [1980] 50 Comp. Cas. 422 (Mad), Sarabhai Machinery v. Haryana Detergents Ltd. [1986] 60 Comp. Cas. 169 (P H) and in a slightly different context, in the decision of Advent Corporation Pvt. Ltd., In re [1969] 39 Comp. Cas. 463 (Bom). H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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