TMI Blog1996 (4) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... or winding up of the appellant-company as in spite of statutory legal notice under the Companies Act, 1956, calling upon the appellant to pay the principal sum of Rs. 1,69,290 together with interest thereon at the agreed rate of 24 per cent. per annum the company has failed to honour the same. In the company petition, the respondent herein made the following averments on oath: "2. The company above named, viz., Ashok Fashions Ltd. (hereinafter referred to as the company), is incorporated and registered under the Companies Act, 1956, as a public company limited by shares. The factory and office of the company is situated at opp. House of Kaydees, Narol, Ahmedabad-382 405. The nominal capital, capital paid-up or credited as paid up of the company is as per the record available in that behalf with the Registrar of Companies, the necessary details whereof, if required, would be furnished to the court during course of the hearing of this petition. The main objects of the company to be pursued by it on its incorporation, and other objects incidental or ancillary to the attainment of objects are as set forth in its memorandum of association. The petitioner shall furnish the nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid-up. If the petition is filed by a creditor then over and above clauses 1 to 5 provided in the said Form No. 45, the creditor has to provide further details as per Form No. 46, such as the amount indebted to the petitioner, showing the consideration for the debt with particulars that the debt claimed is due. As provided in clause 7 of Form No. 46, the petitioner has to further show that the company failed and neglected to pay the debt or any part thereof inspite of notice of demand at its registered office by registered post, and has also to give details of such date of notice and date of service of the notice, etc. He submitted that if a company petition is filed by a creditor it must be in prescribed form as provided in the rules and the petitioner must disclose the materials which under the law are required to be disclosed and if such details are not disclosed, the petition should not be entertained. The learned advocate for the appellant has produced on record a copy of the memorandum and articles of association of the appellant-company, wherein a copy of the certificate of incorporation is also incorporated. Reading the same, it is clear that the appellant company is regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court having jurisdiction at the place at which the registered office of the company is situate has the jurisdiction. A question was raised that an appeal is not maintainable against the order of admission and the order passed for advertisement. In other words, is this order appealable? Section 483 of the Act provides for appeals from order, and it reads as under: "483. Appeals from any order made, or decision given, in the matter of the winding up of a company by the court shall lie to the same court to which, in the same manner in which, and subject to the same condition under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction". Thus it is clear that the appeal against any order made or decision given in the matter of winding up of a company will lie to the same court. Apart from this, what would be the consequences of such an advertisement in a petition preferred by a creditor? Is it a simple thing that the same court could be moved and order could have been obtained for stay? In the instant case, the damage is already done, as the advertisement is already published. The learned advocate invited our attention to a ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and an envelope addressed to the company at its registered office or its principal place of business and sufficiently stamped for being sent by registered post for acknowledgment. The Registrar shall immediately on the admission of the petition send the notice together with the copy of the petition to the company by registered post... " Reading sub-rule (1), it is very clear that notice to the company is to be served either at its registered address or at the principal place of business. In the company petition, the address of the registered office of the appellant-company is nowhere mentioned. It is nowhere stated that company has its principal office at Ahmedabad. It is also clear that notice is not served in the manner provided in the rules. Thus it is clear that process is not served on the appellant-company as per the rules and, therefore, it is no service. Mr. Trivedi, the learned advocate, drew our attention to paragraphs 2,3,4 and 5 of the company petition quoted hereinabove. In the company petition, no details as required under the rules are given. Particularly, in paragraph 4, the petitioner stated that the details of nominal capital, capital paid-up and credited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he correction was done before swearing the petition and filing the petition in the court. The xerox copy of the petition also bears the signature and the stamp of affirmation but the aforesaid deletion is not there. From this, it is clear that the correction was not made before affirmation but it is made after affirmation. Therefore, Mr. Gupta is not right in his submission. We do not intend to hold an inquiry in this behalf but we are only indicating that the learned advocate should have seen that the records are correctly placed before the court. In rule 95 of the rules referred to above, a format is prescribed wherein certain details are required to be given. These are with purposes, one of which is that the court shall first ascertain whether the court has jurisdiction to entertain the petition or not. The relevant details are not stated in the petition. With the deletion of the aforesaid words, the requisite details are not before the court. Details regarding the capital structure of the company is also not given. It is the duty of the petitioner to place necessary materials before the court as per the Rules. What course is to be adopted by the company court after hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are such and its existing liabilities are such as to make it reasonably certain as to make the court feel satisfied that the existing and probable assets would be insufficient to meet the existing liabilities, language which seems to be the origin of the phrase commercially insolvent. Machinery for winding up should not be permitted to be utilised merely as a means for realising debts due from a company. A winding up petition is not a legitimate means of seeking to enforce payment of debts. It is required to be noted that in a given case, if the notice is given and the amount is not paid, and the petition which is presented before the court discloses the assets of the company which are insufficient to meet liabilities including contingent and prospective liabilities and further it discloses the position of fixed assets as well as valuation of plant and machinery of the company, then it can be said that material is placed before the court to arrive at a tentative decision whether the company is able to pay or not able to pay the dues. In some cases it is held that mere production of balance-sheet of the company would not be, by itself, decisive, even though ordinarily, the court doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be kept in mind at the time of consideration as to whether the application should be admitted on the allegations mentioned in the petition". Hence, we are of the view that in a case like this, such a course could have been adopted only after assessing the materials produced before the court by the petitioning creditor and on satisfying that the company is commercially insolvent. At this stage, we would like to reiterate the views expressed by this court in the case of Atul Drug House Ltd., In re [1971] 41 Comp. Cas. 352 wherein the court held that at the time of admission of a petition for winding up under section 433( f ) the petitioner must convince the court not only of a just and equitable ground for so doing but also that there is no alternative remedy open to the petitioner. This is because if such a petition is admitted and there is a public advertisement, it would cause irreparable harm to a solvent company even if the company succeeds ultimately. The learned advocate for the petitioner has drawn our attention to paragraph 17 of the judgment in the case of Kanchanaganga Chemical Industries v. Mysore Chipboards Ltd. [1995] 3 Comp LJ 201 ; [1998] 91 Comp. Cas. 646 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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