TMI Blog1999 (4) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... hese principles are laid down in the case of The King v. The General Commissioners 1917 KBD 486 for the purposes of the Income-tax Acts for the District of Kensington. Therein the following principles are laid down by Viscount Reading C.J. "Before I proceed to deal with the facts I desire to say this; where an ex parte application has been made to this Court for a rule nisi or other process, if the Court comes to the conclusion that the affidavit in support of the application was not candid and did not fairly state the facts, but stated them in such a way as to mislead the Court as to the true facts, the Court ought, for its own protection and to prevent an abuse of its process to refuse to proceed any further with the examination of the merits. This is a power inherent in the Court, but one which should only be used in cases which bring conviction to the mind of the Court that it has been deceived. Before coming to this conclusion a careful examination will be made of the facts as they are and as they have been stated in the applicant's affidavit, and everything will be heard that can be urged in influence the view of the Court when it reads the affidavit and knows the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was a specific mention of Bhurdas as the owner of the shop in dispute which the defendant -petitioner had taken on rent. Hence, there could be no getting away from the fact that the defendant - petitioner had made a clearly false and misleading assertion in the special leave petition. We fail to see what point other than the applicability of Section 116 of the Evidence Act could possibly arise in the case. The whole case was concluded by findings of fact. Nevertheless, the special leave petition was granted in this Court. We think that the only reason why such leave could have been granted was that it was misrepresented to the Court that the rent note in favour of Bhurdas did not contain an admission of ownership of Bhurdas. This was certainly a misstatement of a material fact which was of decisive importance in the case. In fact, it was a serious misrepresentation on the only point which could possibly arise in the case. 8. We have heard learned counsel for both sides. Learned counsel for the defendant-petitioner is unable to give any explanation for the false assertion. In ground No. VII of his special leave petition except that the learned counsel had himself misunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcuse for the party to say that he/she was not aware of the importance of any facts which he/she has omitted to bring forward. On the basis of the aforesaid observations, this Court would be fully justified in dismissing the application as well not accepting the Company Petition, which has only been lodged as yet and has not been accepted. 3. The petitioners have filed this petition under sections 433 and 434 of the Companies Act, 1956 ('the Act') praying that the respondent-company be ordered to be wound up as it is unable to pay its debts. In paragraph 4 of the petition it is mentioned that by a Resolution dated 29-12-1998, the Factory Manager Mr. V.V. Mohan Rao has been authorised to institute, prosecute and to represent in winding up proceedings on behalf of the company. The extract of the Board Resolution is annexed with the petition. The main objects of the respondent-company are to grow, collect, purchase, sell, import, export, refine, store, distribute or deal and in all kinds of oils, fats and bearing seeds etc. It is claimed that the respondent-company approached the petitioner's Branch office in Mumbai through their Commission agents, M/s. Jamnadas Bhimji Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged fire accident, the petitioners lost confidence in the represen-tations of the respondent and presented two cheques out of the four cheques for encashment in the petitioner's bank. These cheques were dishonoured. Therefore, the petitioner has filed a criminal case under section 138 of the Negotiable Instruments Act, 1881. Further it is stated that initially the petitioner did not suspect the bona fides of the respondent and believed the version of the respondent in regard to the reason for deferred payments pleaded by them and acceded to their request. The petitioners, however, came to know that the respondent-company through their later business, associates Gopal Enterprises have already received cash by selling the oil consigned by the petitioner in the open market and gave a false statement that the oil consigned by the petitioner to the respondent has been obtained out from the tanks of the company due to the alleged fire accident. Thus, the petitioner has come to the conclusion that the respondent made the petitioner part with valuable stock of oil in their factory with the pre-planned device to cheat the petitioner by withholding the payments and causing wrongful loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets by selling to their personal accounts. Therefore, an immediate urgent right of the creditors and third parties have to be protected. Winding up proceedings will take quite some time. Meanwhile, if the funds available are removed, there will be no remedy for the petitioner to recover their amount from the respondent-company. It is further stated the contents of the Company Petition may be read as part and parcel of the same. 6. Relying on these observations, on 19-3-1999, leave was granted to the petitioners to take out Judge's Summons in terms of the draft handed in. The Judge's Summons was made returnable on 5-4-1999. It was stated by the learned counsel that if prior notice of this application is given to the company, the purpose of this application will be frustrated. He submitted orally what has been stated in the pleadings. Thus, the case put forward was that the company has sold the entire quantity of oil which was supplied by the petitioner to the company. They have received due consideration from the buyer of the oil. He further submitted that the company has also lodged claim for insurance with the Insurance Company. He also stated that the company is likely to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nited India Insurance Co. Ltd. The said Insurance Company has approved an interim on account of payment of Rs. 3,50,00,000 out of which the Insurance Company has deducted Rs. 88,43,418 as per the aforesaid order. This fact cannot be disputed as Mr. Chinai has produced a photostat copy of the Disbursement (claim) voucher. In the right hand corner of the aforesaid voucher, it is clearly mentioned that Rs. 3,50,00,000 are sanctioned on account of payment approved by the Board, less deduction as per High Court order Rs. 88,43,418. The Voucher is dated 17-3-1999. 8. The order passed in the Company Application on 19-3-1999 was conveyed to the Insurance Company stating therein that this Court had granted ex parte relief in terms of prayer clause ( b ) and the matter is made returnable on 5-4-1999. The letter dated 20-3-1999 states that the copy of the Company Application is enclosed. The Insurance Company was, therefore, "directed not to disburse the claim amount to the Golden Oil Industries". The words "directed not to disburse" have been underlined. The letter further mentioned that the copy of the order will be served as soon as it is available. The letter further states that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under section 434. All other defences taken in the reply by the company are mentioned in the petition. But the defence to the effect that the interest of the petitioner has already been secure, has not been disclosed. In such state of affairs, the Court would be left with no option but to dismiss the application without going into the merits. 10. However, on 5-4-1999, the impressions of the Court were made known to the counsel for the petitioners. The counsel submitted that the petition had, in fact, been drafted by the lawyer of the company in Hyderabad. He submitted that without verifying the contents of the Petition, the same was filed after only changing the format of the petition. He submitted that he did not even have time to go through the reply filed by the company to the statutory notice. The Court assured the counsel that action, if any, has to be taken against the person, who has filed the false affidavit. Therefore, he was requested to keep the deponent present in the Court. Since the deponent was in Hyderabad, the matter was stood over to the next date i.e., 6-4-1999. On that day, the learned counsel submitted that the deponent cannot be held responsible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed that the respondent's intention was not honourable. Thus, whatever has been pleaded in the petition as well as affidavit in support is reiterated in the affidavit in rejoinder. A justification is given to the Court that the petitioner had rightly represented to the Court, as this was the impression they had about the conduct of the company. With regard to the non-mentioning of the Garnishee order and the Summary suit, it is stated that inspite of the order being served on the United India Insurance Co. Ltd. there was no response from them about the confirmation that they would abide by the order of the Court. Reference is made in the letter dated 16-3-1999 expressing the anxiety of the petitioner that the United India Insurance Co. Ltd. was likely to disburse certain amount to the respon- dent. In these circumstances, the company winding up petition was filed in order to protect the interest of the petitioner. But no justification whatsoever is given as to why it was not necessary to mention the filing of the summary suit and passing of the ad interim order. No justification is given as to why it was not necessary to mention that the claim made by the petitioner-company had a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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