A constituted Attorney does not have locus standi to file a petition for winding up under section 433 of the Companies Act, 1956.

Headnote:
COMPANY - WINDING UP - PETITION - AUTHORITY OF CONSTITUTED ATTORNEY - POWER OF ATTORNEY - INTERPRETATION - STRICT CONSTRUCTION - COMPANY PETITION FOR WINDING UP - JURISDICTION OF COMPANY COURT - CODE OF CIVIL PROCEDURE, 1908 - ORDER III, RULE 1 - COMPANIES ACT, 1956 - SECTIONS 433, 434, 439, 2(11), 10 - COMPANIES (COURT) RULES, 1959 - RULES 6, 21.
Fact of the Case:

The respondents filed a petition for winding up the applicant-company under section 433 of the Companies Act, 1956, on the grounds that the company was unable to pay its debts. The applicant-company opposed the winding up petition by affidavit, contending that the petition was liable to be rejected in limine on the ground that it had been signed and verified by a constituted Attorney, which was not maintainable and incompetent under the law.
Finding of the Court:

The Court held that a constituted Attorney has no locus standi to file a petition for winding up under section 433 of the Companies Act, 1956. The Court further held that the expression "any Court" in Rule 1 of Order III of the Code of Civil Procedure, 1908 includes a Company Court and that the provisions of the Code of Civil Procedure apply to proceedings under the Companies Act, 1956, except as provided by the Act or the Rules.
Issues: 1. Whether a constituted Attorney has locus standi to file a petition for winding up under section 433 of the Companies Act, 1956? 2. Whether the expression "any Court" in Rule 1 of Order III of the Code of Civil Procedure, 1908 includes a Company Court?
Ratio Decidendi: 1. The Court held that a constituted Attorney has no locus standi to file a petition for winding up under section 433 of the Companies Act, 1956, because: a. The Act and the Rules do not expressly provide for constituted Attorneys to file winding up petitions. b. The proviso to Rule 21 of the Companies (Court) Rules, 1959, which allows authorized agents to file affidavits verifying petitions, does not override the Act. c. Winding up proceedings are special proceedings that involve the rights of multiple parties and public interest, and therefore require personal verification by the petitioning party. 2. The Court held that the expression "any Court" in Rule 1 of Order III of the Code of Civil Procedure, 1908 includes a Company Court because: a. The definition of "Court" in section 2(11) of the Companies Act, 1956 includes Company Courts. b. Rule 6 of the Companies (Court) Rules, 1959 provides that the provisions of the Code of Civil Procedure apply to proceedings under the Companies Act, 1956, except as provided by the Act or the Rules.
Final Decision: The Court allowed the Judge's summons and dismissed the winding up petition. However, the parties were directed to bear their own costs.

JUDGMENT - G.D. KAMAT, J.:---This application is made in Judge's summons praying for the dismissal of the Company Petition No. 5/S/1991 instituted by the respondents for winding up the applicant-company under section 433 of the Companies Act, 1956.

2. The petition for winding up of the applicant-company is on the grounds that the company is unable to pay its debts. It is averred on their behalf that by virtue of the agreement dated 10th February, 1987, the company had to repay amount deposited by the respondents; that despite statutory notice dated 23rd January, 1991, under section 434 of the Companies Act no steps towards the repayment were taken and therefore, the company be wound up under the directions of the Court.

On notice being issued, applicant-company opposed the winding up petition by its affidavit. In the Judge's summons a contention is taken that the petition for winding up is liable to be rejected in limine on the ground that petition has been signed and verified by a constituted Attorney which is not maintainable and incompetent under the law and secondly on the assumption that a petition can be instituted by a duly authorized agent, it is urged that Attorney who has instituted winding up petition has no authority under the Power of Attorney to do so.

3. To complete the narration it may be mentioned that the respondents No. 1 and 2 claim that under the Agreement dated 10th February, 1987, the applicant-company has failed to return the amount deposited with the company. The petition has been sworn by Pravinkumar Gosalia claiming to be the constituted Attorney of the respondents. The affidavit in support has also been filed and sworn by the aforementioned Pravinkumar Gosalia, under Power of Attorney dated 29th October, 1990.

4. Mr. S.K. Kakodkar, learned Counsel for the applicant-company, contends that having regard to the special nature of the proceeding, unlike an ordinary lis, a constituted Attorney of any creditor or contributor or a shareholder has no locus standi to file a petition for winding up under section 433 of the Companies Act. Embargo according to him is self-evident, when one reads the provisions of section 433, 434 and 439 of the Act read with Rules 6 and 21 of the Companies (Court) Rules, 1959.

5. Section 433 sets out predicates under which a company may be wound up. Admittedly, what is pressed is Clause (e) of section 433 viz. inability of the company to pay its debts.

Section 434 speaks about a presumption as to when a company shall be deemed to be unable to pay its debts. More particularly Clause (a) of sub-section (1) of section 434 lays down that the company shall be deemed to be unable to pay its debts if a creditor by assignment or otherwise to whom the company is indebted in the sum exceeding Rs. 500/- has served on the company a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum due and/or to secure or compound for it to the reasonable satisfaction of the creditor. Emphasis is that the demand must be under the hand of the creditor.

Insofar as section 439 is concerned, it says that an application to the Court for winding up of a company shall be by a petition presented subject to the provisions of Clauses (a) to (f) and sets out categories as to who can present a petition and they are (a) a company, (b) any creditor, including any contingent or prospective creditor, (c) any contributory, (d) by all or any of the parties specified in Clauses (a), (b) and (c) whether together or separately, (e) by the Registrar, and (f) in a case falling under section 243, by any person authorized by the Central Government in that behalf.

6. Mr. Kakodkar now says that having regard to the persons or authorities specified as to who can present applications to the Court for winding up of a company under section 439 (1), it is just not possible for any constituted Attorney of any such person or authorities to present any winding

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