JUDGMENT - Dr. CHANDRACHUD D.Y., J.:---These company applications have been taken out by several secured creditors who assert their right to be heard at the stage of admission of the Company Petition for winding up. The right of the secured creditors to be heard at the stage of admission is questioned by Bharat Petroleum Corporation Limited who is the petitioner before the Court in the Company Petition.

2.In so far as the legal position is concerned, section 557 of the Companies Act, 1956 provides in Clause (a) of sub-section (1) that in all matters relating to the winding up of a company, the Court may, inter alia, have regard to the wishes of creditors or contributories of the company, as proved to it by any sufficient evidence. The words "relating to the winding up of a company", used in sub-section (1) of section 557 are broad enough to comprehend within its purview the stages of admission and of the final hearing of a company petition for winding up. Therefore, as a matter of statutory interpretation, the right of the creditors to appear and be heard in all matters relating to the winding up of a company is recognised by law. That right to appear and be heard comprehends the stage of admission as well.

3.There can be no gainsaying the fact and the order passed by the company Court admitting a petition for winding up by itself has serious consequences for a company. An order of admission seriously affects the market position of a company subject to the order. The confidence of the business or trade in the ability of a company to meet its liabilities is liable to be affected upon an order of admission with the consequential advertising of the petition which follows. Hence, the admission of a petition for winding up is a serious matter.

4.In (National Textile Workers Union and others v. P.R. Ramakrishnan)1, 1983(1) Supreme Court Cases 228, the Supreme Court laid down the principle that the workers are entitled to appear at the admission of a winding up petition, either to support or oppose it and so long as no winding up order is made by the Court. Justice P.N. Bhagwati (as the learned Chief Justice then was), speaking for the Constitution Bench of the Supreme Court held that the workers have a locus to appear and be heard in the winding up petition both before the winding up petition is admitted and an order for advertisement is made and after the admission and advertisement of the petition until an order is made for winding up of the company. Having due regard to the provisions of section 557(1) of the Companies Act, 1956, the principle which has been laid down by the Supreme Court in the case of the workers must necessarily apply in the case of the creditors. There is an express statutory recognition of the position that this Court must have regard to the wishes of creditors and contributories in all matters relating to the winding up of a company.

5.In (M/s. Madhusudan Gordhandas Co. v. Madhu Woolen Industries Private Ltd.)2, A.I.R. 1971 Supreme Court 2600, the Supreme Court was considering a case where after a petition for winding up came to be accepted and, at the stage of admission, a large number of creditors of the company appeared to oppose the petition for winding up. A learned Single Judge of this Court refused to wind up the company and directed it to deposit the disputed amount of Rs 72,556.02 with a consequential direction for institution of a suit. The judgment was affirmed in appeal by a Division Bench of this Court. The principle in so far as the intervention of creditors is concerned was formulated in para 22 of the judgment of the Supreme Court thus :

"Another rule which the Court follows is that if there is opposition to the making of the winding up order by the creditors the Court will consider their wishes and may decline to make the winding up order. Under section 557 of the Companies Act, 1956 in all matters relating to the winding up of the company the Court may ascertain the wishes of the creditors.

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