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High Court Of Delhi
ROMA DEV - Appellant
Versus
R.C.SOOD AND COMPANY PRIVATE LIMITED - Respondent
Civil 22 of 1986
Decided On : 12/12/1986
COMPANY PETITION - MAINTAINABILITY - AFFIDAVIT VERIFICATION - DEFECTS - RECTIFICATION - INHERENT POWERS OF COURT - ENDS OF JUSTICE - COMPANY (COURT) RULES, 1959, RULES 6, 7, 9, 17, 18, 21, 101, 102 - COMPANIES ACT, 1956, SECTIONS 433, 439, 443, 643 - GENERAL CLAUSES ACT, 1887, SECTION 3(3) - LIMITATION ACT, 1963, SECTION 21.
Fact of the Case:
Petitioners, who were allottees of plots in a colony developed by the respondent company, filed a winding-up petition alleging breach of contract, commercial insolvency, and mismanagement. The petition was supported by an affidavit that did not conform to the requirements of Rule 21 of the Company (Court) Rules, 1959. The company raised a preliminary objection challenging the maintainability of the petition on this ground.
Finding of the Court:
The court held that the defect in the verification of the petition was not fatal and could be rectified by allowing the petitioners to file a proper affidavit in Form No. 3. The court relied on its inherent powers under Rule 9 of the Company (Court) Rules, 1959, and the principles applicable to verification of plaints, which allow for the curing of defects at any stage of the suit.
Issues: 1. Whether the petition was maintainable despite the defective affidavit verifying the petition. 2. Whether the court had the power to permit the petitioners to file a proper affidavit.
Ratio Decidendi: 1. The court held that the defect in the verification of the petition was a mere irregularity that could be cured. It distinguished the case from previous decisions holding that a defective verification was fatal to the petition, finding that those decisions placed undue emphasis on the evidentiary value of the allegations in a winding-up petition. 2. The court held that it had the power to permit the petitioners to file a proper affidavit under Rule 9 of the Company (Court) Rules, 1959, which grants the court inherent powers to give directions or pass orders necessary for the ends of justice or to prevent abuse of process. The court noted that the petition was at a preliminary stage and that the petitioners had made serious allegations against the company.
Final Decision: The court overruled the company's preliminary objection and allowed the petitioners to file a proper affidavit verifying the petition within two weeks. The petitioners were ordered to pay costs of Rs. 500.
( 1 ) IN the present winding up petition by this order I am deciding a preliminary objection raised. by the company as to maintainability of the petition. The objection is on the ground that the petition is not supported by an affidavit duly verified as required under Rule 21 of the Company (Court) Rules, 1959 (for short the Rules ).
( 2 ) THE respondent company is engaged in the business of colonisation and acts as builders and colonisers. This is as per Clause-8 of the Memorandum of Association of the company. It is stated that some tune in 1962 the company offered to sell plots of land in the Eros Garden Colony developed by it. There was large scale of advertisement. The colony is stated to be situated near Suraj Kund in the State of Haryana. There are as many as 17 petitioners who, it is alleged, wanted to buy plots and paid varying amounts to the company during the period 1963-64. The details as to which plots these petitioners wanted to buy and were allotted and the amounts paid by them have been set out in the petition. For the purpose of present order it is not necessary to refer to all the details except to note that some of the grounds mentioned for winding up the company are that the substratum of the company has gone and that company is using the amounts paid by the petitioners as plot holders and of other plot holders in other business activities of the company and that company is suffering loss in all its fiinancial activities and that it is just and equitable that the company be wound up. It is alleged that the company is guilty of breach of contract and is commercially insolvent. Again, I need not refer to the alleged acts of mis-management as given in the petition for the purpose of this order. The petitioners feel aggrieved that all these years they have been deprived of their moneys and given false promises.
( 3 ) THE petition was filed on 1st February, 1985. At that time there were 22 petitioners. It was supported by an affidavit of Mr. R. N. Paul-one of the petitioners. By order dated 11th April, 1985 it was noted that some of the petitioners had died and that had. therefore, necessitated filing of an amended petition. This amended petition was filed on 1st July, 1985. This time also it was supported by an affidavit of Mr. R. N. Paul The company raised objection that the amended petition was defective inasmuch as it had not been signed by any of the petitioners. It was signed only by the advocate of the petitioners.
( 4 ) IT was pointed out that counsel for the petitioners had not filed his power of attorney on behalf of all the petitioners. This led to filing of another amended petition on 4th October, 1985 signed by all the petitioners. Again this was supported by an affidavit of Mr. R. N. Paul. It is this affidavit which has been the subject of objection by the company and it is submitted by the company that the petition must fail on that account as filing of affidavit as required by the Rule is mandatory. It was subnmitted that the affidavit filed along with the original petition. could not be looked in to after the amendment of the petition and again it was mentioned that that affidavit also did not conform to the mandatory requirements of the Rules.
( 5 ) THESE submissions were disputed by the petitioners and it was submitted that in any case the Court had ample powers to permit the petitioners to file an affidavit in terms of the Rules.
( 6 ) THE present petition for winding up is under Sections 433 and 439 of the Companies Act, 1956. It is yet at the admission stage. Section 443 prescribes various modes by which this petition could be disposed of. Rules have been framed by She Supreme Court in the exercise of its powers conferred by Section 643 of the Companies Act. No doubt these have been framed under the statutory powers. Under Rule-6-practice and procedure of the Court and provisions of the Code of Civil Procedure would be applicable to all proceedings under the Act and the Ru
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