The company court must provide an opportunity to the company before ordering advertisement for winding up, as established by Rule 24(2) of Companies (Court) Rules, 1959, Rule 9, and relevant precedents.

The short question that arises in this appeal is whether the company court can order winding up of a company without ordering the petition to be advertised.

2. The appellant is a company. A petition was filed by two shareholders for winding up of the company under section 433 of the Companies Act, 1956 before the company court. The company court (learned single judge) by the impugned order:

(a) admitted the petition;

(b) directed the company to be wound up;

(c) appointed the official liquidator and directed him to take charge of the assets and records of the company and proceed in accordance with law and

(d) directed the citation to be published in the “Statesman” (English) and “Jansatta” (Hindi) for 16.03.2009. All these directions were issued in a single order – impugned in the present appeal – passed on 16.02.2009; the relevant paragraph is quoted below:

“46. I, accordingly, admit this petition and direct that the respondent company be wound up. The official liquidator attached to this Court is appointed as the liquidator in respect of the respondent company. He shall forthwith take over all the assets and records of the respondent company and proceed according to law. Citation shall be published in the „Statesman? (English) and „Jansatta? (Hindi) for 16.03.2009. Petitioner may take steps accordingly.”

3. Counsel for the appellant-company contends on the strength of the judgment of the Supreme Court in National Conduits (P) Ltd. v. S.S. Arora, (1967) 37 Com. Cases 786 that the procedure adopted by the learned company judge is unsustainable and that an order for winding up cannot be passed before publishing the advertisement. The contention appears to us to be sound. The judgment cited above lists the steps involved in ordering the winding up of a company under the supervision of the High Court. It was observed (@ page 788): - “When a petition is filed for winding up of a company under the supervision of the High Court, the High Court may: (i) issue notice to the company to show cause why the petition should not be admitted; (ii) admit the petition, fix a date for hearing and issue notice to the company before giving directions for advertising; or (iii) admit the petition, fix the date for hearing, order advertisement and direct service upon those who are specified in the order. A petition for winding up cannot be placed for hearing before the court, unless the petition is advertised; that is clear from the terms of rule 24(2).” The judgment refers to Rule 96 of the Companies (Court) Rules, 1959 framed by the court which states that when an application for winding up is presented it shall be posted before the judge in Chambers for admission and fixing a date for hearing and “for directions as to the advertisements to be published and the persons, if any, upon whom copies of the petition are to be served” and that the judge, if he thinks fit, direct that notice be given to the company before giving directions as to the advertisement of the petition. There is thus an opportunity to be provided to the company as contemplated by the rule.

4. It can still be argued that the opportunity to the company is required to be given only if the judge thinks it fit to do so and that in the present case, having regard to the tenor of the impugned judgment, the learned judge did not consider it fit to give notice to the appellant-company before issuing directions as to the advertisement. Such an argument is taken care of adequately by Rule 9 of the aforesaid Rules – noticed by the Supreme Court in the judgment cited supra – which reads:

“Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.” The judgment of the Punjab High Court in Lord Krishna Sugar Mills Ltd. v Smt. Abnash Kaur, (1961) 31 Comp. Cas. 587 was approvingly noticed (subject to qualificati