Co. App. 19/2009

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$~9

* IN THE HIGH COURT OF DELHI AT NEW DELHI

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Date of Decision:7^th January, 2013

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CO. APP. 19/2009

INDO ROLHARD INDUSTRIES LTD.

.....Appellant

Through:

Mr. Sarat Chandra, Mr. Manoj Kumar

Garg, Mr. Animesh Kumar Sinha and

Mr. Abhinav Anand, Advocates.

versus

M. K. MAHAJAN & ANR.

..... Respondents

Through:

Ms. Vibha Mahajan Seth, Advocate.

Mr. Kanwal Chaudhary, Advocate for

Official Liquidator.

CORAM:

MR. JUSTICE S. RAVINDRA BHAT

MR. JUSTICE R.V. EASWAR

R.V. EASWAR, J.

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.

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Co. App. 19/2009

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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 786that 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

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

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

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Co. App. 19/2009

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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

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

qualifications which are not relevant for our purpose) by the Supreme Court. In that

judgment, the High Court had held that in an appropriate case the court has the

power to suspend advertisement of a petition for winding up, pending disposal of an

application for revoking the order of admission of the petition. The Supreme Court

traced the power to entertain an application by the company that in the interest of

justice or to prevent abu