1985 (4) TMI 236 - HC - Companies Law

Company when deemed unable to pay its debts, Inherent powers of Court, Substitution of creditor or contributory for original petitioner

Summary

Issues:
1. Maintainability of petition without executing Delhi High Court judgment
2. Effect of amending the petition
3. Filing application for winding up despite appeal intention
4. Liability to pay fresh court fee on amended petition
5. Timeliness of filing amended petition

Analysis:

1. Maintainability of petition without executing Delhi High Court judgment:
The petitioner filed a winding-up petition under sections 433, 434, and 439 of the Companies Act, 1956. The respondent argued that as the petitioner did not execute the Delhi High Court judgment, the petition was not maintainable. However, the court held that the petitioner could claim the benefit of clause (a) of section 434 even without executing the judgment, as the notice had been served to the company demanding payment, satisfying the conditions of the clause.

2. Effect of amending the petition:
The petitioner was allowed to amend the petition, leading to the inclusion of new facts and the omission of facts related to the original petitioner. The respondent contended that the amended petition appeared to be a new petition, but the court dismissed this objection as too technical, finding no prejudice caused to the respondent by including the new facts.

3. Filing application for winding up despite appeal intention:
The respondent's intention to file an appeal against the Delhi High Court judgment raised the question of whether the petitioner could still file for winding up. The court clarified that a decree remains binding until set aside, thus rejecting the argument that the appeal intention negated the petitioner's right to seek winding up.

4. Liability to pay fresh court fee on amended petition:
The issue of whether the petitioner was liable to pay fresh court fee on the amended petition was raised. The court found no provision requiring a substituted party in a winding-up petition to pay fresh court fee, especially considering that the amended petition was treated as the original petition under Rule 102 of the Rules.

5. Timeliness of filing amended petition:
The respondent argued that the amended petition was filed six days beyond the three-week period ordered by the court, potentially warranting dismissal. However, the court, invoking Section 148 of the Code of Civil Procedure and emphasizing the procedural laws' role in advancing justice, extended the filing period by six days and declined to dismiss the petition on this technicality.

In conclusion, the court ordered the winding up of the company, directing the petitioner to advertise the order and the official liquidator to take charge of the company. The court rejected arguments aimed at delaying payment to the petitioner, emphasizing the prolonged delay in settling the outstanding amount owed by the respondent.