1986 (12) TMI 324 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the winding-up petition due to defective affidavit verification.
2. Court's power to allow rectification of defects in the affidavit.

Detailed Analysis:

1. Maintainability of the Winding-Up Petition Due to Defective Affidavit Verification

The primary issue addressed in this judgment is the maintainability of the winding-up petition filed under sections 433 and 439 of the Companies Act, 1956, which was challenged on the grounds that it was not supported by an affidavit duly verified as required under rule 21 of the Companies (Court) Rules, 1959. The respondent-company argued that the affidavit filed with the original petition and subsequent amended petitions did not conform to the mandatory requirements of rule 21 and Form No. 3.

The petitioners initially filed the petition on February 1, 1985, supported by an affidavit from one petitioner, Mr. R.N. Paul. Following the death of some petitioners, an amended petition was filed on July 1, 1985, supported again by an affidavit from Mr. R.N. Paul. The company objected, stating that the amended petition was defective as it was signed only by the advocate and not by the petitioners themselves. A second amended petition, signed by all petitioners and supported by another affidavit from Mr. R.N. Paul, was filed on October 4, 1985. The company contended that this affidavit did not meet the requirements of rule 21 and Form No. 3, thus rendering the petition non-maintainable.

The court examined the affidavit in support of the amended petition and found it did not meet the prescribed form and requirements. The affidavit should have been in the first person, signed by the deponent, and sworn in the manner prescribed by the Code or the rules and practice of the court, as per rule 18.

2. Court's Power to Allow Rectification of Defects in the Affidavit

The petitioners argued that the court has inherent powers to permit the filing of a proper affidavit in terms of the rules, even if the original affidavit was defective. They referred to rule 9, which saves the inherent powers of the court to pass necessary orders for the ends of justice or to prevent abuse of the court's process. They also cited a decision from the Bombay High Court, which held that a defect in the verification of a winding-up petition was a mere irregularity that could be cured at any time.

The court considered the objections raised by the company and the supporting judgments from the Calcutta High Court and the Punjab and Haryana High Court, which held that a defect in verification was fatal and could not be remedied. However, the court respectfully disagreed with these views, emphasizing that the defect in verification could be rectified in the interests of justice. The court noted that the petition was at a preliminary stage and had not yet been admitted. The serious allegations made by the petitioners against the company warranted a just and equitable resolution.

The court concluded that it had the inherent power to allow the petitioners to file an affidavit verifying the petition in the prescribed form, thereby overruling the company's objections regarding the maintainability of the petition. The court directed the petitioners to file the proper affidavit within two weeks and imposed a cost of Rs. 500 on the petitioners.

Conclusion

The court overruled the objections to the maintainability of the winding-up petition based on defective affidavit verification. It exercised its inherent powers to permit the petitioners to rectify the defect by filing a proper affidavit in compliance with rule 21 and Form No. 3, ensuring that justice prevails over procedural technicalities.