1995 (3) TMI 380 - HC - Companies Law

Summary

Issues: Application for winding up of a company under sections 434 and 439 of the Companies Act, 1956 due to inability to pay debts and jurisdiction of the court based on the location of the company's registered office.

In this judgment, the court addressed an application for the winding up of a company, N.C.L. Industries Ltd., under sections 434 and 439 of the Companies Act, 1956, citing the company's inability to pay its debts as the ground for the petition. Section 434 of the Act outlines the circumstances in which a company is considered unable to pay its debts, including the failure to pay a sum exceeding five hundred rupees after a demand from a creditor. The petitioner alleged that despite multiple registered letters, the company had not settled the amount owed. However, the court highlighted the issue of jurisdiction under section 10 of the Act, which specifies that the court with jurisdiction is the High Court where the company's registered office is located, unless authority has been granted to a District Court. The judgment emphasized that the registered office of the company in question was in Hyderabad, establishing that the court did not have jurisdiction to entertain the application due to the company's location.

The court's analysis focused on the interpretation of section 10 of the Companies Act, which dictates the jurisdiction of courts in matters concerning the winding up of companies. The provision stipulates that the court with jurisdiction is the High Court where the company's registered office is situated, unless specific authority has been granted to a District Court. Additionally, the judgment clarified that for the purpose of determining jurisdiction, the registered office refers to the location that has been the company's registered office for the longest duration in the six months preceding the winding-up petition. The court underscored that unless jurisdiction is expressly conferred on a District Court, the High Courts retain residual jurisdiction under the Act. Therefore, based on the acknowledgment that the company's registered office was in Hyderabad, the court concluded that it lacked jurisdiction to entertain the winding-up application, leading to the dismissal of the petition.