2003 (10) TMI 410 - HC - Companies Law

Summary

Issues involved:
1. Maintainability of the petition due to lack of affidavit in Form 21 under the Companies Act.
2. Maintainability of the petition in light of an arbitration clause in the contract.
3. Validity of the notice under section 434 of the Companies Act.

Analysis:

Issue 1: Maintainability of the petition due to lack of affidavit in Form 21 under the Companies Act
The respondent raised an objection regarding the maintainability of the petition, citing the absence of an affidavit in Form 21 as required under the Companies Act. The petitioner rectified this by filing an application enclosing the necessary affidavit. The judge allowed this rectification based on the precedent set by the Supreme Court in a similar case, emphasizing the importance of providing the applicant with an opportunity to correct any defects in the affidavit.

Issue 2: Maintainability of the petition in light of an arbitration clause in the contract
The respondent contended that the petition was not maintainable due to an arbitration clause in the contract between the parties. However, the judge rejected this objection, citing a Supreme Court ruling that an arbitrator does not have the jurisdiction to order winding up of a company, as this power is conferred on a court by the Companies Act. Therefore, the petition was deemed maintainable despite the presence of the arbitration clause.

Issue 3: Validity of the notice under section 434 of the Companies Act
Another objection raised by the respondent was regarding the validity of the notice issued under section 434 of the Companies Act. The respondent claimed that the notice did not provide the required 21 days for response and that the description of the leased equipment differed between the notice and the petition. The judge, however, referred to previous judgments to support the conclusion that the notice's specific format or the discrepancy in equipment description did not invalidate the petition. Additionally, the judge highlighted that a composite notice is permissible for filing a winding-up petition, further strengthening the petitioner's case.

In conclusion, the judge found a prima facie case in favor of the petitioner, admitted the petition for hearing, and granted time for the respondent to explore settlement options or make a deposit. The case was renotified for further proceedings.