2009 (5) TMI 542 - HC - Companies Law

Power of Registrar to call for information or explanation - Held that - The present case is not a fit case in which discretion at this stage should be exercised to entertain the present writ petition because of alleged technical flaws and non-compliance of right to hearing. This order ensures hearing and passing of a speaking order, which takes care of substantial grievance raised by the petitioner. Other aspects raised shall be crystallised and clarified once the speaking order is passed. At this stage, learned counsel for the petitioners-companies states that they want to file additional documents before the Registrar of Companies. Learned counsel is granted liberty to do so. It is clarified that this court has not expressed any opinion on the merits of the issues raised by the petitioners or the Registrar of Companies. The petitioners will be at liberty to ventilate their grievance in case they are aggrieved by any order passed by the Registrar of Companies.

Summary

Issues:
Challenge to letter/notice under section 234(7) of the Companies Act, 1956 - Jurisdiction of Registrar of Companies - Opportunity of being heard before passing order under section 234(7) - Compliance with pre-conditions of section 234(7) - Filing additional documents before the Registrar of Companies.

Analysis:
The petitioners challenged a letter/notice dated 23-4-2009, issued by the Registrar of Companies under section 234(7) of the Companies Act, 1956. The petitioners contended that the Registrar lacked jurisdiction as the pre-conditions for invoking section 234(7) were not met. They argued that there must be material forming a prima facie opinion of fraud on creditors or unlawful purpose, provided by specified persons. The petitioners also claimed that they should have been given an opportunity to be heard before the order under section 234(7) was passed.

The High Court directed the petitioners to appear before the Registrar of Companies for a hearing on 19-5-2009. The Court treated the writ petitions as representations to the Registrar, who was instructed to pass a preliminary order under section 234(7) after hearing the petitioners. The Registrar was also tasked with addressing the applicability of section 234(1) of the Act. The Court emphasized the importance of the right to a hearing and the need for a speaking order to address the petitioners' grievances effectively.

Referring to relevant case law, the Court highlighted the necessity of passing a speaking order after considering objections raised by the petitioners. The Court allowed the petitioners to file additional documents before the Registrar. It clarified that its order did not express any opinion on the merits of the issues raised, granting the petitioners the liberty to challenge any future orders by the Registrar. The Court disposed of the writ petitions, ensuring a fair hearing and the passing of a speaking order by the Registrar.

In conclusion, the judgment addressed the jurisdictional issues, the right to a hearing, compliance with statutory pre-conditions, and the importance of passing a speaking order. It provided a procedural framework for the petitioners to present their case before the Registrar of Companies and emphasized the significance of due process in administrative actions under the Companies Act, 1956.