2010 (6) TMI 331 - HC - Companies Law

Winding up - Circumstances in which a company may be wound up - Held that - the petition is entitled ex debito justitiae to have its petition admitted. CP No. 483 of 2009 is admitted in the principal sum of ₹ 7,77,980.80 together with interest at the rate of 9 per cent per annum from the date of the decree till payment. If the company furnishes security for such amount, inclusive of interest, in favour of the Registrar, Original Side, and pays costs assessed at 5000 GM to the petitioner within a fortnight of the petitioner s written demand enclosing an authenticated copy of this order, the petition will remain permanently stayed. In the event such security is presented, the Registrar will invest the same by way of a fixed deposit in a nationalised bank for a period of six months within which period the company may attempt to have the ex parte decree set aside. If the company fails to have the decree set aside within such time, the petitioner will be entitled to receive the maturity value, less the Registrar s commission, upon notice to the company. If the decree is set aside within such time, the company will be entitled to the maturity value, less the Registrar s commission. In default of the security being furnished or the costs being tendered within the time permitted, the petitioner will advertise the petition in The Statesman and in Aajkaal. Publication in the Official Gazette will stand dispensed with. The advertisements should indicate that the matter will appear in Court on the first available working day after the expiry of four weeks from the date of publication.

Issues Involved:
1. Applicability of Section 32 of the Coal Mines (Nationalisation) Act, 1973.
2. Maintainability of the creditor's winding-up petition without the Central Government's consent.
3. Validity of the ex parte decree and the company's efforts to set it aside.
4. The company's status as a "mining company" under the 1973 Act.
5. The relevance of prior judgments and statutory provisions cited by both parties.

Detailed Analysis:

1. Applicability of Section 32 of the Coal Mines (Nationalisation) Act, 1973:
The company argued that Section 32 of the Coal Mines (Nationalisation) Act, 1973, provides it with special protection, preventing the winding-up proceedings without the Central Government's consent. The court analyzed Section 32, which stipulates that a mining company whose coal mine has vested in the Central Government cannot be wound up without such consent. However, the company failed to demonstrate that it owned or ever owned a coal mine, a primary condition for invoking Section 32. The court concluded that Section 32 did not apply to the company as it did not meet the necessary conditions.

2. Maintainability of the Creditor's Winding-Up Petition Without the Central Government's Consent:
The company contended that the creditor's winding-up petition was not maintainable without prior leave from the Central Government as per Section 32 of the 1973 Act. The court rejected this argument, stating that the company did not qualify as a mining company under the Act and thus could not invoke Section 32 as a bar to the winding-up petition.

3. Validity of the Ex Parte Decree and the Company's Efforts to Set It Aside:
The petitioner had an ex parte decree from the City Civil Court, which the company had failed to discharge. The company disclosed that it had applied to set aside the decree but had not served the application on the petitioner or taken meaningful steps to prosecute it. The court noted that no prayer for adjournment was made, and the company's efforts to set aside the decree were perfunctory. The court emphasized that a creditor could use the winding-up petition as an equitable mode of execution, and the company failed to demonstrate that the original claim was without merit.

4. The Company's Status as a "Mining Company" Under the 1973 Act:
The company claimed to be a mining company under Section 2(j) of the 1973 Act, which defines a mining company as one owning a coal mine. However, the company's affidavit did not establish that it owned any coal mine. The court concluded that the company did not qualify as a mining company within the meaning of the 1973 Act, and thus, the special protections under the Act did not apply.

5. The Relevance of Prior Judgments and Statutory Provisions Cited by Both Parties:
The company cited the judgment in Punjab National Bank v. Official Liquidator and Pradyut Bordoloi v. Swapan Roy to support its arguments. The court found that these judgments did not support the company's position. The Punjab National Bank case dealt with the primacy of the Commissioner of payments under the 1973 Act, which was not relevant to the current proceedings. The Pradyut Bordoloi case involved the internal decision-making of Coal India Ltd. and did not impact the statutory requirements under the Companies Act.

Conclusion:
The preliminary objection raised by the company was rejected. The court admitted the winding-up petition, noting that the company had failed to rebut the presumption arising from the statutory notice and had not demonstrated that the original claim was without merit. The court provided the company an opportunity to furnish security to stay the petition permanently, failing which the petitioner was allowed to advertise the petition.

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