2012 (11) TMI 405 - HC - Companies Law

Winding up alleged that Company is unable to pay its admitted debts alleged that Company Judge has not taken into account the very sound financial position of the Company - company is a profit making, ongoing company Held that - Even an order for merely admitting a Company Petition under Sec. 432(e) and (f) of the Act also should be a speaking order supported by reasons as it definitely can affect the interest of the respondent -Company to a considerable extent - remand the matter to the learned Company Judge to consider the matter afresh and pass orders

Summary

Issues Involved:
1. Validity of the admission order of the Company Petition.
2. Requirement for a reasoned order for admitting a Company Petition.
3. Maintainability of an appeal against the admission order under Section 483 of the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Validity of the Admission Order of the Company Petition:
The respondent filed a Company Petition under Sections 433(e) and (f) of the Companies Act, 1956, seeking the winding up of the appellant company on the grounds of inability to pay its admitted debts. The Company Judge issued a cryptic order admitting the petition without providing reasons, which the appellant contested, arguing that the order was passed without considering the material on record, the company's sound financial position, and the fact that the petitioner had no locus standi as the claimed amounts were for remuneration after resignation as a director.

2. Requirement for a Reasoned Order for Admitting a Company Petition:
The appellant's counsel argued, relying on the Division Bench Judgment in Airwings (P.) Ltd. v. Viktoria Air Cargo Gmbh, that even an order admitting a Company Petition must be a reasoned order. The Supreme Court's ruling in Pradeshiya Industrial & Investment Corpn. of U.P. v. North India Petro Chemical Ltd. emphasized that a winding-up petition should not be admitted without prima facie evidence of the company's inability to pay debts. The court noted that the admission of a winding-up petition has serious consequences and must be supported by reasons, reflecting the examination of the company's financial condition and the validity of the debt.

3. Maintainability of an Appeal Against the Admission Order Under Section 483 of the Companies Act, 1956:
The respondent's counsel raised a preliminary objection, arguing that an appeal against an admission order is not maintainable under Section 483 of the Companies Act, as admission is procedural and not a judicial order. However, the court referred to the Division Bench's interpretation in Airwings (P.) Ltd., which followed the Supreme Court's ruling in Pradeshiya Industrial & Investment Corpn. of U.P., establishing that even an admission order must be reasoned and can be appealed. The court rejected the preliminary objection, emphasizing that the interpretation of Section 483 should facilitate appeals rather than restrict them on technical grounds.

Conclusion:
The court allowed the appeal, set aside the admission order, and remanded the matter to the Company Judge for reconsideration. The court mandated that the order should be a reasoned and speaking order, conforming to legal requirements and reflecting the examination of the company's financial condition and the validity of the debt. The appeal was allowed with no order as to costs.