1968 (7) TMI 33 - HC - Companies Law

Circumstances in which a company may be wound up, Company when deemed unable to pay its debts, Cost and expenses payable out of assets in a winding-up by Court

Summary

Issues Involved:
1. Application for leave to deliver interrogatories under Order XI, rule 2, Civil Procedure Code.
2. Objections to interrogatories under Order XI, rule 7, Civil Procedure Code.
3. Application for compelling answers to interrogatories under Order XI, rule 11, Civil Procedure Code.
4. Application for summoning witnesses.

Issue-wise Detailed Analysis:

1. Application for Leave to Deliver Interrogatories:
The petitioning creditor filed an application under Order XI, rule 2, Civil Procedure Code, seeking leave to deliver 94 interrogatories. The court noted that the interrogatories were to be answered by several individuals without specifying which questions were to be answered by whom. After considerable argument, leave was granted on March 21, 1968, to deliver the interrogatories. The issues were reframed to include whether it was just and equitable to wind up the company and whether the petition was mala fide.

2. Objections to Interrogatories:
The company filed a twenty-page application on March 27, 1968, under Order XI, rule 7, Civil Procedure Code, objecting to all interrogatories on the grounds that they were unreasonable, vexatious, prolix, oppressive, unnecessary, and scandalous. The court scrutinized each interrogatory and the objections, considering the affidavit, counter-affidavit, and rejoinder affidavit. The objections were three-fold: the interrogatories fell outside the scope of permissible interrogatories, went beyond the petition's scope, and were mala fide attempts to defame the company. The court emphasized that the power to order interrogatories must be used with care to avoid abuse.

3. Application for Compelling Answers to Interrogatories:
At the close of arguments, the petitioner filed an application under Order XI, rule 11, Civil Procedure Code, to compel answers to the interrogatories. The company contended that this application was premature as the stage for an affidavit in answer to the interrogatories had not been reached. The court found that the application was made late but decided to consider it together with the application under Order XI, rule 7. The court directed the company to answer specific interrogatories (Nos. 9, 10-12, 27-31, 35, 23, 24, 40, and 36) to supplement the evidence already on record.

4. Application for Summoning Witnesses:
The petitioner filed an application on March 26, 1968, to summon witnesses. The court noted that winding up proceedings are generally decided on affidavits and oral evidence is allowed only in exceptional cases. The court dismissed the application for summoning witnesses, stating that the material already on record was sufficient for a satisfactory decision.

Conclusion:
The court allowed the application under Order XI, rule 11, Civil Procedure Code, to the extent of specific interrogatories and set aside the remaining interrogatories under Order XI, rule 7. The application for summoning witnesses was dismissed. The affidavit or affidavits-in-reply to the interrogatories were to be filed by July 20, 1968, and the case was listed for final hearing on July 29, 1968. The parties were to bear their own costs.