2014 (2) TMI 778 - HC - Companies Law

Winding up petition - petition for re-call of order - advertisement of admission of winding up petition - direct the Provisional Liquidator attached to this Court to take over the possession of all the assets of the Respondent Company, including the registered office of the Company, that is, 1-E/2, Jhandewalan Extension, New Delhi-110055 - Held that - It is seen from the order of the learned Company Judge passed on 16.2.2009 that all the pleas taken by the respondent-company against the petition were discussed threadbare and prima facie observations were made justifying the admission of the winding up petition. These observations have attained finality in view of the order passed by the Division Bench in the review petition filed by the petitioners. The findings of the learned Company Judge and his prima facie observations on the admission of the company petition were upheld by the Division Bench. It would thus appear that in the additional affidavit filed by the respondent-company on 30.10.2013 along with the additional documents, the same issue i.e., admission of the winding up petition, is sought to be reargued or reopened. This is not permissible. The present petition was filed in the year 2005 and the respondent had sufficient opportunity to settle the claims of the petitioners, however, the same was also not done by the respondent. Therefore, deferring the publication of advertisements to enable the respondent to pay the admitted dues is also not warranted in the facts of the present case. Thus, in the present case, the advertisement as required under Rule 96 is required to be published in accordance with the Companies (Court) Rules, 1959

Issues Involved:
1. Recall of the order dated 27.02.2013.
2. Appointment of Provisional Liquidator.
3. Publication of citation for the admission of the winding-up petition.
4. Compliance with procedural rules regarding advertisement of the petition.
5. Mismanagement and lack of probity in the company's affairs.
6. Validity of debt owed to the petitioner.

Detailed Analysis:

Recall of the Order Dated 27.02.2013:
The petitioners sought to recall the order dated 27.02.2013, which directed the restoration of the possession of the registered office of the respondent company to its directors. The court had previously rejected the petitioners' contention that the admission of the winding-up petition and the direction to the Official Liquidator to take over possession were not set aside. The Division Bench later clarified that the findings regarding the admission of the petition would continue to stand, thus supporting the petitioners' stance.

Appointment of Provisional Liquidator:
The petitioners requested the appointment of the Official Liquidator as the Provisional Liquidator, citing the court's previous observations about the respondent company's mismanagement and lack of probity. The court found sufficient grounds to appoint the Official Liquidator as the Provisional Liquidator. The court directed the Official Liquidator to take charge of the assets and books of accounts of the company and required the directors to file a Statement of Affairs within 21 days and provide correct addresses.

Publication of Citation for the Admission of the Winding-Up Petition:
The petitioners argued that the winding-up petition had already been admitted by an order dated 16.02.2009. The Division Bench had clarified that the findings regarding the admission of the petition would stand. The respondent's contention that the order dated 05.04.2013 did not imply the admission of the petition was rejected. The court directed that the advertisement for the winding-up petition be published in accordance with Rule 96 and Rule 24 of the Companies (Court) Rules, 1959.

Compliance with Procedural Rules Regarding Advertisement of the Petition:
The court emphasized the importance of advertising the winding-up petition as per Rule 96 and Rule 24, which ensures that interested parties are given an opportunity to be heard. The Supreme Court's ruling in National Conduits (P) Ltd. v. S.S. Arora was cited, which allows for the deferment of advertisement in certain circumstances but mandates advertisement before a winding-up order can be passed. The court found no special circumstances to defer the advertisement and directed its publication.

Mismanagement and Lack of Probity in the Company's Affairs:
The court's order dated 16.02.2009 had detailed observations about the respondent company's mismanagement, including contradictory statements about property transactions and unexplained appropriations of sale proceeds. The court found that these actions justified a lack of confidence in the company's management. The Division Bench did not interfere with these findings, which supported the petitioners' claims.

Validity of Debt Owed to the Petitioner:
The court had previously established that the respondent company owed a bona fide debt of Rs. 7,50,000 to the petitioner, as reflected in the company's balance sheet and other documents. The respondent's arguments against this finding were dismissed, and the court reiterated that the debt was valid and undisputed.

Conclusion:
The court granted the petitioners' application, directing the publication of the winding-up petition's advertisement and appointing the Official Liquidator as the Provisional Liquidator. The court dismissed the respondent's contentions and emphasized the importance of following procedural rules to ensure transparency and fairness in the winding-up process.

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