9911796707
TMI Blog1982 (4) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... the company." By way of the present application, it has been contended that petitioner No. 2, who is the managing director of the company, was at the relevant time in Tihar jail and was not served on behalf of the company and was not in the know of winding-up proceedings which were taken up by the petitioning creditors against the company in this court. It has been mentioned in this application that from December 4, 1980, until November 17, 1981, petitioner No. 2, managing director of the company, was in Tihar jail under judicial custody and his wife, the second director of the company, was in Switzerland. The case of the petitioners is that neither petitioner No. 2 nor his wife were ever served with any notice regarding the pendency of winding-up petition in this court and they were the persons who could have acted on behalf of the company. It is further contended that the aforesaid order passed by me is an ex parte order and it deserves to be set aside in the interest of justice in exercise of review jurisdiction and/or inherent powers of this court. After the passing of the said order, when petitioner No. 2 was released from Tihar jail and when he came to know of the ex pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposed project in its initial days and months had no smooth sailing. In the meantime, respondents Nos. 1 and 2 served statutory notices on petitioner No. 1 company demanding their dues. I am told that petitioner No. 2's wife, Mrs. Anna Elizabeth Sinha, who is also a director of the company, was served with a statutory notice in January, 1981, issued on behalf of respondents Nos. 1 and 2 who are the creditors of the company at her Switzerland address. As the said notices were not complied with, the concerned respondents Nos. 1 and 2 filed Company Petition No. 10 of 1981 for obtaining an order of winding up of petitioner No. 1 company. The said petition was filed on March 3, 1981. It appears that petitioner No. 1 company was sought to be served at its registered office situated in this city pursuant to the order of this court in Company Application No. 10 of 1981 but the notice could not be served as the registered office of the company could not be traced. That, thereafter, by an order March 20, 1982, N.H. Bhatt J. appointed the official liquidator as provisional liquidator for petitioner No. 1 company and direct, ed notice of pendency of the petition to be served by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi. Petitioner No. 2's advocate, Ranjan Dwivedi, accordingly sent a telegram to the official liquidator pointing out the fact that the present petitioner No. 2 was confined in Tihar jail. The said telegram was received by the official liquidator on May 5, 1981. Thereafter, it appears that the official liquidator wrote a letter dated May 27, 1981, to advocate, Ranjan Dwivedi, at Delhi informing him that his client was required to submit statements of affairs of the company within 21 days and that he was requested to make necessary arrangements to hand over possession of books, records and assets of the company (in provisional liquidation) and to submit statements of affairs forthwith. Thereafter, petitioner No. 2 appears to have been informed by the Delhi advocate about the said letter received from the official liquidator. In response to the same, petitioner No. 2 through his advocate addressed a letter, dated June 10, 1981, to the official liquidator pointing out that petitioner No. 2 was in Tihar jail in connection with a case and so, he could not attend the office of the provisional liquidator and that he was hoping that his trial at Delhi will be over by July 15, 1981. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing director and who would be the proper person to put forward his contentions on behalf of the company in opposition to the company petition. It is obvious that the company, though being a legal entity, could not have appeared by itself. It could appear through its officer well versed in the affairs of the company. Petitioner No. 1 being the managing director was the proper person who could have appeared before this court and could have pointed out all the relevant contentions and submissions in opposition to the petition. But he got no opportunity to represent his case on behalf of the company under the circumstances narrated above. The only other person who could have appeared was the other director, his wife, who was a Swiss national and who was away from India in Switzerland and who was not served on behalf of the company in Company Petition No. 10 of 1981. Therefore, practically, there was no appearance on behalf of the company as there was no one who could appear on behalf of the company on June 30, 1981. It is in the background of these facts and circumstances, that I find the order of winding up as passed by me on June 30, 1981, to be in substance an ex parte order. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i case was likely to be decided in the first week of September, 1981, he hoped to be free thereafter and he would personally visit him at Ahmedabad. Thereafter, the official liquidator wrote another letter in September, 1981, to petitioner No. 2 to the address of his Delhi advocate, Shri S.R. Nanda, calling upon him to hand over possession of the books, etc . Even in that letter, no intimation was sent to him that there was already a winding-up order passed by the court on June 30, 1981. Petitioner No. 2 again wrote a letter dated September 30, 1981, to the official liquidator reiterating his request for stay of the proceedings in the company petition and pointing out that he was still in custody in Central jail at Tihar. It was, thereafter, that the official liquidator wrote a letter dated December 29, 1981, to petitioner No. 2 at his Delhi address pointing out that the court had passed a winding-up order on June 30, 1981. When this letter reached petitioner No. 2, he was already out of Central jail at Tihar as he was detained in the said jail up to November, 1981. The moment petitioner No. 2 came to know about the passing of the winding-up order on June 30, 1981, he immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981, in the present case and within 30 days thereof, the present application has been filed and consequently, there was no question of limitation involved in the present matter and in any case, delay, if any, deserved to be condoned in the interest of justice, and Company Petition No. 10 of 1981 deserved to be heard afresh on merits after hearing the petitioners. Mr. G. N. Shah for the contesting respondents, original petitioning creditors, on the other hand, submitted that the present application deserves to be dismissed. He raised the following contentions in opposition. 1The present review application is not maintainable at the instance of the petitioners as petitioner No. 2, the erstwhile managing director, has no locus standi to prefer this application on behalf of the company which can now be represented before the court of law only by the official liquidator. 2The petition is barred by limitation. 3There was no sufficient cause for remaining absent on the day on which the impugned order of winding up was passed by me and, hence, even on this ground, the application should be dismissed. It must be stated at the outset that rule 6 of the Companies (Court) Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reliance on the observations in the standard works on company law, Mr. Shah contended that the legal effect of a winding-up order is that the director is denuded of his power to act on behalf of the company. There cannot be any quarrel with this position of law. But it is trite to say that the very order by which such a result is brought about can, of course, be challenged by a person who is likely to be affected by the order. I asked Mr. Shah as to whether the impugned order of winding up can be challenged in appeal by the erstwhile director on behalf of the company or not. He fairly stated that he can file such an appeal, but hastened to add that in such a case, he should obtain stay of operation of the order of winding up as passed by the concerned company judge. In my view, whether a stay of operation of a winding-up order is obtained or not, an appeal can be legitimately filed by an aggrieved director challenging the winding-up order. If that is so, there is no rhyme or reason why an application to set aside an ex parte winding-up order by way of review cannot be filed by an aggrieved person. Various statutory provisions and the commentaries of the learned authors on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teria provisions of the English Companies Act (at p. 1113 of [1972] 1 All ER and at pp. 641 and 642 of [1972] 1 WLR): "The respondents' submission was that the appointment of a provisional liquidator automatically put an end to the authority of the company's directors to instruct solicitors and counsel to represent it and that the solicitors purporting to act on its behalf were, therefore, liable to pay the respondents' costs personally. It is of course well settled that on a winding-up, the board of directors of a company becomes functus officio and its powers are assumed by the liquidator, and my attention was drawn to In re Mawcon Ltd. [1969] 1 All ER 188 ; [1969] 1 WLR 78 ; 39 Comp. Cas. 926 (Ch D), where Pennycuick J. stated in effect that the appointment of a provisional liquidator had the same result. No doubt that is so, but it is common ground that notwithstanding the appointment of the provisional liquidator, the board has some residuary powers, for example, it can unquestionably instruct solicitors and counsel to oppose the current petition and, if a winding-up order is made to appeal against that order." I fully concur with the aforesaid observation of S. Rangana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the claims under the Act is not a court, yet the principle which is really a principle of fair play and is applicable to all tribunals performing judicial or quasi-judicial functions must also apply to him," Reliance has been placed in the above decision on an earlier decision in Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer, AIR 1961 SC 1500. It must, therefore, be held that for the purpose of computing limitation for filing a review application, the period of 30 days will start to run from the date on which the petitioner got the knowledge of the impugned order. As I have already shown above, he came to know for the first time only after December 29, 1981, pursuant to the letter which he received from the official liquidator that a winding-up order was passed by this court on June 30, 1981. If the date of his knowledge at Delhi about the impugned order is taken to be the day following the date of the letter dated December 29, 1981, posted from Ahmedabad, even then, the present application is filed within 30 days thereof. Mr. Shah in this connection submitted that personal knowledge of petitioner No. 2 is irrelevant as he was not a party to the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the day on which the order was passed by me, neither was it known to me nor to the learned advocate for the petitioners-creditors that the managing director of the company was under a physical disability and could not remain present before the court as he was in judicial custody at Delhi. If that fact was known to me, the impugned order would never have been passed by me. I would have directed a personal service to petitioner No. 2 through the jailor, Tihar Jail, New Delhi. It is trite to say that the public notice issued either in April, 1981, or in May, 1981, regarding pendency of the company petition could not have been read by petitioner No. 2 in Tihar Jail at Delhi as these notices were published in local dailies or in local editions of The Times of India. Therefore, in all probability, petitioner No. 2 could not have got any information regarding pendency of these proceedings. It is true that the correspondence which ensued between petitioner No. 2's advocate on the one hand and the official liquidator on the other did inform petitioner No. 2 about the pendency of the company petition. But petitioner No. 2 made it clear times without number that so long as he was detained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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