9911796707
TMI Blog1998 (7) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... have challenged the order of this court passed under company jurisdiction, in C.A. Nos. 408 and 409 of 1998 in C.P. Nos. 17 and 18 of 1997, in these appeals. The aspect to be considered in these appeals is, whether the impugned order is devoid of various statutory safeguards against admission, advertisement and publication of winding up petitions ? In order to appreciate the legality of the impugned order, it is appropriate to refer to the objects of the company, the position of the parties and how the demand was made, which led to the filing of the company petitions. The main objects of the company are : ( i ) to carry on business of manufacturers, sellers, importers, exporters, suppliers, lessors or lessees and dealers of all kinds of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in C.P. No. 17 of 1997 and Rs. 1,11,67,630.80 with interest at 24 per cent, per annum amounting to Rs. 20,13,314 in C.P. No. 18 of 1997, have not been forthcoming from the appellants herein, in respect of several bills. Hence the respondent herein filed two company petitions viz., C. P. Nos. 17 and 18 of 1997 on January 17, 1997, under sections 433 and 439 of the Companies Act, 1956, for winding up the appellant companies and also filed two company applications in C.A. Nos. 408 and 409 of 1998 on March 6, 1997, for advertising the winding up petitions, under rule 24 of the Companies (Court) Rules (hereinafter referred to as "the Act" and "the Rules", for short), before this court under company jurisdiction. On March 19, 1998, the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances and situations in which a company may be deemed to be unable to pay its debts. Rule 95 of the Rules provides that the petition for winding-up of a company shall be presented in the Registry. Then comes rule 96, which is very material. It provides that ( i ) the court may issue notice to the company to show cause as to why the petition should not be admitted ; ( ii ) it may admit the petition and fix the date for hearing and issue notice to the company before giving directions about the advertisement of the petition ; and ( iii ) it may admit the petition, fix up the date for hearing of the petition and order that the petition be advertised and direct that the petition be served upon the persons, who are connected with the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear at a glance that the rule confers a discretionary power on the judge not to give any direction at that stage, but, if after receipt of the notice the company appears and satisfies that the debt is bona fide disputed or the presentation of the petition is mala fide , actuated by ulterior motive or an abuse of the process of the court, certainly the judge may decline to admit the petition and may direct the party presenting the winding-up petition to prove its claim by a suit or in any other manner. Thus, undoubtedly, a winding-up petition is not a recognised mode for recovery of debt and if the company is shown to be solvent and the debt is bona fide disputed the court generally is reluctant to admit the petition. This power is conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a pre-admission notice is issued to the company under rule 96, it would be open to the company to appear and ask for stay of proceedings or even seek to revoke the admission on the ground that the petitioner was not acting bona fide in filing the petition. The observation in Lord Krishna Sugar Mills Ltd. v. Smt. Abnash Kaur, AIR 1961 Punj 505 ; [1961] 31 Comp Cas 587 that the court, in appropriate cases, has the power to suspend advertisement of the petition for winding-up, pending disposal of the application for revoking the order of admission of the petition, was approved by the apex court. On principle, whenever the petition is admitted, the court need not take recourse to advertise the petition. It is contrary to the plain terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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