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TMI Blog1994 (10) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... Act ), for compulsory winding up of the company and for the appointment of the official liquidator, as the provisional liquidator to take charge of the affairs of the company, on the ground that the company failed and neglected and was also unable to pay the debt due to the creditors. 4. When the company petition was posted for admission, the learned Single Judge passed the following order, which is impugned in this appeal : "Admit. The petitioners are directed to take out notices to the respondents and file proof of service into court. They are also directed to cause publication of the filing of this petition in Indian Express and Eenadu. Post on September 15, 1994." 5. The company filed Company Application No. 194 of 1994 in the company petition on 16-8-1994, seeking stay of the publication of filing of the company petition in two dailies. However, pursuant to the impugned order, publication was caused in Eenadu daily a vernacular in the Rajahmundry edition on 17-8-1994. On the same day, viz., 17-8-1994, the learned Single Judge passed an interim order granting stay of the publication. However, on 18-8-1994, the publication was also caused in the English daily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertisement to be published and the persons, if any, upon whom copies of the petition are to be served. The judge may, if he thinks fit direct notice to be given to the company before giving directions as to the advertisement of the petition." The other rule which relates to the advertisement is rule 24 of the Rules, which is as under : "(1) Where any petition is required to be advertised, it shall, unless the judge otherwise orders, or these rules otherwise provide, be advertised not less than fourteen days before the date fixed for hearing, in one issue of the Official Gazette of the State or the Union Territory concerned, and in one issue each of a daily newspaper in the English language and a daily newspaper in the regional language circulating in the State or the Union Territory concerned, as may be fixed by the judge. (2) Except in the case of a petition to wind up a company, the judge may, if he thinks fit, dispense with any advertisement required by these rules." 11. These two rules as well as rule 9, which provides for the inherent power in the company court to give such directions or pass such orders as may be necessary for the ends of justice and to prevent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is not to say that as soon as the company petition is admitted, it has to be advertised. The learned judges of the Supreme Court also observed that even before admitting the petition, the company court has a discretion to issue notice before admission. Similarly, it has the discretion to issue notice to the company before directing the advertisement of the admission of the company petition. The object behind this principle is, that if a notice is issued before admission of the petition, the company may appear and also show cause as to why the company petition should not be admitted and also may be able to establish that the company petition filed is nothing but an abuse of the process of the court and it is not bona fide and it was filed with a mala fide intention to pressurise the company to pay the amounts, which are otherwise disputed bona fide. It is further to be noticed that this procedure and the discretion is vested in the company court, for the reason that the company petition is primarily for winding up of the company and it is not the recognised mode of recovery of a debt. The remedy for recovery of a debt is primarily by way of a suit. All these facts can be pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit the petition and postpone giving directions as to the advertisement." (p. 216) 15. We are of the opinion that the observations extracted above equally apply to the third course mentioned above, namely that in the normal course, notice should be given to the respondent before advertising the admission of the company petition. In exceptional cases only, the advertisement of the admission of the company petition should be ordered. Therefore, if in any given case, the company court comes to the conclusion that the directions to advertise must be given simultaneously with the admission of the company petition, it should record reasons for the same and this can only be resorted to in exceptional cases as stated above. It is well to remember in this connection that when a company petition is filed under section 433 for compulsory winding up of the company by a creditor on the ground that the company is unable to pay its debts, there will not be any urgency to direct advertisement of the admission of the company petition simultaneously with the admission of the petition, when the creditor was able to wait so long ; he can as well wait till the notice is served on the company. In su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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