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TMI Blog2001 (12) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, did not admit the petition, and for this purpose an option was given to the petitioners to move an application under section 397 within six weeks before the CLB, which has jurisdiction under section 397 to consider such application in the first instance. Appeal against such order as may be passed lies to this Court. With this order, the company petition for winding-up of the company petition was kept pending without admitting. In this event company petition was to be proceeded further in case the petitioners were not to make an application before CLB under section 397. 3. Aggrieved with the order of the learned Company Judge, recording finding against the company in definite terms without even admitting the petition and inviting the objections and before hearing the objections if any, that may be raised after the same is admitted, these appeals could be made, if after admitting the petition the notice of petition were to be published. Findings on merit were also challenged. 4. The petitioners had exercised such option by making an application under section 397 before the CLB which is pending consideration. 5. At the outset, it was contended by the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Judge by way of appeal or otherwise is permitted by law. In case the prima facie conclusions reached by learned Company Judge remains in operation and matter remains pending, such right of appeal is likely to affect such remedies. 9. From a long chain of judicial pronouncements, it is fairly well-settled that a company which is sought to be wound-up on just and equitable ground under section 433(1) ought not be so wound-up unless resort to such an extreme step to bring an end to existence of company is necessity and cannot be dealt with through any alternative mechanism. 10. It was so held almost a century also in Re Professional Commercial Industrial Benefit Building Society [1891] 6 Ch. App. 856 that under the just and equitable clause, the Court will not make an order for winding-up, if the petitioner has another remedy to have the matter complained of by him rectified, as for instance, an application in the case of mismanagement and oppression. 11. The Supreme Court in RES Corpn. Ltd. v. Nageshwara Rao AIR 1956 SC 213 while considering the provisions of section 153C and section 162 of the Indian Companies Act, 1913 (corresponding provision in Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 433( f ) not only to establish that the circumstances obtaining in the company are such that a winding-up of the company is the only alternative but also to show that he has no other remedies available. It further held that it is necessary to bear in mind that the relief under section 433( f ) is in the nature of a last resort, thus, obliging the Court to give relief to the party when moved under the section only under compelling circumstances. 16. In George v. Athimattam Rubber Co. AIR 1964 Ker. 212, Raman Nair, J. (as he then was) opined that even if the allegations made by the petitioner would justify a winding-up order under the just and equitable clause, I think that, on the allegations made, the petitioner s proper remedy would be an application under section 398 of the Act and that he is acting unreasonably in seeking to have the company wound-up instead of pursuing that remedy. To say that that remedy is not available to the petitioner, since he cannot muster the support required by Section 399, seems to me no answer and only serves to show that other members are not prepared to subscribe to the allegations made by the petitioner. 17. The Kerala High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, has granted interim injunction as well as order appointing provisional liquidator on two different dates after the company was served and put up its appearance and had sought time to file reply to winding-up petition. The orders passed on interim appli- cations were challenged, inter alia, on the ground that unless the petition is heard, no interim order could have been granted. Since petition was not admitted, it cannot be said that the petition was heard within the meaning of section 443(1). The question of advisability of continuing both proceed--ings, viz., winding-up petition as well as section 397 petition at the instance of same parties before two different forums was under consideration. For the purpose of Company Court s jurisdiction to order appointment of provisional liquidator, the Court said by referring to sections 441(2) and 450 of the Act that these provisions clearly establish that the Court s jurisdiction is not postponed till the date set for hearing of the company petition after notice to the respondents. 21. The decision of Jammu and Kashmir High Court in A.K. Puri s case ( supra ) also in our opinion does not deal with a case like the one in ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith before it. For going before CLB, both parties have no objection. Whether in such circumstances, it is desirable to keep petition for winding-up pending at the instance of the same petitioners, until those proceedings are culminated, to be prosecuted only if proceeding under section 397/398 does not yield a result favourable to him, was not the question to which the Court was required to address itself. 23. Moreover, it is to be seen that Jammu and Kashmir High Court has also expressed, as opined by us above, that two forums exercising independent and separate jurisdiction under the relevant provisions of the Act exist. The Jammu and Kashmir High Court has also not opined that in no case, two proceedings should be allowed to continue simultaneously by the same petitioner or in all circumstances, on the contrary, it only gives out that merely on the ground of pendency of an application under section 397/398 before the CLB cannot be a good ground for staying the winding-up petition by the Company Judge but it does give out that in the appropriate cases where circumstances of the case so demand, the proceedings of winding-up may be stalled, when an application under section 397 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reached beyond the stage of preliminary consideration for admission and whatever consideration was to be made by the learned Company Judge was only with respect to whether to admit or not to admit. The company is liable to be wound-up only after the petition is admitted and following it public notice of the same is published inviting objection to winding-up as per Company Court Rules. Having decided not to admit and leaving the petitioner to opt to invoke jurisdiction of the CLB, and the petitioners having exercised that option, it does not appear to be just and proper to keep the winding-up petition still pending. 28. It is also apparent that the learned Company Judge has not decided to direct the CLB to frame a scheme for management nor has directed the petitioners to make an application to CLB. This clearly indicates, that the proceedings by CLB were not to be conducted by or under the supervision of learned Company Judge, but left it at the volition of petitioners to invoke jurisdiction of the CLB under section 397 by making an appropriate application. Thus, on exercise of such option an independent proceedings came to be instituted which had to be proceeded with independen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Company Judge binding on him nor any of the parties can press in service finding recorded by the learned Company Judge as a matter of precedent. They otherwise remain to be a prima facie finding of the learned Company Judge for the purpose of examining merit of the petition. Once the petitioners have availed the alternative option, those findings cannot be carried any further and no useful purpose would now be served to complicate the issue about the right of appeal that may be required to be invoked by any of the respective parties so that their right of a fair opportunity of being heard and convincing the CLB on the merits of their respective cases independent of the previous proceedings remain unaffected. 30. As a result, these appeals are allowed. As the petitioner has in pursuance of option given by the learned Company Judge preferred applications under section 397, as a remedy more appropriate to proceed in first instance, the winding-up petition is dismissed subject to observations made above. The CLB shall decide the application filed before it uninfluenced by any finding recorded by the learned Company Judge. This order does not reflect on the merit of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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