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TMI Blog2000 (12) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the appellant-company was unable to meet its financial obligations, the above company petition was filed for winding up of the appellant-company, as according to the respondent herein that the appellant-company appears to be in a commercially insolvent condition. Preliminary objections were filed by the appellant-company. The objections are: ( i )The winding up petition is not maintainable and is liable to be dismissed as the affidavit filed in respect of the petition is not in conformity with the provisions of the Companies Act and the rules made thereunder. It is not an affidavit in the eye of law and the winding up petition is not a properly constituted petition. ( ii )According to the appellant, every affidavit shall be drawn up in the first person and shall state the full name, age, occupation and place of abode of the deponent. It shall be signed by the deponent and sworn to in the manner prescribed by the court or by the rules and practice of the court. Rule 18 of the Companies (Court) Rules states as above. The rule further provides that every exhibit annexed to an affidavit shall be marked with the number of the proceeding to which it relates and shall be initial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. National Paints ( P. ) Ltd. [1986] 60 Comp. Cas. 402 (P H). ( ii ) Registrar of Companies, Punjab v. New Suraj financiers and Chit Fund Co. Pvt. Ltd. [1990] 69 Comp. Cas. 104 (P H). ( iii ) Malhotra Steel Syndicate v. Punjab Chemi-Plants Ltd. [1989] 65 Comp. Cas. 546 (P H); [1989] 2 Comp LJ 261. In the course of arguments, Mr. Kuhad has also referred to the certain High Court Rules with reference to the affidavit (Chapter IV) and in particular, rules 33, 35( g ), 40, 44, 47, 48 and 49 of the Rules. An affidavit dated July 31, 1997, was filed by Shri Vivek Mazumdar, working as assistant manager and constituted attorney of M/s. ITC Bhadrachalam Finance and Investments Ltd. By a reply to the preliminary objections sought to be raised by the appellant-company, it is stated that the objections are frivolous and have been filed by the appellant-company with a view to delay and prolong the present petition and postpone the inevitable order of it being wound up. According to the respondent, reliance sought to be placed by the appellant-company on rule 18 of the said Rules is misconceived, since it deals with the affidavits in general, whereas, rule 21 deals wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azumdar S/o Rabatiranjan Mazumdar, age 29 years, the above named deponent do hereby solemnly affirm and state as follows: 1.That I am the assistant manager and constituted attorney of the petitioner-company and am fully authorised and competent to swear this affidavit. I say that I am conversant with the facts and circumstances of the case and am in a position to swear this affidavit. 2.That I say that I have read the accompanying petition for winding up under sections 433, 434 and 439 of the Companies Act, 1956, and have under stood the contents thereof. I say that the contents of paragraphs 1 to 22 are true to my knowledge, derived from the records of the case and that the contents of paragraphs 23 to 27 are based on advice which I believe to be true. 3.That I say that the annexures annexed to the petition are true copies of their originals. (Sd.) Deponent Verification: I, the above-named deponent, do hereby verify that the contents of the above affidavit are true to my knowledge, no part of its is false and nothing material is concealed therefrom. Verified by me at New Delhi, on this the 8th day of January, 1997. (Sd.) Deponent. According to Mr. Paras Kuhad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of a winding up petition has to only conform with the requirement of rule 21 and Form No. 3. According to Mr. Kuhad, the said order passed by the learned single judge is not correct. According to him, an affidavit in a pending company petition has to conform with the requirement of rule 18 of the Companies (Court) Rules and that the form adopted by the deponent did not conform to the requirements of the rules and was not in accordance with the law. According to Mr. Kuhad, the findings of the learned single judge are contrary to law and not sustainable and that the hon'ble judge has not appreciated that rule 18 and rule 21 read together constitute a complete scheme and that they cannot be read as being mutually exclusive and as being meant to cover totally different situations. According to Mr. Kuhad, in the case of every affidavit there are four issues: ( a )the form of affidavit, ( b )the person authorised to depose the affidavit, ( c )the manner in which the affidavit is to be drawn up, and ( d )the manner in which the affidavit is to be deposed, i.e. , by way of swearing or by way of affirmation. Per contra, it is argued that rule 21 deals with two issues, name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, which defines the expression "principal officer" and this expression seeks to confine its applicability to only the persons holding the post of a director, secretary or manager of the company. It is the specific contention of Mr. Kuhad that the terms excludes from its coverage persons holding office below the rank of managers. The expression "principal officer" thus obviously refers to an officer more elevated and higher than an ordinary "officer" and that the assistant manager is not even an "officer" and, therefore, he certainly cannot be said to be the "principal officer" of the company. Referring to rule 21, it is submitted that the said rule does not allow the competence to swear the affidavit to cover persons carrying a delegated authority and confines it in terms of the nature of the office held by the deponent and that as per rule 21, only such persons who holds principal office of the company shall be empowered to swear affidavit on behalf of the company. The proviso to rule 21 in terms excludes from its purview persons who are duly authorised on behalf of the company, but are not holding any of the principal offices of the company and renders them incapable of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rules. Rule 6 of the rules provides for practice and procedure of the court and provisions of the Code to apply to all proceedings under the Act and the rules. Rule 18 deals with the affidavits, which reads as follows: "Affidavits, ( a ) Every affidavit shall be drawn up in the first person and shall state the full name, age, occupation and the place of abode of the deponent. It shall be signed by the deponent and sworn to in the manner prescribed by the Code or by the rules and practice of the court. ( b ) Every exhibit annexed to an affidavit shall be marked with the number of the proceeding, to which it relates, and shall be initialled and dated by the authority before whom it is sworn. ( c ) Except with the leave of the judge, no affidavit having an interlineation, alteration or erasure, shall be filed in court unless such interlineation or alteration is initialled by the authority before whom it is sworn, or, in the case of an erasure, the words and figures written on the erasure are rewritten in the margin and initialled by such authority." Rule 21 which is relied on by both the parties reads thus: "21. Affidavit verifying petition. Every petition shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany to make the affidavit on its behalf. The note appended to Form No. 3 clearly states that if the affidavit is to be sworn to by any person other than a director, agent or secretary or other officer of the company, the same is to be filled up in the space provided to for it in paragraph 1/3. In the instant case, Vivek Mazumdar has sworn the affidavit. It is described in para. 1 that he is the assistant manager and constituted attorney of the petitioner-company and he is duly authorised and competent to swear the affidavit. It is also stated that he is conversant with the facts and circumstances of the case and he is in a position to swear the affidavit. It is stated in para. 2 that the contents of paras. 1 to 22 are true to his knowledge derived from the records of the case and contents of paras. 23 to 27 are based on advice which he believes to be true. The affidavit was also verified by the named deponent that the contents of the affidavit are true to his knowledge and no part of it is false and nothing material is concealed therefrom. The affidavit was verified by him at New Delhi on January 8, 1997. We have already seen that the affidavit was filed by Shri Vivek Mazumdar a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f service. This rule reads as follows: "54. Affidavit of service. The company shall, as soon as may be, file an affidavit providing the despatch and publication of the notices referred to in rules 52 and 53. Such affidavit shall be in Form No. 25." This rule provides that an affidavit proving despatch and publication shall be in Form No. 25. Likewise, rule 21, which provides for affidavit verifying a petition states that every petition shall be verified by an affidavit made by the petitioner and in case the petition is presented by a body corporate, by a director, secretary or other principal officer thereof; such affidavit shall be filed along with the petition and shall be in Form No. 3. Whereas, in rule 18, which deals with affidavits and also prescribes procedure as to how the affidavit shall be drawn up. There is no form prescribed for the affidavits to be filed under the rules. Rule 21, which is undoubtedly statutory in nature and the forms are to be adopted wherever they are applicable. The rules relating to the affidavit and the verification cannot be brushed aside. In our opinion, the affidavit filed in the present case, complies with the requirement of rule 21. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso of the view that the objections are misconceived and contrary to law since the proceedings initiated by the respondent herein, under sections 433, 434 and 439 of the Companies Act, 1956, are not for recovery of any money under independent of a civil suit for recovery of amounts under contracts. The objections raised are frivolous in nature and are not bona fide . Such objection cannot at all be countenanced in the larger public interest and in the interest of the creditors of the company. We have already referred to rules 30 and 54. Rule 76 does not prescribe any form. Rule 76 directs the chairman appointed for the meeting of the company and other person to issue advertisements and notices of the meeting shall file an affidavit not less than seven days before the date fixed for the holding of the meeting or the holding of the first of the meetings as the case may be showing that the directions regarding the issue of notices and the advertisement have been duly complied with. Thus, the rules of procedure have been clearly spelt out in rule 76. Section 6 of the Oaths Act, 1969, deals with forms of oaths and affirmation. The section reads as follows: "6. Forms of oaths and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. No omission to take any oath or make any affirmation, no substitution of any one for any other of them, and no irregularity whatever in the administration of any oath or affirmation or in the form in which it is administered, shall invalidate any proceeding or render inadmissible any evidence whatever, in or in respect of which such omission, substitution or irregularity took place, or shall affect the obligation of a witness to state the truth." The present section 7 of the Oaths Act, 1969, is corresponding to section 13 of the 1873 Act, which was repealed. Section 13 of the old Act cures form of oath. The Calcutta High Court in the case of Bal Chand v. Tarak Nath Sadhu, AIR 1915 Cal 105, held that the omission to take any oath or any other irregularity in the form in which it is administered does not invalidate the proceedings. The Delhi High Court in the case of Mrs. Roma Deb v. R.C. Sood and Co. Pvt. Ltd. [1990] 67 Comp. Cas. 350 , had occasion to deal with rule 21 of the Companies (Court) Rules, 1959, which requires every petition for winding up a company to be accompanied by an affidavit verifying the petition in Form No. 3. In that case, the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as, the affidavit in respect of the corrupt practices which accompanied the election petition was neither properly made nor in the prescribed form. In paragraphs 12 and 13 of the judgment it was held as follows (page 1551): "12. We now turn to the third preliminary objection and this relates to the affidavit which accompanied the petition in respect of the corrupt practices alleged against the appellant. The argument on this part of the case is that the affidavit was neither in the prescribed form nor was it properly sworn as required by the rules in the Conduct of Election Rules, 1961; therefore there was a failure to comply with the proviso to sub-section (1) of section 83 of the Act. The argument further is that an election petition under section 81 must comply with the provisions of section 83 and unless it complies with those provisions, it is not an election petition under section 81. 13. We think that this contention has been sufficiently disposed of by what has been stated by the Election Tribunal. The Election Tribunal has rightly pointed out that the affidavit was in the prescribed form but due to inexperience the Oaths Commissioner had made a mistake in the verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "'swear', with its grammatical variations and cognate expressions, shall include affirming and declaring in the case of persons by law allowed to affirm or declare instead of swearing." We have already pointed out by reading of rules 18 and 21 together, affidavit accompanying the petition is required to be sworn not affirmed and swearing of the affidavit should be in the manner prescribed by the Code and manner of the court. The phrase "swearing and affirmation" of the affidavit itself can be seen by the definition of the word "swear" in section 3(62) of the General Clauses Act. This point was argued before the learned single judge. The learned single judge held as follows: "Thus, it is apparent that normally swearing does not include affirmation or declaration and further under rule 49 of the rules of the High Court of Judicature for Rajasthan, 1952, it is provided that the person administering an oath or affirmation to the person making an affidavit shall follow the provisions of the Oaths Act, 1969. The form of oath/affirmation given in the name of God 'in case of swearing', and 'I do solemnly affirm' in case of affirmation, which clearly indicates that swearing and affir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in Registrar of Companies, Punjab v. New Sura ) Financiers and Chit Fund Co. Pvt. Ltd. [1990] 69 Comp. Cas. 104 , was cited. A learned single judge of the Punjab and Haryana High Court held (headnote): "An affidavit which supports a company petition is treated as substantive evidence and where there is no affidavit in accordance with law accompanying the petition, it is no petition in the eye of law. Amendment of a petition for winding up, if allowed, relates back to the date of presentation of the petition. It would lead to a great deal of confusion if the petitioner were allowed to swear and supply a fresh affidavit at a later stage because rights of third parties would crop up. Held, on the facts, that since the blanks indicating the numbers of the paragraphs in the affidavit filed in support of the petition had been left blank, it was not in accordance with law and the verification of the petition also could not be treated as being in accordance with law. The petition therefore, had to be dismissed." For the reasons above mentioned, we are unable to agree with the proposition of law laid down by the learned single judge of the Punjab and Haryana High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Time was granted up to April 24, 1997. On May 22, 1997, again, time was sought to file reply. On July 11, 1997, time was sought to file rejoinder to the reply. The matter was thereafter, put up before the court on August 21, 1997, August 27, 1997, September 11, 1997, October 16, 1997 and October 23, 1997. On December 11, 1997, Mr. Paras Kuhad submitted that the parties are making efforts to make compromise in the matter, the matter was adjourned again to put up on January 15, 1998. Again it was posted on February 4, 1998, February 26, 1998, March 19, 1998, April 17, 1998, May 12, 1998, May 29, 1998, July 13, 1998, July 16, 1998, July 23, 1998, July 30, 1998, August 1, 1998, August 15, 1998, August 25, 1998 and August 27, 1998. On September 3, 1998, after several adjournments, arguments were heard and on September 15, 1998, the order was pronounced in the open court. This special appeal was filed on September 26, 1998, and posted on October 7, 1998. On October 8, 1998, the Division Bench reserved the judgment after arguments were heard. On February 19, 1998, the Division Bench passed the order that no order for detaching the S.B. Company Petition No. 9 of 1997 can be passed. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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