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TMI Blog2003 (9) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court praying for winding up of the applicant. The applicant contested the matter and also let in evidence, and while the matter is at the juncture of arguments, the present application was moved. For the sake of convenience, the parties shall be referred to as arrayed in this application. 3. Heard the learned counsel for the applicant and the learned counsel for the respondent. 4. The learned counsel for the applicant would submit that the respondent alleging that the applicant is unable to pay its debt in a sum of Rs. 1,75,867.00 which works out to Rs. 3,51,86,792.00 along with interest, has filed the company petition for winding up of the applicant. The applicant submits that there are certain disputes with respect to the work awarded by them to the respondent and executed by the respondent, and though they initiated arbitration proceedings for resolution of the disputes, and each of the parties have chosen their Arbitrators, who in turn chose the Chairman of the Arbitral Tribunal, for the reasons best known to the respondent, the nominee of the respondent vacated his office, and consequently, the respondent withdrew from the arbitration proceedings itself. The applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... micals Ltd. [1994] 3 SCC 348. The learned counsel for the applicant, thus having regard to the fact that the interest of the secured creditors who have advanced loans to the applicant and that of the families of 1000 employees who are working in the applicant, would be most affected if any extreme order of winding up of the applicant is passed, the learned counsel submits before any such extreme order is passed by this Court, it is necessary that a Meeting of the Secured Creditors is convened for ascertaining their wishes, so that their interest is well protected. 5. The respondent resisted the application. It is contended by the learned counsel appearing on behalf of the respondent that the present application at the instance of the applicant is not maintainable. He would contend that even though notice of admission of the company petition in Form 48, as required under rule 99 of the Companies Rules was advertised in two daily newspapers namely "Eenadu" and "Deccan Chronicle" on 9-11-2001, duly indicating the date of hearing of the company petition as 4-12-2001, none of the secured creditors of the applicant have chosen to enter their appearance or contest the matter. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Distilleries Ltd. s case ( supra ) relied upon by the respondent, has no relevance to the case on hand inasmuch as the said judgment sought to introduce new provisions, giving rise to counter claims and competing claims, which does not find place in section 557 of the Companies Act. "The principal question that falls for consideration in this application is whether in the given facts and circumstances of the case, before proceeding to adjudicate a petition filed for winding up of a company, is it mandatory for this Court to ascertain the wishes of creditors or contributories of the company which is sought to be wound up, and if so, whether this Court is obligated to direct convening of the meetings of the creditors or contributories of the company sought to be wound up ?" 7. It may be noticed that the Company Petition was admitted on 1-10-2001, and the publication of notice in Form 48 in newspapers, as required under Rule 99 of the Companies Rules, was deferred to enable the parties arrive at a settlement. As no settlement was arrived at, this Court on 29-10-2001, directed the respondent to take out paper publication of the notice. In pursuance thereof, the respondent took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled, held and conducted in such manner as the Court directs; and ( c )appoint a person to act as chairman of any such meeting and to report the result thereof to the Court. (2) When ascertaining the wishes of creditors, regard shall be had to the value of each creditor s debt. (3) When ascertaining the wishes of contributories, regard shall be had to the number of votes which may be cast by each contributory." 9. Clause ( a ) of sub-section (1) of section 557 of the Companies Act provides that that in all matters relating to winding up of a company, the court may have regard to the wishes of creditors or contributories of the company, as proved to it by any sufficient evidence, and clause ( b ) thereof provides that, if the Court feels that it is necessary to ascertain those wishes, it may direct calling, holding and conducting of the meetings of the creditors or contributories, in the manner directed by the Court, and clause ( c ) provides for appointment of a person to preside over the meetings as Chairman and to report the result thereof to the Court. While sub-sections (2) and (3) of section 557 of the Companies Act provide that while ascertaining the wishes of cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as is well settled by a plethora of decisions of the Apex Court as well as this Court, shall be exercised by the authority, in whom such discretion is vested, judiciously and with circumspection, and only in the furtherance of the interests of justice. 13. In Ramlal Keemthi v. K. Laxman Bapuji 1961 (1) An.W.R. 221, a Division Bench of this Court, considering the language employed in section 557 of the Companies Act, held that it was well within the powers of the Court to direct that a meeting be held for the purpose of ascertaining the wishes of the creditors in all matters bearing on the winding up of the company. 14. The word "may" appearing in section 557 of the Companies Act, indicates that the power conferred on the Company Court is discretionary. While interpreting similar word "may" used in section 433 of the Companies Act, a Division Bench of the Mysore High Court in Dundappa Shivalingappa Adi v. S.G. Motor Transport Co. [1966] 36 Comp. Cas. 606 , held that it disentitled any person from claiming, as of right, that the Court should necessarily exercise the discretion conferred upon it. As such, mere filing of an application and seeking a direction from thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the creditors or contributories come before the Court by proving their wish before the Court by placing sufficient evidence, then the applicant would have certainly been justified in requesting this Court to exercise its discretionary power. In the absence of any wish proved by sufficient evidence placed before the Court by the creditors or contributories of the company, which is a pre-requisite for exercising the discretionary power vested in the Court by clause ( b ) of sub-section (1) of section 557 of the Companies Act, the question of this Court exercising its discretionary power to call for meting of the creditors of the company, does not arise. 18. In Deccan Farms Distilleries Ltd. s case ( supra ), the Bombay High Court while dealing with section 557 of the Companies Act, considered the competing claims of the creditors who supported the winding up proceedings and those who opposed them, and held : ". . .These cases provide a guideline for considering the competing interest of the creditors. The rule is that if there is opposition to the making of the winding up order by the creditors, the Court will consider their wishes and may decline to make the winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can maintain this application to call for meeting of the creditors or contributories to ascertain their wishes. 20. To exercise power under section 557 of the Companies Act, there should be wishes of the creditors as proved before the Court by sufficient evidence, and in the instant case, no wish is proved by the secured creditors or unsecured creditors, and there are no claims from any quarter, nor is there any material placed on record by any of the creditors to show that they have any interest in the matter. Had any one of the secured creditors or unsecured creditors entered their appearance and proved their wishes before this Court by placing sufficient evidence, then the applicant would have been justified in requesting the Court to call for a meeting of the creditors or contributories to ascertain their wishes, but there is no such wish expressed by any of the secured or unsecured creditors for them to be considered in the meeting. In that view of the matter, it has to be held that this application at the instance of the applicant cannot be maintained. 21. Having regard to the limited scope of this application, namely whether a meeting of the secured and unsecured c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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