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TMI Blog2007 (7) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... r (pages 829 of 134 Comp Cas) : "Learned counsel for the petitioner states that he has the instructions to state that civil suit annexure P17 will be withdrawn within one week from today. In view of the said statement, let notice of the petition be issued to the respondents for May 25, 2006, to show cause as to why the petition be not admitted. Any alienation of any of the assets of the respondent-company, except in due course of the business of the company, during the pendency of the present petition, shall be subject to the final order passed by this court." Thereafter, the respondents caused an advertisement to be published in the newspapers and one such publication appeared in "The Tribune" dated June 2, 2006, which is as follows (page 830 of 134 Comp Cas) : "Public Notice It is hereby brought to the notice of the general public that vide order dated April 27, 2006, passed in Company Petition No. 61 of 2006 under section 433(f) of the Companies Act for winding up the company on April 27, 2006, by the hon'ble Mr. Justice Hemant Gupta, Judge, Punjab and Haryana High Court, Chandigarh. Re : Vinod Krishan Khanna v. Amritsar Swadeshi Textile Corporation P. Ltd., it has been or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of costs and that in view of this, substantial justice has been done and hence, the impugned order, in the circumstances, is just and equitable. We have heard learned counsel for the parties at some length and have perused the record. Part III of the Rules deals with the winding up petitions and their hearing by the court. It consists of rules 95 to 338. Rule 96 pertains to the admission of petitions and directions as to advertisement. The same reads as under : "96. Upon the filing of the petition, it shall be posted before the Judge in Chambers for admission of the petition and fixing a date for the hearing thereof and for directions as to the advertisements to be published and the persons, if any, upon whom copies of the petitions 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." As per the provisions of rule 96, when the company judge proceeds to exercise his jurisdiction and issue show-cause notice as to why the petition be not admitted, the company petition is at a nascent stage with no order authorising the publication. Thus, the respondents, in this case, have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... describe the appellant as a company borne out of fraud which had no existence in the eyes of law. The relevant extract of letter dated August 4, 2006, is reproduced below : "The purpose of writing this letter to you is to give you an update and inform you that we have filed a petition now the matter is before the High Court of Punjab and Haryana for winding up the illegal and fraudulently formed company, under section 433(f) of the Companies Act, 1956. Admitting the petition, the hon'ble High Court issued notice to the company and passed the following restraint order which is for your information and action considered appropriate : 'Any alienation of assets of the respondent-company except in due course of the business of the company during pendency of the present petition shall be subject to the final order passed by this court'. It may be mentioned that a company owned by fraud is 'non est,' i.e., it does not and never existed. Any order/decree/registration of charge on a company based on fraud is thus rendered void ab initio. It is brought to your notice that in the case of the incorporation of the company being declared void/illegal/fraudulent the amounts advanced to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To advertise before then is an abuse of the whole process of advertisement as it applies to those petitions." In National Conduits (P.) Ltd. v. S.S. Arora [1967] 37 Comp. Cas. 786 , their Lordships of the Supreme Court made the following observations (headnote) : "Once a petition for the compulsory winding up of a company is admitted, the court is not bound forthwith to advertise the petition. In an appropriate case the court has the power to suspend advertisement of a petition for winding up, pending disposal of an application for revoking the order of admission of the petition. In answer to a notice to show cause why a petition for winding up be not admitted, the company may show cause and contend that the filing of the petition amounts to an abuse of the process of the court. If the petition is admitted, it is still open to the company to move the court that, in the interest of justice or to prevent abuse of the process of the court, the petition be not advertised. Such an application may be made where the court has issued notice under the last clause of rule 96 of the Companies (Court) Rules, 1959, and even when there is an unconditional admission of the petition for winding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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