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TMI Blog2012 (11) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... d in a Company Petition filed by the respondent herein under the provisions of Sec. 433(e) and '(f) of the Companies Act, 1956 (for short, the Act) for winding up of the respondent -Company on the premise that respondent - Company is unable to pay its admitted debts. 3. The Company Petition had been listed before the learned Company Judge on 3-2-2010, after issue of notice to the respondent - Company. The learned Company Judge had directed the matter to be listed for admission on 10-2-2010 and on 10-2-2010, the impugned order has come to be passed. 4. This small and cryptic order is appealed against by the respondent - Company complaining that it can have very serious repercussions on the respondent-Company; that the admission of the Company Petition is one without considering the material on record placed by the respondent before the Company Court; that it is in ignorance of the serious and tenable defence raised in the objection statement filed on behalf of the Company; that the learned Company Judge has not taken into account the very sound financial position of the Company; that it is in ignorance of the fact that the company is a profit making, ongoing company; that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial order which is capable of being appealed against under the provisions of Sec. 483 of the Act, that there is sufficient authority for this proposition in terms of the judgment of the Division Bench of this Court in Miland Exports (P.) Ltd. v. A.V. Venkatanarayana [1995] 83 Comp. Cas. 585 (Kar.). Submission is that, admission is essentially a matter for the Court, that in the present case also, the Company Judge had considered the submissions made by the learned Counsel and elaborate arguments had been heard and it is only thereafter, being convinced about the desirability of admitting the Company Petition, an order for admission has been passed, but it is not followed by ordering for advertisement, that it is only when an order for advertisement is passed, it can affect the interest of the respondent - Company in the Company Petition and for such purposes, an enquiry is desirable and can be held also; and therefore, the appeal is not merely premature, but not tenable in law and has prayed for dismissing the appeal on the very preliminary objection. 8. Mr. Chaitanya Hegde, has also placed reliance on two other authorities, namely (head note 'C') in the case of Market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that, that precisely is not the ratio in the judgment of the Supreme Court in Pradeshiya Industrial Investment Corpn. of U.P. ( supra ), the question that was gone into by the Supreme Court in Pradeshiya Industrial Investment Corporation's case ( supra ) was one relating to what is a "debt' and who is a debtor'. etc.; we are afraid that we cannot accept this submission that the judgment of the Supreme Court in Pradeshiya Industrial Investment Corpn. of U.P . ( supra ) cannot be an authority for the proposition that an order of admission of a Company Petition under sections 433(e), (f) and 439 of the Act, should be a reasoned order. In our opinion also even an order for admission requires to reveal the reasons for admitting the company petitions, as it can be made subject matter of an appeal under Sec. 483 of the Act, for the reason that the Division Bench of this Court has already understood the judgment of the Supreme Court in such a manner and it is not open for us nor is it proper to re-understand the judgment of the Supreme Court, as is canvassed by the learned Counsel for the respondent, in the wake of the earlier Judgment of the Division Bench of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) admitted and advertised. In para 26 it was observed that defence of the appellant Company in relation to non-payment was a bona fide one. After referring to Section 433(e), it was observed that in such Petition, there must be a debt and Company must be unable to pay the same. In para 29 it is observed that debt under this Section is a definite amount payable immediately or at a future date. Then Court considered at para 30 the scope and ambit of the words "unable to pay its dues"(sick debts). Taking a clue from a Europe Life Insurance Society (1869) O Eq.122 and other Decisions, it was observed that for being plainly and commercially insolvent, it has to be shown the assets of the Company are such and make it reasonably certain, and from which Court feels satisfied that the existing and probable assets would be insufficient to meet the existing liabilities. Reliance was then placed on the observations of the Supreme Court in AIR 1971 SC 2600, supra and then the following pertinent observations were made in paragraph 32: "it is beyond dispute that the machinery for winding-up will not be allowed to be utilized merely as a means for realising its debts due from a Company". In par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court to dilate on this aspect in para 30 of the Report. In fact in para 34 of the Report, the Supreme Court went into this question on the basis of the material on record and took the view that the Company was a profit making financial corporation and it was paying dividend as seen from the balance sheet for the year 1991-92. The assets of the appellant-Corporation and the reserves are so much, there was no justification whatsoever for admitting the winding up Petition. Meaning thereby this exercise about the prima facie finding on financial condition of the Company and for prima facie concluding whether the Company was commercially solvent or not has to be undertaken even prior to admission of such winding-up Petition under Section 433(e) of the Act. That very exercise was undertaken by the Supreme Court on the material on record and it was found that as the Company was not in such a financial doldrums, it was not a fit case for admission of winding up Petition against such Company under Section 433(e) of the Act. It must, therefore, be held that such consideration on admission stage of the Petition is not only not foreign to the scope of such enquiry but also, it is a part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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