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TMI Blog2014 (2) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... sy that arises in the present matter is whether an order under Rule 96 of the Companies (Court) Rules, 1959 (hereinafter referred to as the „Rules‟) for advertisement of admission of winding up petition should be directed and whether an order under Rule 106 of the Rules for appointing the Official Liquidator as the Provisional Liquidator should be passed. 3. The present Company Petition has been filed by the petitioners alleging that the respondent company is liable to be wound up under Sections 433 (c), (e) & (f) read with Section 434 (1)(a) & (c) of the Companies Act, 1956 (hereinafter referred to as the „Act‟). The petitioners are shareholders of the respondent company and petitioner no. 1 is also claiming to be a creditor of the respondent company. By an order dated 16.02.2009, this court admitted the winding up petition and ordered that the respondent company be wound up. The court appointed the Official Liquidator as a Liquidator of the company and directed him to take over all the assets and records of the respondent company. The court also directed that citations be published in the "Statesman" (English) and "Jansatta" (Hindi). The relevant extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench. The said application was contested by the petitioners and it was contended by the petitioners that the order dated 16.02.2009 had been set aside only because the said order had directed the final winding up of the company instead of admitting the petition. It was contended that the findings recorded in the order dated 16.02.2009 had not been interfered with by the Division Bench. It was further contended on behalf of the petitioners that the admission of the winding up petition and the direction to the Official Liquidator to take over the books and accounts of the company continued to be in effect notwithstanding the orders passed by the division bench on 07.01.2013. By a common order dated 27.02.2013, this court disposed of both the applications (being CA no. 84/2013 and C.A. No. 90/2013) by directing that the possession of the registered office of the respondent company and the records of the company be restored to its directors. By the said order, this court rejected the contention of the petitioners that the admission of winding up petition and direction to Official Liquidator to take over possession of premises of respondent company was not set aside. However, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court on several occasions. Before the said application could be decided, the respondent filed two applications (CA No.2159/2013 for bringing on record additional documents and CA No.2160/2013 for cross-examination of the petitioner no.1). By an order dated 17.01.2014, both the applications filed by the respondent were dismissed by this court. With regard to CA No.2159/2013, it was observed by the court that the additional documents which the respondent has relied upon have already been considered by this court while passing the order dated 16.02.2009 and nothing new has been agitated by the respondent. With regard to CA No.2160/2013, the court made the following observations:- "26. In the aforesaid conspectus of the facts and in my perception it seems to me that the present application filed under Order XIX, Rule 2 of the CPC read with Rule 9 of the CCR, 1959 is an afterthought and has been filed only to prolong or delay the proceedings relating to the winding-up. No case has been made out by the respondent-company as to why the Court should exercise the discretion in its favour. I have considerable doubt regarding the bona fide of the respondent-company in filing the present ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the order dated 05.04.2013 passed by the Division Bench in Review Petition No.116/2013 could not be interpreted to mean that the petition was admitted. It is further stated that the Division Bench, by an order dated 07.01.2013, has set-aside the winding up order and has remanded the petition to be decided afresh, therefore, the matter has to be decided afresh. It is further stated that the respondent was not supposed to file any application for dispensing with the requirement of advertisement of the petition. It is also stated that since the Division Bench had not specifically mentioned anything with regard to handing over of the possession of the registered office to the Official Liquidator and the prayer was impliedly denied and thus could not be allowed. 11. I have examined the facts of the present case in detail and have also gone through various orders passed by this court and by the Division Bench of this court. The fact is that, by an order dated 16.02.2009, this court has examined the facts in great detail and made a prima facie observations with regard to the admission of the winding up petition under Sections 433(e), (f) & (c) read with Section 434 and 439 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been placed on record by the respondent in support of their submission. On the other hand, the petitioner no. 1 has placed on record the Income Tax returns filed by him, inter alia, for the assessment years 1999-00 and 2000-01 showing the details of loans and advances as on 31.03.1999 and 31.03.2000. According to the said returns, as on 31.03.1999, the loans advanced to the respondent company have been shown as Rs.11,00,000/- and as on 31.03.2000 the said amount has been shown as Rs.9,50,000/-. I may notice that as on 31.03.1999, according to the affidavit filed by the petitioner in compliance of the order dated 31.07.2000, the outstanding amount was Rs.9,50,000/- whereas in the income tax returns for the period ending 31.03.1999 the outstanding amount shown by the petitioner is Rs. 11,00,000/-. However, for the next year i.e. financial year ending 31.03.2000, the amount as shown in the income tax return tallies with the amount shown in the Balance Sheet of the respondent company as at 31.03.2000. Had the petitioner not advanced the amounts, as aforesaid, to the respondent company from time to time, it does not stand to reason as to why the petitioner no.1 would have reflected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... robe whether there is justifiable lack of confidence among the shareholders in the manner the business of the company has been carried on by the directors of the company. 38. The fact that the business of the company has been carried on in a non transparent and clandestine manner is clearly evident from the contradictory stand taken by the company. Respondent company had admitted the sale of Nangloi land in April 2000 before the ROC, NCT, Delhi And Haryana and also in their reply to the petition dated 17.1.2006 they have admitted that property at Mundka, Delhi was purchased from the sale proceeds of Nangloi property to start the work at its units. But as per Form-8 it can be clearly seen that property at Nangloi was released in lieu of properties at Mundka located at Khasra No.57/17, min(1-00) and 57/17 min (0-08). The same fact is reiterated in Form -13 filed under the Act. Further in the resolution passed in the meeting of the Board of Directors on 11.01.01 (marked as Annexure-VI to the reply of the company), there is a specific admission that plot at Mundka was acquired vide sale deed dated 17.2.2000, whereas, as per admissions before Registrar Of Companies, the Nangloi land wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r established the misappropriation of the funds of the company by its Directors. The aforesaid state of affairs of the company are sufficient to cause justifiable lack of confidence in the conduct and management of the company's affairs and also lack of probity in the conduct of Company's affairs. 42. On perusal of Statement of Accounts of the company it appears to me that the substratum of the Company is lost and the business of the company can not be carried on in its current financial state. The „List of Fixed Assets‟ under Schedule 4 appended to the balance sheet for the year ending on 31.03.05, shows the entire plant and machinery, factory building, lab equipments, crane, furnace, with other assets of the Company have been disposed of during the year 2004- 2005. These are basic ingredients for running the business of this nature without which a Company cannot sustain itself as a running concern. Company is not being able to run in an efficient manner and its output has fallen drastically is evidenced from its profit and loss account for the year ended 31st March, 2005, which shows material consumed at Rs.12,55,000/- and the sales figure are at Rs.16,48,285/- where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition and neither the merits of the findings nor the admission of the petition were assailed by the respondent (appellant in Company Appeal No.19/2009). The same is apparent from the question framed by the Division Bench in the order dated 07.01.2013. The said question is quoted below:- "The short question that arises in this appeal is whether the company court can order winding up of a company without ordering the petition to be advertised." 14. By an order dated 07.01.2013, the Division Bench has only set aside the said procedure and has not given any finding on the merits of the admission of the winding up petition. Therefore, the findings of facts or observations on the merits of the admission of the winding up petition would stand. This fact has also been unequivocally clarified by the Division Bench, by an order dated 05.04.2013, whereby it has been held that findings and observations in the order dated 16.02.2009 undoubtedly point to the fact that the petition needed to be admitted. Therefore, the present winding up petition stands admitted by an order dated 16.02.2009. 15. The respondent has stated in its reply that the order dated 05.04.2013 could not be interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judge on 16.2.2009 would stand insofar as it admits the winding up petition. The order passed by the Division Bench in the review petition has undisputedly become final, no appeal having been preferred against it. It is also not denied that the respondent-company did not file any application before the Company Court under Rule 9 of the CCR within 7 days from the date on which the Company Appeal was originally disposed of, seeking dispensation of the advertisement of the winding up petition. The order passed by the Division Bench in the review petition having become final, it is not open to the respondentcompany to re-agitate or try to reopen the order dated 16.2.2009 passed by the learned Company Judge insofar as it admits the winding up petition. To permit the respondentcompany at this stage to do so would amount to not only ignoring the finality attained in the earlier proceedings, but also to throwing to winds the salutary principles of judicial discipline. A Single Judge of the Court is bound by the orders passed by the Division Bench of the same Court and this principle is non-negotiable. [see: Tribhovandas Purushottamdas Thakkar Vs. Ratilal Motilal Patel & Ors.(AIR 1968 SC 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order dated 16.02.2009 passed by this Court has been set aside by the Division Bench by an order dated 07.01.2013 and the question of admission of the petition must be decided afresh. This contention is also devoid of any merit in view of the order dated 05.04.2013 passed by the Division Bench in Review Petition No.116/2013 as well as the order dated 07.01.2014 passed by this Court in applications CA No.2159/2013 and CA No.2160/2013. 17. It is further stated by the respondent in the reply that the Division Bench had set aside the order dated 16.02.2009 and the said decision must be read to mean that the Division Bench had denied the prayer that the assets and records of the respondent company be taken over by the Official Liquidator. I am unable to accept this contention as the orders passed by the Division Bench on 07.01.2013 and 05.04.2013 clearly indicates that the issue considered by the Division Bench was only with regard to the rolledup procedure adopted by the Single Bench by the order dated 16.02.2009 and the procedure, after the admission of the winding up petition, has to dealt with in accordance of the law. The issue whether the Official Liquidator should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is now necessary to examine whether, in the present case, advertisement regarding the admission of the winding up petition should be published. Rule 96 of the Companies (Court) Rules, 1959 (hereinafter referred to as the „Rules‟) deals with the manner of the admission and advertisement of the petition. Rule 96 is relevant and is quoted below:- "96. Admission of petition and directions as to advertisement - 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 petition 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." 21. Rule 96 of the Rules provides that on the company petition being filed, the same will be posted before the Company Judge for (i) admission; (ii) fixing a date for hearing the company; and (iii) for directions as to advertisement of the petition. Rule 96 of the Rules also indicate that a court may issue notice before advertising the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition is advertised, however, in certain circumstances, on an application filed by the company, the court can defer or suspend the advertisement of the petition. The relevant is quoted below:- 3. ......A petition for winding up cannot be placed for hearing before the Court, unless the petition is advertised: that is clear from the terms of Rule 24(2). But that is not to say that as soon as the petition is admitted, it must be advertised. 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 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, and even when there is an unconditional admission of the petition for winding up. The power to entertain such an application of the Company is inherent in the Court, and Rule 9 of the Companies (Court) Rules, 1959, 4. For reasons already set out, in our judgment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in one of the issues of the Official Gazette of the State, one issue of a daily newspaper in English and daily newspaper in regional language. Submission of learned counsel for the appellant was that this mandate stands diluted because of the wording of Rule 99, which says that subject to any directions of the Court. xxxx xxxx xxxx xxxx xxxx 11. We are not convinced by what has been urged by learned counsel for the appellant. The requirement of advertising the petition in the Official Gazette is mandatory. No doubt on reading Rule 99 it may be said that there is a discretion vested in the Court, but the said discretion is limited only to the extent that at what stage the petition be advertised. It may not be advertised forthwith or advertising the petition may be deferred for some time." 28. In the present case, as explained earlier, the Court has already considered the rival contentions and has found that the petition is required to be admitted. The next step that is required to be followed is for fixing a date for hearing of the petition after publishing a citation as required under Rule 96 and 24 of the Rules. I have examined the facts of the present case and find no reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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