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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 ..... petition, is sought to be reargued or reopened. This is not permissible. The present petition was filed in the year 2005 and the respondent had sufficient opportunity to settle the claims of the petitioners, however, the same was also not done by the respondent. Therefore, deferring the publication of advertisements to enable the respondent to pay the admitted dues is also not warranted in the facts of the present case. Thus, in the present case, the advertisement as required under Rule 96 is required to be published in accordance with the Companies (Court) Rules, 1959 - CO. APPL. 898/2013 in CO. PET. 136/2005 - - - Dated:- 13-2-2014 - Vibhu Bakhru,JJ. For the Petitioner : Ms Vibha Mahajan Seth For the Respondent : Mr. Sarat Chandra, Mr. Manoj Kumar Garg Mr Rahul Kumar. JUDGMENT Vibhu Bakhru, J 1. The present application has been filed by the petitioners under Rule 9 read with Rule 29 of the Companies (Court) Rules, 1959, inter alia, seeking the following prayers:- (i) re-call the order dated 27.02.2013 passed by this Hon ble Court in Co Appls. No.84 of 2013 90 of 2013; (ii) direct the Provisional Liquidator attached to this Court to take over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 433(c) read with Section 434 and 439 of the Act. 46. I, accordingly, admit this petition and direct that the respondent company be wound up. The official liquidator attached to this Court is appointed as the liquidator in respect of the respondent company. He shall forthwith take over all the assets and records of the respondent company and proceed according to law. Citation shall be published in the Statesman‟ (English) and Jansatta‟ (Hindi) for 16.03.2009. Petitioner may take steps accordingly. 4. The respondent company filed a Company Appeal No.19/2009 before a Division Bench of this Court impugning the order dated 16.02.2009. The Division Bench, by an order dated 07.01.2013, allowed the said appeal and set aside the order dated 16.02.2009 and remanded the matter with a direction that the company petition be disposed of in accordance with law. A liberty was also given to the respondent company to move an application under Rule 9 of the Companies (Court) Rules, 1959 within seven days for dispensing with the advertisement of the petition. 5. Admittedly, the respondent company has not filed any application seeking that the advertisement of the petition be dispe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prima facie observations, of the learned Single Judge‟s order dated 16.02.2009, with regard to the admission of the petition would continue to stand. The relevant extract of the order dated 05.04.2013 is extracted hereinbelow:- This Court has considered the submissions and also the judgment dated 16.02.2009. As is evident from the discussion in the final judgment of the Division Bench dated 07.01.2013, the point which persuaded the Court to set aside the earlier Single Judge's order (dated 16.02.2009) was the rolled up procedure adopted by him in discussing the merits of the case, not advertising the proceedings and straightaway directing winding up. The Court did not, however, comment and decide the merits of the observations of the learned Single Judge which undoubtedly point to the fact that the petition needed to be admitted. In these circumstances, the final direction contained in paragraph 8 is clarified appropriately; it stands modified to the effect that the judgment and order dated 16.02.2009 to the extent it records findings and prima facie observations warranting admission of the petition would stand. No further clarification is required. The said judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the winding-up proceedings that will have to be decided by the learned Company Judge. Thus even after the merits of the admission order became final, the respondent-company is making a last ditch or desperate attempt to stall the proceedings by making the present application seeking to enforce the attendance of petitioner No.1, taking advantage of some orders passed by the disciplinary committee of the ICAI in the case of the petitioner No.1. Such a conduct on the part of the respondentcompany cannot be countenanced. 27. For the aforesaid reasons I do not think I would be justified in issuing notice to the petitioners in C.A. No.2159/2013 and 2160/2013 filed by the respondentcompany. The applications are dismissed in limine. (emphasis supplied) 9. By way of the present application (CA No.898/2013), the learned counsel for the applicants (petitioners) contented that this Court by an order dated 16.02.2009 had categorically observed that the present company petition needs to be admitted under Sections 433(e), (f) (c) of the Act. Since, it has been clarified by the order dated 05.04.2013 passed in the Review Petition No.116/2013 that the prima facie observations with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. The argument that no amount whatsoever was due and payable to petitioner no.1, and that he was not a creditor of the company cannot, therefore, be accepted. The defence that the brother of petitioner no.1 was a partner of the firm that acted as the statutory auditors of the company till March 2003 does not explain the conduct of the Managing Director in signing the Balance Sheet as on 31.03.2000 which showed an outstanding amount of Rs.9,50,000/- payable to the petitioner no.1. As rightly contended by learned counsel for the petitioner, the accounts are maintained by the company. The auditor merely audits the accounts as maintained by the company. It was certified by the Managing Director of the Company that an amount of Rs.9,50,000/- is payable to the petitioner no.1 as on 31.03.2000. 13. It is also pertinent to note that the respondents do not explain as to why, on what account, payment of Rs. 1,80,000/- as reflected by various cheques issued in the name of petitioner no. 1 was made to him. In fact, in the statement of account pertaining to petitioner no. 1 the respondent company shows payment of Rs. 2,00,000/- in the year 2002- 03 reducing the outstanding balance from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only the documents/statement maintained by the respondent company provided to the petitioner, like the copy of the ledger accounts of the respondent company. The figures as reflected in the respondent‟s ledgers/books of accounts in relation to the petitioner no. 1 and the company owned/controlled by him have also been disclosed. On a comparison of these statements/tabulations it is clear that the discrepancy in the amount claimed to be due to petitioner No.1 has arisen on account of an error of accounting on the part of the Company itself. 16. Merely because the demand made by the petitioners in their notice of demand dated 07.05.2004, in relation to the amount allegedly due in favour of petitioner no.1 was for Rs.9,50,000/-, the same would not render the demand illegal and the said notice would still be considered as a valid notice for the purposes of Section 433 and 434 of the Act. Reference in this regard may be made to Devender Kumar Jain Vs. Polar Forgings Tools Ltd. 1993 (1) CLJ 184 (Delhi). The Supreme Court has held in Madhu Woolen Industries Private Ltd. 1970 (3) SCC 632 that where the debt is bona fide, and there is no doubt that the company owes the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t been cleared by the respondent. In the explanatory statement issued by the respondent pursuant to Section 173(2) of the Act for proposing the passing of a special resolution, it is specifically mentioned that the land was sold vide Deed of Sale Agreement dated 19.10.2001 and 24.10.2001. Even as per schedule No.4 (Fixed Assets) appended to the Balance sheet as at 31.03.03 it is clear that the property at Bahadurgarh was sold during 2002-2003. As mentioned above, the details regarding the said property was not made available to the auditors and it is clear that they were purposely withheld to keep the shareholders in dark. 40. The respondents have not provided any satisfactory explanation as to how the proceeds of the land situated at Nangloi, Mundka and Bahadurgarh were appropriated. They have failed to produce satisfactory records before the Court. The explanations furnished by the respondents in this regard are vague and self-contradictory. 41. It is pertinent to mention here that this Court had directed the respondents, vide an order dated 16.1.2008, to file all the annexures to the balance-sheet of the Company for the year 2001 onwards. The respondents were put to notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /03 have remarked that The Company has sold land at Bahadurgarh and Delhi during the year for which no details/evidence is available . The said auditors have also observed and reported in their Auditor‟s Report submitted along with the audited Balance Sheet for the year ended on 31.03.05 that the Company is not regular in depositing dues and various taxes like income tax, sales tax, employees‟ state insurance, provident fund, wealth tax, customs duty, excise duty and other material dues. In fact Income Tax Department has raised demand to the tune of Rs.79,783/- for the year 2001-2002 for which the Company had filed an appeal with CIT, (A), which was dismissed and the Company has still not made any provision for this demand. 44. The income of the company has nosedived to a dismal figure of Rs.20,204/- in the year ended 31st March, 2006 as compared to its income of Rs.1,78,88,963/- in the year ended 31st March, 2002 i.e. within a span of four years. The Balance Sheets of the Company continues to show losses year after year and there is nothing shown to suggest any improvement in the coming years. 45. In view of the law discussed above and by carefully analysing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reproduced below:- 6. I heard arguments and reserved orders on 29.11.2013 on the preliminary questions (a) whether the respondent can raise arguments now against the admission of the winding up petition and (b) whether notices can be issued in CA 2159 and 2160 of 2013 filed by the respondent. 7. In my opinion, it is not open to the respondent-company to raise arguments now against the admission of the winding up petition. This is because of the order passed by the Division Bench on 5.4.2013 in the review petition No.116/2013 filed by the petitioners. In this order the Division Bench clarified the final direction contained in paragraph 8 of its earlier order passed on 7th January, 2013 in Company Appeal No.19/2009. In the order passed on the review petition it was clarified that the objection against the order passed by the learned Company Judge on 16.2.2009 was to the rolled-up procedure adopted by him in discussing the merits of the case and the direction for winding up without advertising the proceedings. It was further clarified that the Division Bench did not comment upon or decide the merits of the observations of the learned Single Judge which undoubtedly point to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the admission of the winding up petition. These observations have attained finality in view of the order passed by the Division Bench in the review petition filed by the petitioners. The findings of the learned Company Judge and his prima facie observations on the admission of the company petition were upheld by the Division Bench. It would thus appear that in the additional affidavit filed by the respondent-company on 30.10.2013 along with the additional documents, the same issue i.e., admission of the winding up petition, is sought to be reargued or reopened. This is not permissible. xxxx xxxx xxxx xxxx 26. I have considerable doubt regarding the bona fide of the respondent-company in filing the present application in C.A. No.2160/2013. It has made the same or substantially the same allegations which it made in the winding-up proceedings resulting in the admission order passed on 16.02.2009. No such pleas or allegations were made in the appeal filed against the admission order dated 16.02.2009 which appeal in any case was only against the rolled up procedure followed by the learned Company Judge, and which did not question the admission order on merits. The order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as further found that the debt of Rs. 7,50,000 is, indisputably, owed to petitioner no. 1 as the final accounts which reflected the same were also signed by the Managing Director of the company. In view of the above, the contention that the petitioner no. 1 misconducted himself as a Chartered Accountant because his firm having been found guilty of accepting the audit of the company is also not germane to the question being considered in the present application. 19. Lastly, it is stated by the respondent in the reply that the respondent was not required to file any application for dispensing with the advertisements required to be published. In the present case, the Division Bench by an order dated 07.01.2013 had granted the liberty to the respondent to file an application under Rule 9 of the Companies (Court) Rules, 1959 seeking dispensation from publication of the advertisements. There have been a number of instances where the Court had concluded that publication of an advertisement would be highly detrimental to the interest of the company and in given circumstances, has afforded an opportunity to the company to repay its debt and in such circumstances the court has deferred the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Advertisement of petition (1) Where any petition is required to be advertised, it shall, unless the Judge otherwise orders, or these rules otherwise provide, be advertised not less than fourteen days before the date fixed for hearing, in one issue of the Official Gazette of the State or the Union Territory concerned, and in one issue each of a daily newspaper in the English language and a daily newspaper in the regional language circulating in the State or the Union Territory concerned, as may be fixed by the Judge. (2) Except in the case of a petition to wind-up a company the Judge may, if he thinks fit, dispense with any advertisement required by these rules. 24. A plain reading of the aforesaid Rules indicate that once the procedure prescribed under Rule 96 of the Rules with regard to the admission of the petition has been completed and the court has directed that the petition is advertised, the petition has to be advertised as per Rule 24 of the Rules, before the same is posted for hearing. This is essential to give an opportunity to persons desiring to support or oppose the petition to be heard. An order for winding up cannot be passed unless the petition is advertis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 9, inter alia, seeking deferment or suspension of the advertisement of the petition in the interest of justice or to prevent abuse of the process of Court, for instance, if the petition is not presented in good faith or was filed with ulterior motive and obtaining an order for winding up was unreasonable , then the court in such circumstances need not direct an advertisement to be issued and may proceed to reject the petition. However, the court cannot pass an order for winding up the company, unless the petition is advertised and is heard thereafter. The object being that the court must afford an opportunity to the persons who may be affected, to be heard before an order for winding a company is passed. The requirement of publication of the notice cannot be dispensed with as is apparent from the scheme of the Rules. 27. A Division Bench of this court in the case of R.K. Saxena (Lt. Col.) v. Imperial Forestry Corporation Ltd.: (2001) 60 DRJ 54 (DB) has also followed the judgment passed by the Supreme Court in the case of National Conduits (P) Ltd. (supra) has held as under:- 9. A petition for winding up cannot be placed for hearing before the Court unless the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the admitted dues is also not warranted in the facts of the present case. Thus, in the present case, the advertisement as required under Rule 96 is required to be published in accordance with the Companies (Court) Rules, 1959 as indicated above. 30. Accordingly, it is directed that the advertisement be issued by the petitioner in Statesman (English) and Jansatta (Hindi). The advertisement may also be published in the Delhi Gazette for hearing on 15.05.2014. 31. The present application also seeks that the assets of the company be taken over by the Provisional Liquidator. The respondent has sought to contest this prayer by contending that the prayer for appointment of a Provisional Liquidator stands impliedly rejected by the order by Division Bench dated 07.01.2013. This contention is without any merit as stated herein above. Given the, prima facie, finding in the order dated 16.02.2009 wherein this Court has found that affairs of the company are mismanaged and there is sufficient material on record 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. 32. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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