B.K. Duplex Board Ltd. vs Sound Fibre

M.M. Kumar, J.—The instant appeal filed u/s 483 of the Companies Act, 1956 (for brevity, ''the Act'') is directed against the order dated 17.4.2009 passed by the learned Company Judge in CP No. 226 of 1998. The learned Company Judge has concluded that the appellant-Company has admitted the debts payable by it and it has been prima facie established that the appellant-Company was not able to pay its debts. However, the dispute has been raised by the appellant-Company with regard to directions issued in the concluding para for winding up the Company without first admitting the petition and directing its advertisement. The operative part of the concluding two paras reads as under:

In the circumstances, I am of the clear view that the company is unable to pay its debts and the affairs of the company cannot be carried on. The company is required to be wound up and ordered accordingly.

The notice of the order of winding up shall be filed with the Registrar of Companies and also communicated to the Official Liquidator attached to this Court. The advertisement of factum of winding up shall also be made within 14 days from the making of the order in "The Tribune (Chandigarh-Delhi Edition)" and in "Dainik Bhaskar-Hindi" as well Official Gazette of Punjab Government.

The appellant has confined the challenge only to the direction issued in the concluding para of the order.

Mr. R.C. Setia, learned Senior counsel for the appellant- Company has vehemently argued that Rules 24, 96 and 99 of the Companies (Court) Rules, 1959 (for brevity, ''the Rules'') have not been complied with. According to the learned Counsel before passing the order of winding up, the learned Company Judge was under obligation to first order admission of the petition and then should have directed its advertisement. He has maintained that the aforesaid provisions of Rules 24, 96 and 99 of the Rules are mandatory and in the absence of admission, the appellant-Company could not be wound up at the initial stage.

Mr. Salil Sagar, learned Senior counsel alongwith Mr. Samarth Sagar are present for the caveator-respondent-petitioner. They have accepted notice on behalf of the respondent-petitioner. Mr. Sagar states that he concedes the proposition canvassed by the learned Counsel for the appellant-Company. He further states that the prayer made by the learned Counsel for the appellant-Company to that extent be accepted.

Having heard learned Counsel and in view of the consensus reached between the learned Counsel, we direct that the appellant-Company may not be considered to have been wound up and the impugned directions concerning winding up is accordingly set aside. Consequently, directions for issuance of notice of winding up of the appellant-Company to the Registrar of Companies and the Official Liquidator are also set aside. We also set aside the further direction issued by the learned Company Judge that advertisement of factum of winding up be made within 14 days by publishing the same in the Official Gazette and the newspapers.

However, as per the agreement between the parties, we maintain the conclusion drawn by the learned Company Judge to the effect that there is a prima facie case for admission of the petition on the basis that the alleged debts payable by the appellant-Company has been established and it has been prima facie proved that the appellant- Company is unable to pay the same. Accordingly, the Company Petition, bearing CP No. 226 of 1998 is admitted. The factum of admission be advertised for 8.7.2009, even if it has already been advertised. A notification in the Official Gazette of Punjab Government be published at least 14 days preceding the date of hearing. The factum of admission be also published in the English daily ''The Tribune'' and the Hindi daily ''Dainik Bhaskar (Chandigarh-Delhi Edition). The impugned order passed by the learned Company Judge stands modified to that extent and the matter be now placed before him for 23.7.2009.

Before parting we make it clear that any observation made in the preceding paras shall not be taken to imply as an expression of opinion on the merit of the issues, which are otherwise open before the learned Company Judge after advertisement of the petition.

As a sequel of the aforesaid agreement between the parties, the instant appeal is disposed of alongwith miscellaneous applications.