Nashsa Toys Pvt. Ltd. vs Harshad Corporation

R.S. Mongia, C.J.—Harshad Corporation, Clearing and Forwarding Agent, Ahmedabad (hereinafter referred to as the Respondent Company) filed a Company Petition being Company Petition No. 2 of 1995 for winding up Nasha Toys Private Limited, a Joint Venture with Nagaland Industrial Development Corporation Limited having its registered Office at Duncan Road, Police Station Dimapur West, Dimapur under Sub-section (1)(b) of Section 439 of the Companies Act, 1956 for the alleged negligence to pay Rs. 3,46,368 towards indebtedness. This Company Petition was registered as Company petition No. 2 of 1995. The Managing Director of the Nasha Toys Private Limited (hereinafter referred to as the appellant Company) did put in his appearance before the Company Judge. However, he did not file any reply to the Company Petition. The Company Judge issued notice to show cause as to why the advertisement for winding up the appellant Company u/s 433 read with Section 438 of the Companies Act should not be published. Inspite of that notice having been published, none appeared on behalf of the Appellant Company to show cause as to why the advertisement should not be published. Thereafter by order dated 23.3.1995 the Company Judge allowed the Respondent Company to take steps for advertising the notice in two local dailies, "The Sentinel", an English Daily and "Dainik Asom", an Assamese Daily, published from Guwahati. Accordingly, advertisement was published in the said two dallies. An affidavit was sworn on behalf of the company regarding publication of the advertisement enclosing the copy of the newspaper. On 18.5.1995. Mr. K. Agarwal, learned counsel appearing on behalf of the Managing Director of the appellant Company prayed for one month''s time to file counter and his prayer was allowed. Several adjournments were given thereafter the counsel for the appellant. However, no affidavit-in-opposition was filed. On 31.8.1995 the learned counsel Mr. K. Agarwal informed the Company Judge that inspite of repeated reminders he did not receive any instruction from his client. Accordingly, he sent a registered letter on 13.7.1995. Even then he did not receive any instructions. In these circumstances, Mr. Agarwal desired to withdraw from the case and his prayer was allowed by the learned company Judge, Mr. K. Agarwal also produced a letter sent to the appellant company. Despite several adjournments thereafter the appellant failed to take any steps. The learned Company Judge, by the judgment and order dated 14.12.1995, ordered the winding up of the appellant company. Concluding portion of the judgment and orders reads as under :-

"I have heard the learned counsel for the petitioner and have gone through the documents produced by the petitioner-company-As no counter affidavit has been filed it is not known what is the exact case of the respondent. Statutory notice was also nerved on the respondent and thereafter notice was also published in the news papers. In spite of that no step was taken by the respondent to defend their case. In view of the above, I find that the respondent company has failed or neglected to pay the debt. Accordingly, I order for winding up of the respondent-company.

Send intimation to the Registrar of Companies and the Official Liquidator according to law.

The case is disposed of"

The present appeal has been filed by Nasha Toys Private Limited. Before adverting to the arguments of the learned counsel for the appellant, it may be observed that on 12.4.2001 the following order was passed by the Motion Bench :

"Heard Mr. K. Agarwal, learned counsel for the appellant. Counsel for the other side is not present.

The dispute involved in this appeal is with regard to the settlement of Rs. 3,46,000 to be settled between the Company and the Supplier. Considering the amount involved in this appeal, we further allow two months time to the parties to settle the dispute amicably out of court. We make it clear that if the parties are unable to settle the dispute amicably out of Court, the matter shall be decided on merit after expiry of two months.

List this matter for hearing after 2 months."

Thereafter again on 2.8.2001 this Bench had passed the following order :-

"We have heard the case. The same remains part-heard.

Learned counsel for the appellant is directed to get instructions as to how much money the Company is prepared to pay to the Respondent towards, its dues and in what manner.

Be it listed after one month whenever this Bench meets,

Copy of this order attested by the Bench Assistant be supplied to the learned counsel for the appellant for onward transmission."

Learned counsel for the appellant states that despite having written one letter on 17.4.2001 and a registered letter dated 6.8.2001 to his client Nasha Toys Private Limited, no instructions whatsoever have been received by him and even no reply has been given to the letters addressed by him.

Learned counsel for the appellant submitted that the Company itself,, i.e., Nasha Toys Private Limited was not made respondent before the Company Judge in Company Petition No. 2/95 and it was only the Managing Director of the respondent-company who Was arrayed as respondent. It was further argued that no notice as required u/s 434(1) of the Companies Act was served on the respondent-company before filing the company petition. He submit that in the Company petition itself it has been mentioned by the petitioner that the statutory notice which was sent by registered A/ D post u/s 434(1)(a) of the Companies Act prior to filing of the Company Petition for winding up, had been returned by the postal authorities with the remarks, "addressee left".

So far as the first argument advanced by the learned counsel for the appellant is concerned, reference may be made to Rule 95 of the Companies (Court) Rules, 1959, which is in the following terms :-

"95. Petition for winding up. - A petition for winding-up a company shall be in Form No. 45, 46 and 47, as the case may be, with such Variations as the circumstances may require, and shall be presented in duplicate. The Registrar shall note on the petition the date of its presentation."

Rule 95 in turn takes us to Form No. 46 laying down the format of a Company Petition for winding up by a creditor. This in turn provides that the heading has to be as in From No. 1, Form No. 1 is as under :-

"In the High Court at....

[(or) In the District Court of.....]

Original Jurisdiction

In the matter of Companies Act, 1955

- and

In the matter of X, Y, Ltd, (give the name of the Company)

*Note, -(1) Where the company is being wound up the words "in liquidation" should be inserted in brackets after the name of the company (see Rule 115).

(2) Where the company is wound-up under the provisions of the Banking Companies Act, 1949 or the Insurance Act, 1938, the relevant Act should be set out in the cause-title along with the Companies."

From the bare perusal of the aforesaid form, it is evident that the Company Petition has to mention the name of the Company in the heading in respect of which winding up is sought. From the perusal of the Company petition No. 2/95, we find that it is mentioned. "In the matter of Nasha Toys Private Limited". In the form No. 46, there is no indication that any other person is to be made respondent as such the. It is sufficient to mention that the petition relates to a particular company of which the winding up is sought for. Otherwise also we find that the notice which was published in the news papers was for winding up of Nasha Toy Private Limited. In the Company Petition, the Managing Director of the Company has also been arrayed as respondent. The contents of the petition relate to the affairs of the company and nothing personal against the Managing director as such. After all the Managing Director was appearing before the Company Judge through a counsel representing the Company. For all the aforesaid reasons, we find that there was nothing wrong in the Company Petition and the objection raised by the learned counsel for the appellant is not well founded.

So far as the second objection is concerned, the notice was sent at the registered office of the Company though it came back unserved with the report, "addressee left". According to us, this was sufficient compliance of Section 434 of the Companies Act inasmuch as at the registered office of the Company a registered notice was sent. Be that as it may, even later on the notices were published in the news papers as has been mentioned in the opening part of the judgment. The conduct of the respondent company is writ large. Despite the counsel, who was appearing before the Company Judge, writing letters to the company, no response was made by the Company or no instruction had been given to the counsel so much so the learned counsel for the appellant (respondent before company Judge) withdrew from the case. Even this Court in the appeal, by the aforesaid two orders dated 12.4.2001 and 2.8.2001 (as reproduced above) gave time to the Company even now to make the payment of the outstanding dues. But despite their counsel writing letters to the Company, no response was made. It seems that the company is realty not interested in the matter.

For the foregoing reasons we find no merit in this appeal, which is hereby dismissed.

Before parting with the judgment, we still give three months time from today to the Respondent (appellant herein) company to make the payment of the dues to the petitioner (respondent herein) or make a settlement and in such an eventuality they would be at liberty to move the Company Judge u/s 466 of the Companies Act for stay of the winding up proceeding.