Plastisac P. Ltd. vs Gujarat Lease Finance Ltd.

Y.B. Bhatt, J.—This O. J. appeal has been filed by the appellant which is the original respondent-company, where the present respondent is

the original petitioning creditor of a petition for winding up of the company.

In brief, the appellant challenges the winding up order passed by the learned company judge as merged in the order passed by the said judge in

the review application. The net effect of the said order is that, on the factual grounds discussed in the said order, the company is directed to be

wound up.

It may only be mentioned here at this stage and only by way of a background leading up to the winding up order, that the present respondent

had filed a winding up petition following a statutory notice u/s 434 of the Companies Act, 1956, that the notice on filing of the petition had been

served on the appellant-company, and on its failure to present any defence, the said winding up petition was admitted and also advertised. Even at

this stage, the appellant-company did not prefer any defence, and ultimately, the learned company judge passed the order of winding up of the

company. As against this order, an earlier O.J. appeal had been preferred, which was however withdrawn with a view to prefer a review

application before the learned company judge. The learned company judge then heard and decided the review application and confirmed the

winding up order in sub-stance, and with only a minor change in the observation part of the judgment, without affecting the findings and/or

conclusions in the said decision.

The appellant-company is thus in appeal before us.

Learned counsel for the appellant first sought to contend that in view of rule 24 of the Companies (Court) Rules, 1959, with specific emphasis

on sub-rule (2) thereof, the company judge has no power to dispense with the publication of the petition, and not even publication in the

Government Gazette.

In the context of this submission, it must be noted that what has been dispensed with by the earlier orders passed by the learned company judge

is merely publication in the Government Gazette, and not all advertisements. It is not in dispute that the petition was in fact advertised in one

Gujarati newspaper and one English newspaper circulating in the district.

According to learned counsel for the appellant, sub-rule (2) does not confer any discretion upon the company court to dispense with any

advertisement, so far as the petition for winding up is concerned. To our mind, this is a gross misinterpretation of the rule. As observed by the

learned company judge, rule 24 is to be read in the context of rule 6 and rule 9, which confers adequate discretion upon the company court to

dispense with any advertisement. However, it may be noted that we are not required to interpret whether such discretion is wide enough to

dispense with all advertisements contemplated by sub-rule (2). We are merely required to interpret as to whether the court has power to dispense

with publication in the Government Gazette.

As observed by us hereinabove, if sub-rule (2) of rule 24 of the said Rules is interpreted in the manner professed by learned counsel for the

appellant, the same would amount to saying that in the case of petition for winding up, the company court has absolutely no discretion to dispense

with any publication at all. Such an interpretation would obviously run counter to the combined reading of rule 24, rule 6 and rule 9.

On a specific query being put to learned counsel for the appellant, he is unable to refer to any decision of the Supreme Court, or even of any

other High Court, specifically supporting the view canvassed by him. We, therefore, reject this contention.

Learned counsel for the appellant then sought to raise another contention to the effect that prior to the effective hearing of the winding up

petition, the same had been dismissed and by a subsequent order of the company court had been restored to file. According to him, however, on

the date of restoration, the debt asserted against the appellant-company had become time-barred. We are not inclined to entertain this plea firstly

because the assertion that on the date of restoration that debt had become time-barred is an assertion of fact which is nowhere found on the

record. No such contention was raised before the learned company judge which could have been dealt with by him. In any case, once the

restoration application was granted and the winding up petition was restored to file, any orders that may be passed on any such winding up petition

would obviously relate back to the date of filing of the petition. Thus, the question of the debt asserted in the winding up petition as against the

respondent-company being a time-barred debt cannot factually be considered.

The next point sought to be urged by learned counsel for the appellant is that the appellant-company has more than adequate assets to meet

the obligation in respect of the debt asserted by the petitioning-creditor, and that given an opportunity, such assets can be realised or dealt with for

meeting the dues of the petitioning-creditor. To our mind, this submission is merely academic and has been made only with a view to stretch as

much time as possible. We cannot overlook the fact that the winding up petition was filed as early as in the year 1993, and even till today, the

official liquidator has not been placed in possession of the assets of the company in spite of the orders passed in the said winding up petition.

Protracted negotiations and protracted litigations ultimately serve nobody''s purpose except the debtors''. However, the principal reason why we

are not inclined to accept this submission is because these are mere oral assertions made without any foundation of fact. The appellant-company

has not been able to refer to any material even to remotely justify this assertion. To our mind, this is merely an attempt in an indirect manner to

bring on record fresh material, which was never placed before the learned company judge.

For the reasons aforesaid, we find that the contention in law sought to be asserted in the present appeal is not sustainable, and the assertions of

fact sought to be made are not justified from any material on record. This appeal is, therefore, dismissed.

At this stage however, learned counsel for the appellant states that the appellant wishes to approach the Supreme Court in respect of the

present order and accordingly an opportunity should be afforded to it. We, therefore, direct the stay of the operation of the present judgment up to

April 21, 1998, with a specific undertaking that no extension of this period will be entertained.