S. Srinivasulu and Another vs Amberlite Resins P. Ltd.

Bilal Nazki, J.—Company petition was filed by the appellants on July 26, 1999. The learned company judge has dismissed the petition at the admission stage, therefore, the appeal.

In the original petition, the appellants claimed that they had advanced certain amounts to the respondent-company as loan. The learned company judge noted that details of the loan were not given in the petition, nor any documents were annexed. He also noted that there was not even a receipt in the hands of the petitioners. The petitioners admitted in their petition that the respondent-company allotted certain shares in their favour and some other members of the family. On the allotted shares, no dividend was paid. They also alleged in the original petition that the substratum of the respondent-company had disappeared and the objects of the respondent-company had failed and it was impossible to run the business as there was no hope of trading at profit and the respondent-company would not be able to carry on its business.

On August 4, 1999, the respondent-company filed counter. On December 13,1999, the company judge directed the petitioners to file an affidavit, disclosing all the facts and circumstances under which the respondent-company should be wound up. The grounds raised in the original petition, as found by the learned company judge, did not lay down any factual foundation for winding up the respondent-company. The company judge also noted that propositions of law were mentioned without laying any factual foundation.

On the basis of the court''s order dated December 13,1999, another affidavit was sworn and signed on November 18, 2000. Counsel appearing for the respondent-company before the company judge, raised a preliminary objection that the affidavit filed in pursuance of order dated December 13, 1999, could not be looked into by the court, as amendment was not made in the original petition in accordance with law. It was submitted that in view of the rules framed under the Companies (Court) Rules, 1959, the provisions of the CPC were applicable to all the proceedings in the Companies Act, and the second affidavit filed, was without seeking leave of the court for amendment of the petition as originally filed. The learned company judge accepted this contention and held that winding up petitions are required to be filed either in Form 45, 46 or 47, depending on the nature of the petition. The learned company judge held, "I am of the view that the affidavit dated November 18, 2000, shall be ignored for the purpose of deciding the admissibility of the company petition.

Various grounds have been agitated in this appeal and we have heard learned Counsel for the parties at length.

We feel that the approach of the learned company judge was not correct, as the petitioners could not be faulted for not having filed a proper application seeking amendment in the company petition, as the court itself had ordered filing of an additional affidavit by order dated December 13, 1999. As it is well-settled that actions of the courts would prejudice none, we feel that if the learned company judge had come to a conclusion that the subsequent affidavit filed in pursuance of the court order dated December 13, 1999, was not in the form in which it had to be filed, he should have given a chance to the petitioners to file a proper amendment application, if they so desired. The appellants could not be taken by surprise at the time of hearing of the company petition by telling them that their petition was not maintainable, which they had filed in pursuance of the orders of the court. Had there been no order of the court dated December 13, 1999, perhaps the approach adopted by the learned company judge would be right, but the order of the court, in our view, changed the whole scenario.

Learned Counsel for the appellants has relied on a judgment of the Gujarat High Court in Welding Rods P. Ltd. v. Indo Borax and Chemicals Ltd. [2002] 108 Comp Cas 747, wherein the court held (page 770):

In view of the above discussion, we do not see any merit in any of the contentions raised on behalf of the appellant-company. We are of the view that the orders passed by the learned company judge granting opportunity to the petitioning-creditor (the respondent herein) to cure the defects regarding signature on the petition and the form of affidavit were merely procedural orders. As regard the order of the learned company judge holding that the resolution dated June 28, 2000, conferred sufficient authority on the constituted attorney to file the winding up petition may also prima facie appear to be a procedural order. But adopting the reasoning of the Division Bench of the Bombay High Court in para. 5 of the judgment in Western India Theatres Ltd. Vs. Ishwarbhai Somabhai Patel, , that if the preliminary objection of the respondent-company (appellant herein) had been upheld by the learned company judge, the petition could have been dismissed in the absence of any further resolution passed by the board of directors of the petitioning-creditor before the date on which the learned company judge passed the order under appeal, we have proceeded on the footing that the appeal is maintainable.

Learned Counsel for the appellants also argued that the substratum of the company had disappeared and the company was unable to repay the debts and therefore, the company petition should have not been dismissed. In view of our findings about the learned company judge not looking into the additional affidavit filed, we restrain ourselves from going into the merits of the case and allow this appeal on the ground that the additional affidavit filed in pursuance of the order of the court was not looked into by the learned company judge. It is also true that the affidavit was not filed in accordance with the procedure prescribed under the Companies (Court) Rules.

Therefore, while setting aside the order of the learned company judge and remanding the case back to the learned company judge, we direct the appellants to file proper amendment application within two weeks, if they so desire. After the amendment application is filed, it will be for the learned company judge to examine whether such an application could be allowed or not. However, if no application is filed within the time prescribed, the company petition shall stand dismissed. Appeal is accordingly allowed.