1982 (3) TMI 219 - HC - Companies Law

Notice Rules Must Be Followed: Ex Parte Winding-Up Order Set Aside

Modern Dekor Painting Contracts (P.) Ltd., In re

Modern Dekor Painting Contracts (P.) Ltd., In re - [1985] 57 COMP. CAS. 675 (BOM.) Issues Involved:1. Whether it was obligatory upon the petitioning creditors to serve an individual notice upon the company as required by rules 27, 28, and 29 of the Companies (Court) Rules, 1959.2. The effect of non-compliance with the provisions of rules 27, 28, and 29 of the Companies (Court) Rules, 1959.3. Whether rules 95 and 96 of the Companies (Court) Rules, 1959, exclude the applicability of rules 27, 28, and 29.4. The validity of the ex parte order for winding-up of the company.Issue-wise Detailed Analysis:1. Obligation to Serve Individual Notice:The primary issue was whether the petitioning creditors were required to serve an individual notice upon the company as mandated by rules 27, 28, and 29 of the Companies (Court) Rules, 1959. The court held that the provisions of these rules are mandatory. Rule 27 specifies that notice of every petition required to be served upon any person shall be in Form No. 6 and served not less than 14 days before the hearing. Rule 28(1) mandates that a petition against a company must be accompanied by a notice of the petition in the prescribed form, and the Registrar must send this notice to the company by registered post immediately upon admission of the petition. Rule 28(2) specifies that every petition must be served on the company at its registered office or principal place of business. The court concluded that these rules apply to every petition filed against a company, including winding-up petitions, and the service of notice upon the company is mandatory.2. Effect of Non-Compliance:The court examined the effect of non-compliance with the notice requirements as per rules 27, 28, and 29. Rule 31 states that in default of compliance with the advertisement and service requirements, the petition shall be posted for orders, and the judge may either dismiss the petition or give further directions. The court held that since the notice of the winding-up petition was not served upon the company, the petition should have been dismissed or appropriate orders should have been passed.3. Applicability of Rules 95 and 96:The court analyzed whether rules 95 and 96, which are specific to winding-up petitions, exclude the applicability of rules 27, 28, and 29. Rule 95 provides the form for a winding-up petition, and Rule 96 deals with the admission of the petition and directions for advertisement. The court noted that Rule 96 contemplates notice by advertisement and, if directed by the judge, notice to the company before giving directions for advertisement. However, Rule 96 does not exclude the necessity of serving individual notice upon the company. The court concluded that the rules in Part III (rules 95 and 96) do not exclude the rules in Part I (rules 27, 28, and 29) and that both sets of rules must be read together.4. Validity of Ex Parte Order:Given the non-compliance with the mandatory notice requirements, the court found that the ex parte order for winding-up the company was invalid. The court emphasized that the advertisements published in newspapers and the Government Gazette cannot be deemed as service upon the company. Consequently, the court allowed the appeal, set aside the order dated January 27, 1982, dismissing the judge's summons, and made the judge's summons absolute in terms of prayer (a).Final Order:The court ordered that the appeal is allowed, the order dated January 27, 1982, is set aside, and Company Petition No. 221 of 1977 is to be placed on board for hearing and final disposal on April 14, 1982. The company is to file its affidavit by March 31, 1982, and the petitioning creditors may file an affidavit-in-rejoinder before April 8, 1982. There will be no order as to costs for the judge's summons or the appeal. The official liquidator is to act upon a certified copy of the minutes of the order.