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Issues: (i) Whether the erstwhile managing director had locus standi to maintain an application to set aside the winding-up order on behalf of the company; (ii) whether the application was barred by limitation; and (iii) whether sufficient cause existed to revoke the ex parte winding-up order passed without effective opportunity to the company to be heard.
Issue (i): Whether the erstwhile managing director had locus standi to maintain an application to set aside the winding-up order on behalf of the company.
Analysis: Rule 6 of the Companies (Court) Rules, 1959, made the Code of Civil Procedure applicable to company proceedings, while Rule 9 preserved the court's inherent powers to act for the ends of justice. Once the winding-up order itself was under challenge, the ordinary rule that the directors' powers cease could not prevent the aggrieved director from assailing the very order that displaced him. The application was therefore treated as maintainable by the person who could have effectively represented the company before the order was passed.
Conclusion: The objection to locus standi was rejected and the application was held maintainable.
Issue (ii): Whether the application was barred by limitation.
Analysis: Section 3 of the Limitation Act, 1963, and Article 124 of the Schedule prescribe a 30-day period for review, but where the aggrieved party had no notice of the order, the period must be reckoned from the date of knowledge. On the facts, the managing director was in judicial custody and was not effectively served, and the company had no one else in a position to receive or act upon notice. The application was filed promptly after knowledge of the winding-up order, and in any event the delay was capable of condonation under Section 5 of the Limitation Act, 1963.
Conclusion: The application was held to be within time, and delay, if any, was condonable.
Issue (iii): Whether sufficient cause existed to revoke the ex parte winding-up order passed without effective opportunity to the company to be heard.
Analysis: The winding-up order had been passed when the managing director was in jail, the other director was abroad, the registered office was not traceable, and the public notices were not likely to reach the person who alone could have represented the company. The circumstances showed that the order was, in substance, ex parte and passed without a real hearing. This amounted to a violation of the principles of natural justice, justifying exercise of review and inherent powers to set aside the order.
Conclusion: Sufficient cause was established, and the winding-up order was revoked and cancelled.
Final Conclusion: The company was restored to the position it occupied before the winding-up order, and the petition was directed to proceed afresh in accordance with law from the earlier stage.
Ratio Decidendi: Where a winding-up order is passed without effective opportunity to the only person capable of representing the company, the order may be recalled in exercise of review or inherent powers because the limitation period runs from knowledge and the order is vulnerable for breach of natural justice.
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