1982 (4) TMI 259 - HC - Companies Law

Court revokes ex parte winding-up order, ruling in favor of petitioners after finding lack of notice.

Sinha Watches (India) (P.) Ltd. Versus Gujarat State Financial Corpon.

Sinha Watches (India) (P.) Ltd. Versus Gujarat State Financial Corpon. - [1985] 58 COMP. CAS. 489 (GUJ.) Issues Involved:1. Validity of the ex parte winding-up order.2. Locus standi of the managing director to file the review application.3. Limitation period for filing the review application.4. Sufficient cause for absence during the winding-up order hearing.Detailed Analysis:1. Validity of the Ex Parte Winding-Up Order:The petitioners, M/s. Sinha Watches (India) (P.) Ltd. and its managing directors, challenged an ex parte winding-up order passed on June 30, 1981, on the grounds that the company was unable to pay its dues. The managing director was in Tihar jail from December 4, 1980, until November 17, 1981, and was not aware of the winding-up proceedings. The court acknowledged that the managing director and his wife, who was in Switzerland, were not served with any notice regarding the winding-up petition. Consequently, the order was ex parte and deserved to be set aside in the interest of justice.2. Locus Standi of the Managing Director to File the Review Application:The respondents argued that the managing director had no locus standi to file the review application as the official liquidator should represent the company post-winding-up order. However, the court held that the managing director, being an aggrieved party, could challenge the winding-up order. The court referenced the Delhi High Court's decision in Anil Kumar Sachdeva v. Four 'A' Asbestos (P) Ltd., which stated that former directors could seek the setting aside of an ex parte winding-up order. The court concluded that the managing director had the authority to file the review application.3. Limitation Period for Filing the Review Application:The respondents contended that the review application was barred by limitation as it was filed beyond the 30-day period prescribed under article 124 of the Limitation Act. The court, however, noted that the managing director only became aware of the winding-up order after receiving a letter from the official liquidator dated December 29, 1981. The court cited the Supreme Court's decision in Madan Lal v. State of U.P., which established that the limitation period starts from the date the aggrieved party becomes aware of the order. Since the application was filed within 30 days of the managing director's knowledge of the order, the court held that the application was within the limitation period. Even if it were beyond the period, the court found sufficient grounds to condone the delay.4. Sufficient Cause for Absence During the Winding-Up Order Hearing:The court found that the managing director had a valid reason for his absence as he was detained in Tihar jail and could not be present to contest the winding-up proceedings. The court emphasized that the managing director did not receive proper notice and had no opportunity to represent the company. The court noted that the public notices issued locally could not have been read by the managing director in Tihar jail. The court concluded that the winding-up order was passed in violation of the principles of natural justice and deserved to be set aside.Conclusion:The court allowed the company application, revoked, and canceled the winding-up order dated June 30, 1981. The company petition was ordered to proceed in accordance with the law from the stage prior to the order. The court granted a stay of the operation of the order for a fortnight to enable the respondents to appeal and directed the official liquidator to maintain the status quo regarding the company's properties. The court made no order as to costs.Separate Judgments:No separate judgments were delivered by the judges.